operates one of the largest and most complex health systems in the nation and has a dual health care mission-readiness and benefits. The readiness mission provides medical services and support to the armed forces during military operations. The benefits mission provides health care to over 9 million eligible beneficiaries, including active duty personnel, retirees, and dependents worldwide. Past GAO and other reports have recommended changes to the military health system (MHS) structure. GAO was asked to (1) describe the options for structuring a unified medical command recommended in recent studies by DOD and other organizations and (2) assess the extent to which DOD has identified the potential impact these options would have on the current MHS. GAO analyzed studies and reports prepared by DOD's Joint/Unified Medical Command Working Group, the Defense Business Board, and the Center for Naval Analyses, and interviewed department officials.

Why GAO Did This Study: The Department of Defense (DOD) operates one of the largest and most complex health systems in the nation and has a dual health care mission -- readiness and benefits. The readiness mission provides medical services and support to the armed forces during military operations. The benefits mission provides health care to over 9 million eligible beneficiaries, including active duty personnel, retirees, and dependents worldwide. Past GAO and other reports have recommended changes to the military health system (MHS) structure. GAO was asked to (1) describe the options for structuring a unified medical command recommended in recent studies by DOD and other organizations and (2) assess the extent to which DOD has identified the potential impact these options would have on the current MHS. GAO analyzed studies and reports prepared by DOD's Joint/Unified Medical Command Working Group, the Defense Business Board, and the Center for Naval Analyses, and interviewed department officials. What GAO Recommends: GAO is recommending that DOD address the expected benefits, costs, and risks for implementing the fourth option and provide Congress the results of its assessment. In commenting on a draft of this report, DOD concurred with GAO's recommendations.

Over the past decade, the cost of the Department of Defense's (DOD) Military Health System (MHS) has grown substantially and is projected to reach nearly $95 billion by 2030. As health care costs consume an increasingly large portion of the defense budget, current DOD leadership and Congress have recognized the need to better control these costs. Section 716 of the National Defense Authorization Act for Fiscal Year 2012 required DOD to submit a report analyzing potential MHS governance options under consideration, and also an analysis of these options. In response, this report determined the extent to which DOD's assessment provides complete information on cost implications and the strengths and weaknesses of potential MHS governance options. Tables and figures. This is a print on demand report.

The Defense Department's (DOD) health care system, which costs $15 billion annually, is undergoing sweeping reform. Through TRICARE, its new managed health care program, DOD is trying to improve access to care among its 8.3 million beneficiaries while containing costs. How well DOD implements and operates TRICARE may define and shape military medicine for years to come. Because of TRICARE's complexity, scale, and impact on beneficiaries, GAO reviewed the program, focusing on (1) whether DOD's experiences with early implementation yielded the expected results, (2) how early outcomes may affect costs, and (3) whether DOD has defined and is capturing data needed to manage and assess TRICARE's performance. GAO concludes that despite initial confusion among beneficiaries arising from marketing and education problems, as well as problems with the compatibility of computer systems, early implementation of TRICARE is progressing consistent with congressional and DOD goals. However, the success of DOD's efforts to implement resource-sharing agreements and utilization management is critical to containing health care costs. DOD also needs to gather enrollment and performance data so that it and Congress can assess TRICARE's success in the future.