DoD Budget Proposal Addresses Growing Health Care Costs

by U.S. Medicine

March 10, 2011

WASHINGTON, DC—The president proposed a $672 billion budget for DoD for FY2012 that includes a base budget of $553 billion and $117.8 billion to support overseas contingency operations, primarily in Afghanistan and Iraq.

The budget includes $52.5 billion for the Military Health System. As administration officials have previously said would be the case, this year’s budget request included initiatives to rein in healthcare costs, which have more than doubled from over $19 billion in FY2001.

Budget documents said DoD would improve patient access and services through the implementation of the patient-centered medical home model for primary care and the addition of urgent care centers and behavioral healthcare providers. It will also expand access to health information through a nationwide Nurse Advice Line and enhancements to TRICARE Online.

Proposals to streamline business and operation practices include reducing overhead by sharing services and consolidating activities such as standardizing the procurement of medical supplies, equipment, and devices.

The budget also proposes a premium increase for working-age military retirees enrolled in TRICARE Prime. These increases would be at $2.50 per month for individuals and $5 per month for families in FY2012, and the premiums would be indexed to Medicare inflation in future years.

The administration is also asking for adjustments to be made to retail and mail order pharmacy co-pays to incentivize the use of generic drugs and the use of the mail order pharmacy. Under the proposal, the co-pay for prescriptions filled in retail pharmacies would increase by no more than $3, while the co-pay for generic drugs filled through mail order would be eliminated. There continues to be no co-pay for prescriptions filled at military treatment facilities.

“We are committed to providing high-quality healthcare, but looking for ways to slow the growth, and that’s the general rational behind this set of initiatives …” said Robert Hale, under secretary of defense (comptroller) and chief financial officer at a briefing last month. “That includes the modest increases in TRICARE enrollment fees, changes in pharmacy co-pays, and some changes in subsidies to some of our hospitals.  So we’re trying to look for ways to slow the growth in healthcare, and we hope that the Congress will allow us to do that.”

In previous years, Congress has rejected the idea of raising TRICARE fees. Hale said that it is hoped by starting with “modest” TRICARE fee proposals that Congress will agree to the changes.

Officials state that the total savings for all of the healthcare proposals is almost $8 billion over five years.

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