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Military Health Care: TRICARE Cost-Sharing Proposals Would Help Offset Increasing Health Care Spending, but Projected Savings Are Likely Overestimated

GAO-07-647 Published: May 31, 2007. Publicly Released: May 31, 2007.
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Highlights

In light of the fact that Department of Defense (DOD) health care spending more than doubled from 2000 to 2005 and continues to escalate, DOD proposed increasing the share of health care costs paid by TRICARE beneficiaries, under a proposal known as Sustain the Benefit. DOD estimated that if the proposal had been implemented in fiscal year 2007, savings would amount to over $11 billion through fiscal year 2011. As required by the National Defense Authorization Act for 2007, GAO evaluated (1) the likelihood that DOD would achieve its estimated savings from the proposed enrollment fee and deductible increases for retirees and dependents under age 65, (2) the likelihood that DOD would achieve its estimated savings from the proposed pharmacy co-payment increases for all beneficiaries except active duty personnel, and (3) the factors identified by DOD as contributing to increased TRICARE spending from 2000 to 2005. To conduct its work, GAO examined DOD analyses and interviewed DOD officials. GAO also analyzed data on many aspects of health care costs in general and interviewed health economists.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To help DOD manage its health care spending, the Secretary of Defense should direct the Assistant Secretary of Defense for Health Affairs to collect and compile information that could help DOD identify the reasons why beneficiaries may or may not choose to use TRICARE. Such data could include beneficiaries' access to and cost of other health insurance.
Closed – Not Implemented
We believed that DOD could develop better cost saving proposals if it had a better understanding of its beneficiaries' other health insurance options. We therefore recommended that DOD collect data on its beneficiaries options, such as why they may or may not choose to use TRICARE. DOD concurred with our conclusions and recommendations. However, after considering whether to include additional questions on its Health Care Survey of DOD Beneficiaries, it decided not to ask additional questions about other health insurance options, believing the the current questions in the survey provided adequate information. DOD plans no more action on this recommendation.

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Topics

BeneficiariesCost analysisDeductibles and CoinsuranceDefense cost controlHealth care costsHealth care programsHealth insuranceInsurance premiumsManaged health careMilitary dependentsUser feesCost growthSavings estimates