Reserve Forces

Reserve forces are generally considered essential to the nation's defense, as evidenced by the increasing use of these forces in recent years. Congress and the Defense Department (DOD) have been concerned about the (1) financial losses that some reservists have confronted with when they are activated and (2) DOD's ability to continue recruiting and retaining sufficient numbers of quality personnel in its reserve forces. These concerns have led to the development of an insurance program to protect reservists and their families against financial losses arising from extended mobilizations. GAO concludes that the program is not self-sustaining under its current design and with its current low enrollment. GAO suggests that the program be suspended while DOD reexamines the need for and possible alternatives to the program.

GAO noted that: (1) because of its limited work, GAO could make only a few observations about the Ready Reserve Mobilization Income Insurance Program; (2) DOD estimated that about 40 percent of the eligible reservists would enroll in the program, but less than 3 percent actually did; (3) the low enrollment rate raises a key question about the extent of the need for the program; (4) although previous studies showed that many reservists suffered economic losses and would be interested in an income insurance program, very few actually enrolled when the program was offered; (5) while there is some evidence that DOD did not market the program as effectively as possible, this alone cannot explain the low enrollment rate; (6) because of the low enrollment, which limits the amount of premiums paid into the insurance fund, and because many of those who did enroll suspected, or possibly knew, they would be activated for the ongoing Bosnia operation, the program is not self-sustaining, as intended; (7) many reservists activated for duty in Bosnia began to receive benefits almost immediately after enrolling in the program; (8) the program is expected to be $72 million in the red by September 1997; (9) the legislation allows DOD to seek a supplemental appropriation from the Congress to cover funding shortfalls; (10) because enrollment in the program is a one-time opportunity that most reservists have already declined, the existing program cannot significantly improve its viability through increased premium income from new enrollees, at least in the near term; (11) the program is not actuarially sound because of the unpredictability of future reserve call-ups, including the frequency of call-ups, their duration, and the number and types of reservists that might be needed; and (12) GAO's observations tend to support DOD's recent proposal to suspend the program and reexamine the need for it and to consider possible alternatives to meet the needs of reservists and their families.