DOD Health Care: Cost Impact of Health Care Reform and the Extension of Dependent Coverage

The Department of Defense (DOD) offers health care to eligible beneficiaries through TRICARE, its health care program. Recently enacted health care reform legislation--the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA)--has implications for much of the nation's health care system, including TRICARE. One particular health reform provision directed certain health insurance plans to extend coverage to dependents up to age 26. Though this provision does not apply to TRICARE because it is not considered a health insurance plan, the subsequent Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (NDAA 2011) included a similar provision that extends TRICARE coverage to certain dependent children of TRICARE beneficiaries. In response, in May 2011, DOD began implementing TRICARE Young Adult (TYA), a premium-based health care plan that extends TRICARE coverage to dependents of TRICARE beneficiaries up to age 26 who do not have access to employer-sponsored health care coverage and are unmarried. The NDAA 2011 directed us to assess the cost to DOD of complying with PPACA and HCERA. You also asked us to examine DOD's costs of implementing, administering, and providing benefits under TYA. In this report, we assess DOD's costs of (1) complying with PPACA and HCERA and (2) implementing and providing benefits under TYA.