DOD's 21st Century Health Care Spending Challenges
Gao ID: GAO-07-766CG April 18, 2007This is a Comptroller General Presentation delivered to the Task Force on the Future of Military Health Care on April 18, 2007. Major topics of this presentation include: growth in health care spending, cumulative growth in health care spending per capita, growth in DOD health care spending, and comparison of average out-of-pocket costs for a family of three in various health plans, 2005.
GAO-07-766CG, DOD's 21st Century Health Care Spending Challenges
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DOD's 21st Century Health Care Spending Challenges:
Presentation for the Task Force on the Future of Military Health Care:
April 18, 2007:
By David M. Walker:
Comptroller General of the United States:
Our Current Federal Fiscal Obligations are Unsustainable for the Long-
term:
Major Fiscal Exposures($ trillions):
Explicit liabilities (Publicly held debt, military & civilian pensions
& retiree health, other);
2000: $6.9;
2006: $10.4;
Percent Increase: 52%.
Commitments & Contingencies: e.g., PBGC, undelivered orders;
2000: $0.5;
2006: $1.3;
Percent Increase: 140%.
Implicit exposures;
2000: $13.0;
2006: $38.8;
Percent Increase: 197%.
Implicit exposures: Future Social Security benefits;
2000: $3.8;
2006: $6.4;
Percent Increase: [Empty].
Implicit exposures: Future Medicare Part A benefits;
2000: $2.7;
2006: $11.3;
Percent Increase: [Empty].
Implicit exposures: Medicare Part B benefits;
2000: $6.5;
2006: $13.1;
Percent Increase: [Empty].
Implicit exposures: Medicare Part D benefits;
2006: $8.0;
Percent Increase: [Empty].
Total;
2000: $20.4;
2006: $50.5;
Percent Increase: 147%.
Source: 2000 and 2006 Financial Report of the United States Government.
Note: Totals and percent increases may not add due to rounding.
Estimates for Social Security and Medicare are at present value as of
January 1 of each year and all other data are as of September 30.
[End of table]
Federal Spending for Mandatory Programs Crowds Out Spending for
Discretionary Programs:
[See PDF for Image]-graphic text:
Line graph.
Fiscal year: 1962;
Net Interest: 6.9;
Mandatory: 27.9;
Discretionary: 72.1.
Fiscal year: 1963;
Net Interest: 7.7;
Mandatory: 28.3;
Discretionary: 75.3.
Fiscal year: 1964;
Net Interest: 8.2;
Mandatory: 31.2;
Discretionary: 79.1.
Fiscal year: 1965;
Net Interest: 8.6;
Mandatory: 31.8;
Discretionary: 77.8.
Fiscal year: 1966;
Net Interest: 9.4;
Mandatory: 35.0;
Discretionary: 90.1.
Fiscal year: 1967;
Net Interest: 10.3;
Mandatory: 40.7;
Discretionary: 106.5.
Fiscal year: 1968;
Net Interest: 11.1;
Mandatory: 49.1;
Discretionary: 118.0.
Fiscal year: 1969;
Net Interest: 12.7;
Mandatory: 53.6;
Discretionary: 117.3.
Fiscal year: 1970;
Net Interest: 14.4;
Mandatory: 61.0;
Discretionary: 120.3.
Fiscal year: 1971;
Net Interest: 14.8;
Mandatory: 72.8;
Discretionary: 122.5.
Fiscal year: 1972;
Net Interest: 15.5;
Mandatory: 86.7;
Discretionary: 128.5.
Fiscal year: 1973;
Net Interest: 17.3;
Mandatory: 98.0;
Discretionary: 130.4.
Fiscal year: 1974;
Net Interest: 21.4;
Mandatory: 109.7;
Discretionary: 138.2.
Fiscal year: 1975;
Net Interest: 23.2;
Mandatory: 151.1;
Discretionary: 158.0.
Fiscal year: 1976;
Net Interest: 26.7;
Mandatory: 169.5;
Discretionary: 175.6.
Fiscal year: 1977;
Net Interest: 29.9;
Mandatory: 182.2;
Discretionary: 197.1.
Fiscal year: 1978;
Net Interest: 35.5;
Mandatory: 204.6;
Discretionary: 218.7.
Fiscal year: 1979;
Net Interest: 42.6;
Mandatory: 221.4;
Discretionary: 240.0.
Fiscal year: 1980;
Net Interest: 52.5;
Mandatory: 262.1;
Discretionary: 276.3.
Fiscal year: 1981;
Net Interest: 68.8;
Mandatory: 301.6;
Discretionary: 307.9.
Fiscal year: 1982;
Net Interest: 85.0;
Mandatory: 334.8;
Discretionary: 326.0
Fiscal year: 1983;
Net Interest: 89.8;
Mandatory: 365.2;
Discretionary: 353.3.
Fiscal year: 1984;
Net Interest: 111.1;
Mandatory: 361.3;
Discretionary: 379.4.
Fiscal year: 1985;
Net Interest: 129.5;
Mandatory: 401.1;
Discretionary: 415.8.
Fiscal year: 1986;
Net Interest: 136.0;
Mandatory: 415.9;
Discretionary: 438.5.
Fiscal year: 1987;
Net Interest: 138.6;
Mandatory: 421.3;
Discretionary: 444.2.
Fiscal year: 1988;
Net Interest: 151.8;
Mandatory: 448.2;
Discretionary: 464.4.
Fiscal year: 1989;
Net Interest: 169.0;
Mandatory: 486.0;
Discretionary: 488.8.
Fiscal year: 1990;
Net Interest: 184.3;
Mandatory: 568.2;
Discretionary: 500.6.
Fiscal year: 1991;
Net Interest: 194.4;
Mandatory: 596.6;
Discretionary: 533.3.
Fiscal year: 1992;
Net Interest: 199.3;
Mandatory: 648.5;
Discretionary: 533.8.
Fiscal year: 1993;
Net Interest: 198.7;
Mandatory: 671.4;
Discretionary: 539.4.
Fiscal year: 1994;
Net Interest: 202.9;
Mandatory: 717.6;
Discretionary: 541.4.
Fiscal year: 1995;
Net Interest: 232.1;
Mandatory: 738.9;
Discretionary: 544.9.
Fiscal year: 1996;
Net Interest: 241.1;
Mandatory: 786.8;
Discretionary: 532.7.
Fiscal year: 1997;
Net Interest: 244.0;
Mandatory: 810.1;
Discretionary: 547.2.
Fiscal year: 1998;
Net Interest: 241.1;
Mandatory: 859.5;
Discretionary: 552.1.
Fiscal year: 1999;
Net Interest: 229.8;
Mandatory: 900.3;
Discretionary: 572.0.
Fiscal year: 2000;
Net Interest: 222.9;
Mandatory: 951.4;
Discretionary: 614.8.
Fiscal year: 2001;
Net Interest: 206.2;
Mandatory: 1,007.7;
Discretionary: 649.3.
Fiscal year: 2002;
Net Interest: 170.9;
Mandatory: 1,105.9;
Discretionary: 734.3.
Fiscal year: 2003;
Net Interest: 153.1;
Mandatory: 1,181.6;
Discretionary: 825.4.
Fiscal year: 2004;
Net Interest: 160.2;
Mandatory: 1,237.3;
Discretionary: 895.5.
Fiscal year: 2005;
Net Interest: 184.0;
Mandatory: 1,319.8;
Discretionary: 968.5.
Fiscal year: 2006;
Net Interest: 227.0;
Mandatory: 1,411.0;
Discretionary: 1,016.0.
Fiscal year: 2007;
Net Interest: 235.0;
Mandatory: 1,455.0;
Discretionary: 1,024.0.
Fiscal year: 2008;
Net Interest: 250.0;
Mandatory: 1,533.0;
Discretionary: 1,034.0.
Fiscal year: 2009;
Net Interest: 255.0;
Mandatory: 1,620.0;
Discretionary: 1,050.0.
Fiscal year: 2010;
Net Interest: 262.0;
Mandatory: 1,708.0;
Discretionary: 1,067.0.
Fiscal year: 2011;
Net Interest: 269.0;
Mandatory: 1,821.0;
Discretionary: 1,1089.0.
Fiscal year: 2012;
Net Interest: 268.0;
Mandatory: 1,866.0;
Discretionary: 1,100.0.
Fiscal year: 2013;
Net Interest: 261.0;
Mandatory: 2,001.0;
Discretionary: 1,129.0.
Fiscal year: 2014;
Net Interest: 255.0;
Mandatory: 2,123.0;
Discretionary: 1,155.0.
Fiscal year: 2015;
Net Interest: 248.0;
Mandatory: 2,258.0;
Discretionary: 1,182.0.
Fiscal year: 2016;
Net Interest: 239.0;
Mandatory: 2,438.0;
Discretionary: 1,215.0.
Fiscal year: 2017;
Net Interest: 228.0;
Mandatory: 2,568.0;
Discretionary: 1,238.0.
Sources: Office of Management and Budget and the Congressional Budget
Office.
[End of figure]
Potential Fiscal Outcomes Simulation-Discretionary Spending Grows with
GDP and Expiring Tax Provisions Extended (January 2007) Revenues and
Composition of Spending as a Share of GDP:
[See PDF for image] - graphic text:
Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars
per group.
2006;
Net interest: 1.7%;
Social Security: 4.2%;
Medicare & Medicaid: 3.9%;
All other spending: 10.5%;
Revenue: 18.4%.
2015;
Net interest: 2.1%;
Social Security: 4.6%;
Medicare & Medicaid: 4.9%;
All other spending: 9.6%;
Revenue: 17.6%.
2030;
Net interest: 5.9%;
Social Security: 6.8%;
Medicare & Medicaid: 8.3%;
All other spending: 9.5%;
Revenue: 17.8%.
2040;
Net interest: 12.1%;
Social Security: 7.6%;
Medicare & Medicaid: 10.3%;
All other spending: 9.5%;
Revenue: 17.8%.
Source: GAO's January 2007 analysis.
Notes: AMT exemption amount is retained at the 2006 level through 2017
and expiring tax provisions are extended. After 2017, revenue as a
share of GDP is held constant-implicitly assuming that action is taken
to offset increased revenue from real bracket creep, the AMT, and tax-
deferred retirement accounts.
[End of figure]
What is to be done?
The "Status Quo" is Not an Option:
* We face large and growing structural deficits largely due to known
demographic trends and rising health care costs:
* GAO's simulations show that balancing the budget in 2040 could
require actions as large as:
- Cutting total federal spending by 60 percent or:
- Raising federal taxes to 2 times today's level:
Faster Economic Growth Can Help, but It Cannot Solve the Problem:
* Closing the current long-term fiscal gap based on reasonable
assumptions would require real average annual economic growth in the
double digit range every year for the next 75 years:
* During the 1990s, the economy grew at an average 3.2 percent per
year:
* As a result, we cannot simply grow our way out of this problem. Tough
choices will be required:
Growth in Health Care Spending: Health Care Spending as a Percentage of
GDP:
[See PDF for Image] - graphic text:
Bar graph.
Year: 1975;
Percent: 8.1%.
Year: 1985;
Percent: 10.4%.
Year: 1995;
Percent: 13.7%.
Year: 2005;
Percent: 16.0%.
Year: 2015;
Percent: 19.2%.
Source: The Centers for Medicare & Medicaid Services, Office of the
Actuary.
Note: The most current data available on health care spending as a
percentage of GDP are for 2005. The figure for 2015 is projected.
[End of figure]
Cumulative Growth in Health Care Spending Per Capita, Medical
Inflation, GDP Per Capita, and General Inflation, 2000-2005:
Year: 2000;
Health care spending per capita: 0;
CPI-Medical: 0;
GDP per capita: 0;
CPI-Urban consumers: 0.
Year: 2001;
Health care spending per capita: 7.47;
CPI-Medical: 4.6;
GDP per capita: 2.08;
CPI-Urban consumers: 2.85.
Year: 2002;
Health care spending per capita: 16.05;
CPI-Medical: 9.51;
GDP per capita: 4.5;
CPI-Urban consumers: 4.47.
Year: 2003;
Health care spending per capita: 24.26;
CPI-Medical: 13.92;
GDP per capita: 8.32;
CPI-Urban consumers: 6.85.
Year: 2004;
Health care spending per capita: 31.98;
CPI-Medical: 18.9;
GDP per capita: 14.64;
CPI-Urban consumers: 9.7.
Year: 2005;
Health care spending per capita: 39.81;
CPI-Medical: 23.93;
GDP per capita: 20.77;
CPI-Urban consumers: 13.41.
Cumulative percents;
Health care spending per capita: 39.81%;
CPI-Medical: 23.93%;
GDP per capita: 20.77%;
CPI-Urban consumers: 13.41%.
Source: Bureau of Labor Statistics, The Centers for Medicare & Medicaid
Services, Office of the Actuary, and the Bureau of Economic Analysis.
Note: The most current data available on health care spending per
capita are for 2005.
[End of figure]
Cumulative Growth in Real Health Care Spending Per Capita and Real GDP
Per Capita, 1960-2005:
[See PDF for Image]-graphic text:
Line graph.
Year: 1960;
Real Health care spending per capita: 0;
Real GDP per capita: 0.
Year: 1961;
Real Health care spending per capita: 3.56;
Real GDP per capita: 0.7.
Year: 1962;
Real Health care spending per capita: 10.08;
Real GDP per capita: 5.2.
Year: 1963;
Real Health care spending per capita: 16.75;
Real GDP per capita: 8.3.
Year: 1964;
Real Health care spending per capita: 25.91;
Real GDP per capita: 13.1.
Year: 1965;
Real Health care spending per capita: 33.12;
Real GDP per capita: 18.9.
Year: 1966;
Real Health care spending per capita: 41.09;
Real GDP per capita: 25.3.
Year: 1967;
Real Health care spending per capita: 52.33;
Real GDP per capita: 27.3.
Year: 1968;
Real Health care spending per capita: 63.78;
Real GDP per capita: 32.2.
Year: 1969;
Real Health care spending per capita: 73.98;
Real GDP per capita: 35.0.
Year: 1970;
Real Health care spending per capita: 83.82;
Real GDP per capita: 33.5.
Year: 1971;
Real Health care spending per capita: 92.27;
Real GDP per capita: 36.4.
Year: 1972;
Real Health care spending per capita: 104.07;
Real GDP per capita: 42.2.
Year: 1973;
Real Health care spending per capita: 112.03;
Real GDP per capita: 49.1.
Year: 1974;
Real Health care spending per capita: 119.04;
Real GDP per capita: 47.2.
Year: 1975;
Real Health care spending per capita: 126.34;
Real GDP per capita: 45.7.
Year: 1976;
Real Health care spending per capita: 142.98;
Real GDP per capita: 52.2.
Year: 1977;
Real Health care spending per capita: 156.72;
Real GDP per capita: 58.0.
Year: 1978;
Real Health care spending per capita: 167.52;
Real GDP per capita: 65.2.
Year: 1979;
Real Health care spending per capita: 177.46;
Real GDP per capita: 68.8.
Year: 1980;
Real Health care spending per capita: 189.9;
Real GDP per capita: 66.7.
Year: 1981;
Real Health care spending per capita: 203.97;
Real GDP per capita: 69.3.
Year: 1982;
Real Health care spending per capita: 218.9;
Real GDP per capita: 64.3.
Year: 1983;
Real Health care spending per capita: 235.76;
Real GDP per capita: 70.2.
Year: 1984;
Real Health care spending per capita: 253.03;
Real GDP per capita: 80.7.
Year: 1985;
Real Health care spending per capita: 271.16;
Real GDP per capita: 86.5.
Year: 1986;
Real Health care spending per capita: 285.9;
Real GDP per capita: 91.1.
Year: 1987;
Real Health care spending per capita: 304.78;
Real GDP per capita: 95.8.
Year: 1988;
Real Health care spending per capita: 333.87;
Real GDP per capita: 101.9.
Year: 1989;
Real Health care spending per capita: 360.77;
Real GDP per capita: 107.1.
Year: 1990;
Real Health care spending per capita: 390.16;
Real GDP per capita: 108.6.
Year: 1991;
Real Health care spending per capita: 412.48;
Real GDP per capita: 105.8.
Year: 1992;
Real Health care spending per capita: 437.5;
Real GDP per capita: 110.0.
Year: 1993;
Real Health care spending per capita: 458.02;
Real GDP per capita: 113.1.
Year: 1994;
Real Health care spending per capita: 469.88;
Real GDP per capita: 119.3.
Year: 1995;
Real Health care spending per capita: 483.92;
Real GDP per capita: 122.5.
Year: 1996;
Real Health care spending per capita: 496.54;
Real GDP per capita: 128.4.
Year: 1997;
Real Health care spending per capita: 511.5;
Real GDP per capita: 136.2.
Year: 1998;
Real Health care spending per capita: 533.54;
Real GDP per capita: 143.6.
Year: 1999;
Real Health care spending per capita: 556.89;
Real GDP per capita: 151.9.
Year: 2000;
Real Health care spending per capita: 580.99;
Real GDP per capita: 158.6.
Year: 2001;
Real Health care spending per capita: 614.74;
Real GDP per capita: 157.8.
Year: 2002;
Real Health care spending per capita: 658.56;
Real GDP per capita: 159.4.
Year: 2003;
Real Health care spending per capita: 695.26;
Real GDP per capita: 163.3.
Year: 2004;
Real Health care spending per capita: 721.37;
Real GDP per capita: 171.0.
Year: 2005;
Real Health care spending per capita: 744.54;
Real GDP per capita: 177.1.
Source: GAO analysis of data from the Centers for Medicare & Medicaid
Services, Office of the Actuary, and the Bureau of Economic Analysis.
Note: The most current data available on health care spending per
capita are for 2005.
[End of figure]
Drivers of Health Care Spending Growth:
Over the last 4 decades, health care spending growth has been driven
by:
* population growth:
* increase in health insurance coverage:
* medical inflation, and:
* increased utilization of services-that is, growth in the number of
services (volume) and the complexity of these services (intensity):
Comparison of Growth in DOD Health Care Spending, TRICARE Enrollment
Fees, Other Insurance Premiums, and Economic Indicators:
[See PDF for image] - graphic text:
Year: 2000;
Health care spending: 0;
CPI, All Urban Consumers: 0;
Gross Domestic Product: 0;
DOD Total Discretionary Budget Authority: 0;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 0.
Year: 2001;
Health care spending: 9;
CPI, All Urban Consumers: 3;
Gross Domestic Product: 3;
DOD Total Discretionary Budget Authority: 6;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 11.
Year: 2002;
Health care spending: 36;
CPI, All Urban Consumers: 4;
Gross Domestic Product: 7;
DOD Total Discretionary Budget Authority: 17;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 25.
Year: 2003;
Health care spending: 73;
CPI, All Urban Consumers: 7;
Gross Domestic Product: 12;
DOD Total Discretionary Budget Authority: 33;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 39.
Year: 2004;
Health care spending: 86;
CPI, All Urban Consumers: 10;
Gross Domestic Product: 19;
DOD Total Discretionary Budget Authority: 34;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 52.
Year: 2005;
Health care spending: 103;
CPI, All Urban Consumers: 13;
Gross Domestic Product: 27;
DOD Total Discretionary Budget Authority: 70;
TRICARE Prime Enrollment Fee: 0;
Average FEHBP Premium: 64.
Source: DOD, Bureau of Economic Analysis, Bureau of Labor Statistics,
and Office of Personnel Management. Note: The most current data
available on DOD health care spending are for 2005.
[End of figure]
DOD Health Care Spending has been Growing Faster than DOD's
Discretionary Budget Authority:
[See PDF for image] - graphic text:
Line graph.
FY 2000;
DOD Health Care: 0;
DOD Total Discretionary Budget Authority: 0.
FY 2001;
DOD Health Care: 9;
DOD Total Discretionary Budget Authority: 9.
FY 2002;
DOD Health Care: 36;
DOD Total Discretionary Budget Authority: 34.
FY 2003;
DOD Health Care: 73;
DOD Total Discretionary Budget Authority: 61.
FY 2004;
DOD Health Care: 86;
DOD Total Discretionary Budget Authority: 68.
FY 2005;
DOD Health Care: 103;
DOD Total Discretionary Budget Authority: 78.
Source: GAO analysis of DOD data.
[End of figure]
DOD Pharmacy Spending Grew Faster than Overall DOD Health Care
Spending:
[See PDF for image] - graphic text:
Line graph.
FY2000;
DOD Pharmacy Spending: 0;
DOD Health Care Spending: 0.
FY2001;
DOD Pharmacy Spending: 25;
DOD Health Care Spending: 9.
FY2002;
DOD Pharmacy Spending: 88;
DOD Health Care Spending: 36.
FY2003;
DOD Pharmacy Spending: 138;
DOD Health Care Spending: 73.
FY2004;
DOD Pharmacy Spending: 194;
DOD Health Care Spending: 86.
FY2005;
DOD Pharmacy Spending: 238;
DOD Health Care Spending: 103.
Source: GAO analysis of DOD data.
[End of figure]
Growth in DOD Health Care Spending:
From FY 2000 to FY 2005:
* DOD health care spending (primarily TRICARE) more than doubled, from
$17.413 to $35.413, growing at an average annual rate of 16 percent:
* TRICARE spending on prescription drugs more than tripled, from $1.613
to $5.413:
In FY 2005, health care spending accounted for 7.5 percent of DOD's
total discretionary budget and is expected to increase to 12 percent by
FY 2015:
DOD Estimates of Factors Contributing to Increases in DOD's Health Care
Spending, FY 2000-FY 2005:
[See PDF for image] - graphic text:
Pie chart divided into 6 sections each representing a certain
percentage.
TRICARE for life: 48%.
GWOT: 6%.
Medical Care Inflation: 24%.
Increase in Retiree and Dependents Under Age 65: 7%.
Factors Not Accounted For: 9%.
Other Benefit Enhancements Required by Law: 5%.
Source: DOD.
[End of figure]
Majority of TRICARE Beneficiaries are Not Active Duty Personnel:
TRICARE Beneficiaries in FY 2005:
[See PDF for image] - graphic text:
Pie Chart divided into 3 sections each representing a percentage.
TRICARE for Life retirees and dependents (generally age 65 and older):
14%.
Retirees and dependents (generally under age 65): 44%.
Active duty personnel and dependents: 42%.
Source: GAO-07-48.
[End of figure]
Government's (Taxpayers') Share of TRICARE's Financing has Grown:
While TRICARE spending has increased, beneficiaries' costs have
remained unchanged or have been lowered over the last decade:
* No enrollment fee (TRICARE Standard, Extra) or no increase in
enrollment fee (TRICARE Prime) since 1995:
* Lowering of catastrophic cap (limit on beneficiary's costs) for the
under-65 retirees and dependents in 2001 (from $7,500 to $3,000):
* No increase in TRICARE deductibles since 1995:
* Elimination of TRICARE Prime copayments for dependents of active duty
service members:
The Congress has expanded benefits each year since FY 2001:
Beneficiaries' out-of-pocket share of TRICARE costs has declined:
For example, DOD reports that under-65 retirees and dependents paid 12
percent of their health care costs in FY 2005, down from 27 percent in
FY 1996:
TRICARE Cost-Sharing is Out of Step with Other Public and Private
Payers:
While TRICARE enrollment fees are either absent or nominal, other
public programs and private plans typically raise premiums annually, in
part to account for rising health care expenditures:
Comparison of Current TRICARE PRIME Enrollment Fees with Fees if they
were Indexed to FEHBP Premium Increases, 1996-2007:
[See PDF for Image] - graphic text:
Line graph. 4 lines.
Premium amount in dollars.
Year: 1996;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 460;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 230;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 1997;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 467.82;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 233.91;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 1998;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 501.04;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 250.52;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 1999;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 548.13;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 274.07;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2000;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 596.92;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 298.46;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2001;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 661.38;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 330.69;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2002;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 746.70;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 373.35;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2003;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 831.83;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 415.91;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2004;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 910.85;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 455.472;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2005;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 977.34;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 488.67;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2006;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 1040.0;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 519.9;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Year: 2007;
Enrollment fee indexed to annual FEHBP premium growth (family
coverage): 1058.61;
Enrollment fee indexed to annual FEHBP premium growth (single
coverage): 529.30;
Current enrollment fee (family coverage): 460;
Current enrollment fee (single coverage): 230.
Source: DOD and Office of Personnel Management.
[End of figure]
Comparison of Average Out-of-Pocket Costs-Including Premiums,
Copayments, Coinsurance, and Deductibles-for a Family of Three in
Various Health Plans, 2005:
[See PDF for image] - graphic text:
Bar graph.
Out-of-pocket costs in dollars.
TRICARE Prime Health Plan: 1,021.
TRICARE Standard and Extra: 1,533.
FEHBP Kaiser: 3,470.
FEHBP Blue Cross and Blue Shield: 4,750.
Source: DOD.
[End of figure]
TRICARE Cost-Sharing is Out of Step with Other Public and Private
Payers:
TRICARE counts a beneficiary's enrollment fee toward the catastrophic
cap on the beneficiary's out-of-pocket costs, whereas other public and
private payers exclude a beneficiary's premium from counting toward the
cap:
TRICARE's copayment requirements for prescription drugs are not
structured to encourage the use of the less expensive mail order option
over the use of more expensive retail pharmacies:
* In FY 2004, TRICARE beneficiaries obtained more than twice as many
prescriptions from retail pharmacies as from mail order pharmacies:
* Other payers use stronger financial incentives to steer patients
toward least costly option:
Because of low out-of-pocket costs for prescription drugs, TRICARE for
Life beneficiaries have little incentive to enroll in Medicare Part D,
which has more aggressive cost-sharing requirements:
* Part D requires an annual premium, which may increase yearly:
* Part D has gap in coverage (i.e., "doughnut hole"):
Health Care is Part of a Package of Military Benefits that May be
Unsustainable Over the Long-term:
The cost of active duty pay and benefits was $158 billion in fiscal
year 2004 and growing.
Enhanced pay and benefits, including health care costs, increased costs
to an average of $111,783 per person.
Figure: Total Compensation Costs for Fiscal Years 2000-2004:
[See PDF for Image] - graphic text:
Bar graph.
2004 constant dollars in billions.
2000: 123;
2001: 131;
2002: 141;
2003: 155;
2004: 158.
Source: GAO-05-798.
Note: Our calculations include supplemental funding for the Global War
on Terrorism. Since fiscal year 2002 over 100,000 mobilized reservists
were paid out of the cash compensation. If you considered these
personnel, the average costs to provide compensation would be about
$5,000 per capita lower.
[End of figure]
Issues to Consider:
In examining the federal government's 21st century challenges, the
following are issues we have asked the Congress to consider in regard
to DOD and VA health care programs:
* How can the benefits, eligibility, and health delivery systems of DOD
and VA be optimally structured to ensure quality and efficiency? For
example, should changes in eligibility of the military and VA health
systems be considered?
* With billions of dollars going to DOD and VA for health care, what
options are available to reduce spending growth through increased
collaboration in, and integration of, health care delivery both within
and between those two agencies?
* To ensure the affordability and sustainability of TRICARE, should
DOD's long-term commitment for health care for non-active duty military
and their families be reexamined?
* Should TRICARE's provide financial incentives to encourage under-65
military retirees and dependents to obtain health care coverage when
available through non-DOD sources?
Should TRICARE cost-sharing requirements be brought into parity with
those of other public and private payers?
* Should cost sharing, including enrollment fees, deductibles, and
copayments, for retirees and their dependents in TRICARE be indexed to
inflation or increases in other public and private sector insurance, so
that they increase over time?
How can cost-sharing requirements be designed to encourage TRICARE
beneficiaries to use options that are most cost-efficient for DOD, such
as purchasing drugs through mail order rather than retail pharmacies?
* Should DOD's compensation structure, which is weighted toward non-
cash and deferred benefits (e.g., health care benefits and retirement),
be reexamined?
On the Web:
Web site: [Hyperlink, http://www.gao.gov/cghome.htm]:
Contact:
Paul Anderson, Managing Director, Public Affairs AndersonP1@gao.gov
(202) 512-4800:
U.S. Government Accountability Office 441 G Street NW, Room 7149
Washington, D.C. 20548:
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