Defense Health Care

When space and resources are available in military medical facilities, military retirees may receive care at little or no cost. When resources are unavailable, retirees under age 65 can seek medical care from the private sector, and the Defense Department's (DOD) Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) will cover the cost. But retirees over age 65 lose the CHAMPUS benefit, and the only DOD-funded care is the space-available care at military facilities. In the last 10 years, one-third of military hospitals have been closed because of military downsizing, reducing space available for older retirees, a group that has grown 75 percent during the last 10 years to 1.2 million. In addition, DOD's managed health care system gives older retirees the lowest priority for access to space. GAO examines the costs and benefits of five proposed alternatives for addressing the issue of health care for older retirees: (1) Medicare subvention, (2) enrollment in the Federal Employees Health Benefit Program, (3) CHAMPUS as a secondary payer, (4) Medigap policies, and (5) a mail order pharmacy benefit.

GAO noted that: (1) its work has shown that recent system downsizing has reduced all care, including space-available care, the only care retirees may access at military facilities; (2) in the last 10 years, the number of military medical personnel has declined by 15 percent and one-third of military hospitals have been closed, reflecting the one-third reduction in active-duty forces; (3) while further readiness-related downsizing decisions are pending, some predict more system reductions; (4) meanwhile, TRICARE, which does not allow older retirees to enroll in its Prime health care option (its new health maintenance organization option), is moving to maximize Prime enrollment at all the facilities; (5) as this takes place, older retirees' space-available care will further decline at most facilities and eventually end at some; (6) space-available care at military health facilities, moreover, is episodic and lacks the continuity so important to older retirees who have more frequent, and often chronic, medical problems than younger retirees; (7) although retirees may also access care through such government-sponsored programs as Medicare and private supplementary health insurance, many retirees experience coverage gaps and high out-of-pocket costs; (8) DOD and members of Congress have proposed alternatives to address the availability, cost, and coverage issues affecting retirees' access to care: (9) these proposals have potentially large price tags or fall short in helping those most affected by base closures and TRICARE's implementation; (10) allowing retirees to join the Federal Employees Health Benefits Program, or using the Civilian Health and Medical Program of the Uniformed Services as a second payer to Medicare, would provide retirees with more dependable, consistent access to care; (11) costs, however, would be considerable, in part because retirees whose care is now funded by other sources would most likely join the new program; (12) to mitigate these costs, DOD would probably need to explore measures such as alternative beneficiary cost sharing; (13) in addition, although not yet fully developed, DOD's pharmacy proposal would provide retirees a single benefit not covered by basic Medicare and could fill the gap in coverage until system restructuring decisions are made and the related consequences known; and (14) DOD has not yet decided, however, on benefit eligibility, delivery, or funding details for this proposal and thus it is too early to judge the cost implications.