From FY 1988 to 2003, the Dept. of Defense's (DoD's) spending on medical care almost doubled in real terms. That growth occurred despite large reductions in the size of the active-duty military force & a substantial reduction in the size of the military's own hospital system. This study examines the reasons for those increases & considers directions for the future. Already, DoD's total spending on health care is more than half as large as its cash compensation. Looking forward, this analysis examines how overall growth of health care costs in the economy could affect DoD's health care costs through 2020, as well as how changes in benefits could do so. This study makes no recommendations. Charts, tables & graphs.

A CBO Study. Examines reasons for the increase in spending on medical care by the Department of Defense from fiscal years 1998-2003. Also considers directions in future medical spending. From fiscal year 1988 to 2003, the Department of Defense’s (DoD’s) spending on medical care almost doubled in real terms. That growth occurred despite large reductions in the size of the active-duty military force and a substantial reduction in the size of the military’s own hospital system. This Congressional Budget Office (CBO) study—prepared at the request of the Chairman of the Senate Budget Committee—examines the reasons for those increases and considers directions for the future. Already, DoD’s total spending on health care is more than half as large as its cash compensation. Looking forward, CBO’s analysis examines how overall growth of health care costs in the economy could affect DoD’s health care costs through 2020, as well how changes in benefits could do so.

The Department of Defense (DoD) faces a growing burden in providing peacetime health care for military personnel, retirees, and their dependents and survivors-who all together number over 8 million. Adjusted for the overall rate of inflation in the U.S. economy, the department's annual spending on medical care almost doubled from 1988 to 2003, rising from $14.6 billion to $27.2 billion. Furthermore, because DoD cut the size of the active-duty force by 38 percent over that same period, medical spending per active-duty service member nearly tripled, rising from $6,600 to $19,600.' Medical spending rose from one-quarter to more than one-half of the level of cash compensation (defined as basic pay, the housing allowance, and the subsistence allowance), and it is likely to continue to increase.

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 cost of providing this care has increased rapidly as a share of the defence budget over the past decade, outpacing growth in the economy, growth in per capita health care spending in the United States, and growth in funding for DoD's base budget. This book focuses on the approaches that can be taken to reduce federal spending on military care, and continues to provide information on management practices available to help achieve efficiencies within the military health system.