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Robert Longley

Military Health Care Costs Soaring

By April 4, 2013

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By 2030, the Department of Defense could be spending as much just to run its military health care system as it spends today on all other military research-and-development programs combined, according to the non-partisan Congressional Budget Office (CBO).

Estimates in the CBO's report, Long-Term Implications of the 2013 Future Years Defense Program, project that the rapidly increasing use of military health care facilities by active and retired military personnel and their families could drive the cost of the military health care system from $51 billion in 2013 to $90 billion a year by 2030.

The CBO report projects that running military health plans will cost $123 billion through 2017, or 5% more than estimated by the Department of Defense (DoD).

The CBO's projected cost is higher than the DoD's because the CBO correctly predicted that Congress would "continue its history" of rejecting the Department of Defense's proposals to reduce its health care costs.

This year, the Department of Defense proposed cutting costs by increasing annual Tricare program fees for military retirees still working in private jobs and for military retirees who are eligible for Medicare coverage. In addition, DoD proposed that active-duty military personnel and their families being making co-payments for pharmacy services.

Despite the DoD's estimate that its proposed changes would save some $13 billion over five years, Congress excluded them from the 2013 Defense Authorization Act (H.R. 4310), signed by President Obama on January 2, 2013.

The reason the cost of running the military health care system is soaring is pretty simple: More retired military personnel are using it than ever.

"A larger share of military retirees and their dependents are relying on the program rather than participating in health insurance provided by civilian employers or purchasing of their own," said the CBO report.

The reason for that, said the CBO, is also pretty simple: It's cheaper.

"Low out-of-pocket expenses for Tricare beneficiaries (many of whose co-payments, deductibles, and maximum out-of-pocket payments have remained unchanged or have decreased since the mid-1990s), combined with the increased costs of alternative sources of health insurance coverage, make the Tricare program relatively more attractive each year," noted the CBO report.

The CBO's report showed that the percentage of military retirees and their families choosing to use military health care, rather than enrolling in private or employer-provided health care programs, had increased from 25% in 2001, to over 50% in 2012.

Also See:
VA Health Benefit Processing Just Getting Slower
Top Government Benefit Programs
Are You Eligible for Federal Government Benefits?

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