Approaches to Reducing Federal Spending on Military Health Care

by Sabrina I. Pacifici on February 18, 2014

“In 2012, the Department of Defense (DoD) spent $52 billion on health care for service members, retirees, and their families. The department offers health care to nearly 10 million people through its TRICARE program, an integrated system of military health care providers and regional networks of civilian providers. Established in 1993, TRICARE now consists of three major plans: TRICARE Prime, TRICARE Standard, and TRICARE Extra. The following groups of people are eligible to participate in TRICARE (with the respective populations in 2012 shown in parentheses):

  • All members of the four military branches as well as members of the Coast Guard and the commissioned corps of the Public Health Service and of the National Oceanic and Atmospheric Administration (1.8 million);
  • Families of current service members (2.6 million); and
  • Retired service members and their families (5.2 million).

The cost of providing that care has increased rapidly as a share of the defense budget over the past decade, out-pacing growth in the economy, growth in per capita health care spending in the United States, and growth in funding for DoD’s base budget (which finances the department’s routine activities but has excluded funding for operations in Iraq and Afghanistan). Between 2000 and 2012, funding for military health care increased by 130 percent, over and above the effects of overall inflation in the economy. In 2000, funding for health care accounted for about 6 percent of DoD’s base budget; by 2012, that share had reached nearly 10 percent. By 2028, health care would claim 11 percent of the cost of implementing DoD’s plans, CBO estimates.”

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