Defense Health Care: Lessons Learned From DOD's Managed Health Care Initiatives

GAO discussed the Department of Defense's (DOD) efforts to reform its military health care system. GAO noted that: (1) DOD needs to establish a uniform benefits package with uniform cost sharing requirements for each category of beneficiaries; (2) DOD managed-care initiatives have created differences in benefits and cost sharing in certain geographic areas; (3) potential hospital closings resulting from military base closures may leave many retirees without prescription drug benefits and having to pay substantial penalties to obtain Medicare supplemental insurance; (4) budget constraints and prevailing employer practices suggest a need to adopt some significant cost sharing requirements for military health care; (5) the military health care system lacks sufficient incentives and controls to encourage the delivery of efficient and cost-effective health care; (6) DOD plans to adopt a budgeting system that allocates resources based on the demographics of its beneficiary population instead of on the amount of workload that a hospital can generate; and (7) contracting for health care services will probably increase as DOD medical staffing decreases.