It is a story all too familiar to the Pentagon: yet another defense program with runaway costs.
But this is a $3.2 billion Pentagon program with a difference. It does not involve a glamorous, high-tech weapon system, and it was not sold to the military by a high-pressure lobbying campaign.
It is the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), the military's health insurance program for the estimated 9.2 million people eligible for care in military hospitals.
Established in the 1960s for military families who could not get -- or did not want -- military medicine, CHAMPUS's costs have soared in recent years as more military families have turned to private doctors and hospitals for their health care. Since 1985, the program's costs -- mirroring those in the private sector -- have more than doubled, and some of the increase has been passed on to military families by making them pay more of the doctor's bill initially and by cutting authorized services.
"CHAMPUS reminds me at times of Social Security, it has gotten so large," said Rep. Beverly B. Byron (D-Md.), chairwoman of the House subcommittee on military personnel and compensation, which oversees the program. Byron said she believed earlier this year that the Pentagon was on the verge of getting the program's costs under control after scrambling to cover a $700 million shortfall last year.
But because so many military doctors have been sent to the Persian Gulf region as part of Operation Desert Shield, the number of military personnel and dependents covered by CHAMPUS has risen dramatically, and Byron said she doubts 1991 will be the year CHAMPUS meets its budget.
"Today, we don't know what the overall costs are," she said last week after visiting U.S. troops in Germany. There, Bryon said, she found many military families are worried about being forced to use CHAMPUS because their access to military doctors has been reduced by the gulf crisis.
Faced with a shortfall for the current fiscal year estimated at between $750 million and $1 billion, CHAMPUS has become a prime but elusive target for Pentagon and congressional budget cutters.
Like a growing number of private employers, the government later this year will require patients to pay more of their own medical costs before the insurance picks up the bill. And it is limiting some benefits, such as inpatient psychiatric care, which have accounted for a large portion of the increase.
Last week, a California company that has won praise for its efforts to hold down CHAMPUS's costs in California and Hawaii complained that the Pentagon does not seem eager to expand its test program into three other western states.
Officials of Sacramento-based Foundation Health Corp. said the Defense Department rejected a proposal to expand its cost-cutting test to New Mexico, Arizona and Nevada. Daniel D. Crowley, Foundation's president and chief executive officer, expressed surprise at the decision because he said a Rand Corp. survey is expected to show that the Foundation project "has saved taxpayers over $100 million in the past two years in California and Hawaii."
Crowley added, "The program's compelling economics suggest that we'll eventually move forward in those states and elsewhere, perhaps short-term by helping support alternative approaches."
Susan Hansen, a Pentagon spokeswoman, said Foundation appeared to have "prevented a significant increase" in CHAMPUS costs in the two states where an estimated 16 percent of the program's beneficiaries live. Costs there have risen 4.5 percent a year, well under a Rand Corp. projection of a 22 percent without Foundation's efforts, Hansen said.
Pentagon officials are apprehensive, however, that Foundation would not have enough time under its current contract to make starting a project in the three other states worthwhile, Hansen said. Startup costs were estimated by one knowledgeable official at $20 million.
Congress itself may have blocked temporarily the program's expansion. In the 1991 Defense Authorization Act, congressional conferees directed that the Pentagon not expand the Foundation's "CHAMPUS reform initiative" until after it certifies to Congress that the effort "has been demonstrated to be more cost effective" than any other program being tested to hold down CHAMPUS's costs.
When Foundation won its "CHAMPUS reform initiative" contract in early 1988, it was announced with much fanfare by the Pentagon. The project was said to be valued at "potentially $3 billion over five years" and was described as "innovative and unprecedented" for both the Pentagon and the health-care industry.
After the Foundation effort got off to a rocky start in processing claims, Pentagon officials retreated from their strong endorsement and expressed hope that other procedures might also be effective in controlling CHAMPUS costs.
The military is testing other procedures, including holding senior military medical officers responsible for CHAMPUS costs within each officer's regional command. A Pentagon report has cited the failure to involve military medical commands more directly in the CHAMPUS program as one reason for its high costs.
In California, Foundation provides an estimated 860,000 military dependents and retirees three options:
They can remain in the standard CHAMPUS program. More than half of those eligible choose this option, seeking care in the private sector and paying 20 percent of their medical bills after first paying $50 out of pocket, or $100 for a family. Those out-of-pocket, or deductible, expenses will triple in March. Retirees in the standard program pay 25 percent of their bills.
They can avoid paying deductibles with CHAMPUS Prime, which requires $5-a-visit payments for medical care from a selected panel of health-care providers who operate much like a health maintenance organization. About 100,000 California military dependents and retirees have chosen this option.
A third option, used by 300,000 Californians, allows beneficiaries to go to hospitals and physicians who have agreed to limit their fees. Patients have to pay the annual CHAMPUS deductible and must make what Foundation calls "a reduced co-payment" for each visit.
One way to hold down costs is for the military to mandate more health-care programs be handled on an "in-house" basis by military hospitals, but there is too little in the defense budget and there are too few military doctors for the Pentagon to staff its own facilities, Byron said. The Marines recently opened a new Navy hospital at their Camp Lejuene, N.C., base, but two floors are unused because of a lack of medical staff, Byron said.
Sydney Hickey, associate director of the Alexandria-based National Military Family Association, expressed doubt that any reworking of the CHAMPUS program alone can resolve what she said is the basic problem confronting military families: overcrowded hospitals that are unable to guarantee care. "CHAMPUS is only a part of the military health-care system, and the system is what is wrong," she said.