FORT WORTH, Texas (Reuters) - When Wayne Johnson flew missions in Vietnam in the 1960s, one of the allures of a military career was the pledge that those who risked their lives for the United States would be repaid with healthcare in old age.

Now, as the 65-year-old retired Air Force major nears an age when he may need to bank on that promise, support is building in Washington for changes that could make it more costly for military retirees and their dependents to receive healthcare. It is a move Johnson finds worrying.

"It's something that was an unwritten contract when we joined the military back in the '60s," said Johnson, who flew an OV-10 Bronco light strike aircraft as a forward air controller in Vietnam. "And now to change the rules when it's time to use it, certainly it's a violation of trust."

That sentiment, said Joe Davis, director of public affairs for the Veterans of Foreign Wars, is widespread among the nearly 10 percent of U.S. military veterans, a little over two million people, who spent 20 years or more in the service.

"This is being perceived by the military, those in uniform today, by their families and all the retirees as a total breach of faith," Davis said. "I mean an absolute, 100 percent breach of faith."

Those remarks underscore how perilous it can be for politicians to make even modest changes to military healthcare programs, even when it involves raising premiums that have not budged since Bill Clinton was president.

Nonetheless, in an era of government belt-tightening, support appears to be growing for reining in the spiraling expense of military healthcare.

In recommendations to the budget-cutting congressional "super committee" in September, President Barack Obama proposed two steps to offset rising military healthcare costs.

He said Congress should impose a $200 annual fee on Tricare-for-Life, a health insurance plan for military retirees 65 and older that pays for most expenses not covered by the government's Medicare insurance plan for the elderly.

The fee on Tricare-for-Life, which is now free, would then increase annually according to a cost of living adjustment. The White House estimated the proposal would save $6.7 billion in mandatory federal spending over 10 years.

Obama also proposed changing Tricare co-payments on prescription drugs to encourage people to use cheaper generics rather than brand-name pharmaceuticals. The change, which would affect all but active duty military personnel, would reduce mandatory spending by $15.1 billion and discretionary spending by $5.5 billion over 10 years, the White House estimated.

Tricare is the military's main health insurance program.

Obama's suggestions received some support from senators. Democrat Carl Levin, the chairman of the Senate Armed Services Committee, and Republican John McCain, the senior Republican on the panel, both supported Obama's suggestion for fees on Tricare-for-Life.

"While this fee increase would hit those age 65 and over, a group mostly on fixed incomes who are vulnerable to unanticipated changes in expenses, I believe this fee increase is a reasonable step and should be considered," McCain, himself a Vietnam veteran, said in a letter to the committee.

How detailed the deficit-cutting committee will be is unclear. Todd Harrison, a defense analyst at the Center for Strategic and Budgetary Assessments, said he thought the panel was more likely to set a top-line number for defense spending and ask the Pentagon to figure out the details.

Harrison said he hoped the committee would take a more holistic approach to reforming military pay and benefits. What is needed, he said, is a commission that would "try to understand what they (military personnel) value rather than just making little changes here and there to save money."


Even before Obama and the U.S. Congress agreed in August to cut military spending by $450 billion over the next decade as part of a debt reduction deal, officials were warning that spiraling healthcare costs were becoming a problem.

Care for another generation of warriors, those wounded, many grievously, in Iraq and Afghanistan, is expected to raise the burden further.

The rising cost of the military healthcare system is "simply unsustainable," Defense Secretary Robert Gates said before he left office earlier this year.

The overall military healthcare program, which covers 9.6 million active-duty troops, retirees and their dependents, is expected to cost $52.5 billion this fiscal year -- about 10 percent of the Defense Department's base budget -- up from $19 billion in 2001.

The nonpartisan CSBA says military healthcare costs rose at a real annual rate of 6.3 percent between 2001 and 2011, faster than the rate of inflation.

Government officials say the proposed fees are modest compared to the cost of health insurance and co-pays in the private sector.

Nationwide, family premiums in employer-sponsored health plans jumped 9 percent in 2011, and single premiums rose 8 percent, the Kaiser Family Foundation found in an annual study released in September.

But veterans wonder where it will all stop.

"I guess I could afford it, but I wouldn't like it," said Terry Lindsay, a retired Air Force senior master sergeant who also served in Vietnam. "I generally hate to see them messing with the benefit ... Once they start doing it, you lose confidence in what more is to come."

Lawmakers in the House of Representatives have been more circumspect in their stance toward raising fees on military benefits.

Republican Representative Buck McKeon, chairman of the House Armed Services Committee, did not explicitly rule out the idea. But he urged the super committee to avoid any action that would break faith with veterans and active duty troops -- a position echoed by McCain and Defense Secretary Leon Panetta.

But veterans say that is exactly what officials are doing with their efforts to impose more fees.

Johnson, who flew commercial planes for American Airlines after his military career, said he understands the financial pressures on the government and wouldn't be badly affected by the new fees. But he expressed concern for those who were more dependent on the program.

"I hope something gets done here that's not devastating for a lot of these elderly widow ladies that rely on this very, very much," he said. "It would hurt them a lot worse than it would hurt me."

(Editing by Warren Strobel and Christopher Wilson)

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