Medicare Subvention Demonstration

In the Balanced Budget Act of 1997, Congress established a three-year demonstration, called Medicare subvention, to improve the access of Medicare-eligible military retirees to care at military treatment facilities (MTF). The demonstration allowed Medicare-eligible retirees to get their health care largely at MTFs by enrolling in a Department of Defense (DOD) Medicare managed care organization known as TRICARE Senior Prime. During the subvention demonstration, access to health care for many retirees who enrolled in Senior Prime improved, while access to MTF care for some of those who did not enroll declined. Many enrollees in Senior Prime said they were better able to get care when they needed it. They also reported better access to doctors in general as well as care at MTFs. Enrollees generally were more satisfied with their care than before the demonstration. However, the demonstration did not improve enrollees' self-reported health status. In addition, compared to nonenrollees, enrollees did not have better health outcomes, as measured by their mortality rates and rates of "preventable" hospitalizations. Moreover, DOD's costs were high, reflecting enrollees' heavy use of hospitals and doctors.