Military Retirees' Health Care

Today, 4.3 million military retirees, their dependents, and survivors are eligible for care under the military health care system. However, because of changes during the past decade, including the establishment of a nationwide managed care program and the closure many medical facilities, many military retirees fear that they will lose access to care. This report describes various proposals that have been made to enhance older retirees' military health care benefits and provides cost estimates for implementing them. These options, each of which would require legislation to implement, include (1) enrolling Medicare-eligible retirees in TRICARE Prime, a health maintenance organization, and paying for their care with Medicare funds; (2) using Defense Department (DOD) funds to pay retirees' Medicare part B premiums and to furnish Medigap policies; (3) providing the Civilian Health and Medical Program of the Uniformed Services as a Medicare supplement; (4) extending the Federal Employees Health Benefits Program to retirees as a Medicare supplement and using DOD funds to pay part of the premium; and (5) expanding DOD's current mail-order prescription program to Medicare-eligibles who do not live near military medical facilities. GAO also discusses the uncertainties about and limitations of these options.

GAO noted that: (1) its analyses indicate that the proposals vary in their potential costs, coverage, and other effects on DOD, eligible beneficiaries, and Medicare; (2) DOD lacks the cost and care use data needed to estimate its current spending level for Medicare-eligible retirees, the level that would be DOD's spending limit under the Medicare subvention proposal and that, once reached, would trigger the Health Care Financing Administration's (HCFA) payments to begin; (3) it is uncertain whether HCFA's subvention payment rates, which would be lower than those it pays to Medicare HMOs, would equal DOD's actual care costs; (4) relatively few retirees could be accommodated by subvention at military medical facilities because of facility capacity and financial constraints; (5) the three proposals to have DOD fund Medicare supplemental coverage would cover all older retirees, and estimated additional DOD costs would range from $1.6 billion to $2.2 billion per year, in 1996 dollars, after they were fully implemented; (6) costs would be likely to rise over time as health care costs rose and greater numbers of Medicare-eligible retirees became eligible for programs; (7) all three of these options could inadvertently create a disparity in retirees' health care benefits by, in effect, providing older retirees with more comprehensive benefits than younger retirees; (8) while these options would provide retirees with enhanced benefits, none would increase retirees' access to care in military medical facilities; (9) the mail-order pharmacy option would address a significant gap in older retirees' health coverage--Medicare's lack of outpatient prescription drug coverage; (10) this proposal is unlike the others, which involve many uncertainties or high potential costs; (11) under this proposal, for an estimated cost of $229 million per year, DOD could extend the current mail-order pharmacy program in base closure areas to Medicare-eligible retirees who live far from military facility pharmacies; (12) this option would reduce prescription expenses for retirees living far from military pharmacies who have limited or no prescription coverage; and (13) because the approach could be implemented fairly easily as an extension of the current program, it would offer some relief to beneficiaries without major system changes.