Rapid growth problems face the $53 billion Defense Health Program, which covers 9.7 million active and retired service members, their families, and eligible surviving family members of deceased active and retired service personnel.
The 3,050 employees at the headquarters of the Military Health System are preparing to move this summer into a three-building complex in Falls Church that will contain the offices of the assistant defense secretary for health affairs, the Tricare Management Activity, the Army and Air Force surgeons general, and the Navy Bureau of Medicine.
The Pentagon health program’s budget issues are well known, the overall costs having more than doubled in the past 10 years and expected to continue to shoot up unless tough changes are made. The health-care headquarters staff has already been cut by 440 employees from 2011, and aligning its reimbursement rates for outpatient services with Medicare rates will save $900 million annually.
Less publicized is the more than 10-year history of efforts to revamp the military health-care bureacracy. The 2012 annual report by the Government Accountability Office on duplication, released last month, cited its 2005 study that called the Pentagon health-care system an area where “combining, realigning, or otherwise changing selected support functions” could achieve improved delivery of services — and save money.
One alternative the 2005 study suggested was to create “a unified medical command similar to [the Defense Department’s] unified transportation command.” Another was to set up two commands, one for operational medicine for the active services with the ability to be battlefield-deployed. The other, to handle “beneficiary care” for service personnel, families and retirees through military hospitals and contracted health providers.
“Inability to obtain a consensus among the services” — i.e., Army, Navy and Air Force leadership could not agree — was cited for why no basic change occurred. Instead, a smaller, seven-step program to end obvious overlaps was approved in late 2006. But the new GAO report notes only “varying levels of progress in implementing four of the seven incremental steps.”
Last June, because of program growth, top Pentagon officials established an internal task force to review the Military Health System governance. The interagency group proposed the creation of a Defense Health Agency that would subsume Tricare Management Activity and deal with pharmacy programs, medical education training, research and development, and other common activities. Its director would be a three-star general or flag officer and operate under the assistant secretary of defense for health affairs. The military services would retain their surgeons general and their separate treatment facilities as well as their own medical personnel, readiness programs and health-care delivery. It is estimated that this proposal would lead to a reduction of 330 full-time employees and a savings of roughly $46.5 million a year.