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Demand for Health Insurance by Military Retirees

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About three million military retirees and their dependents less than 65 years of age Retirees are eligible for group health insurance from the Department of Defense DoD under the TRICARE program. TRICARE offers three health plans Prime, a health maintenance organization HMO Standard, a fee-for-service plan FFS and Extra, a preferred provider organization PPO. Standard and Extra, similar plans, are combined in the empirical analysis as SE. Under TRICARE, Retirees obtain direct care at military facilities usually from military providers and purchased care at civilian facilities from civilian providers. TRICARE is relatively inexpensive compared to other health insurance OHI that can be obtained from civilian employers. However, according to surveys of beneficiaries, some Retirees are dissatisfied with the access andor quality of care that they receive from military providers, and some using civilian providers are dissatisfied with purchased care claims processing. As a result, many have obtained other health insurance OHI, and this reduces DoD health care costs. The Office of the Director, Cost Assessment and Program Evaluation asked the Institute for Defense Analyses IDA to assist with out-year budgeting by analyzing past military health care utilization as a basis for forecasting future utilization and costs. In reviewing data from a thirteen-year period, IDA s research team found that in Fiscal Year FY 2000, 46 percent of retiree families had OHI, but by FY 2012, that number had dropped to 20 percent, with a corresponding rise in TRICARE usage. The return of previously non-reliant beneficiaries sharply increased TRICARE costs, leading to the questions of what caused the return of ghost beneficiaries to TRICARE and whether the trend will continue.

Subject Categories:

  • Economics and Cost Analysis
  • Personnel Management and Labor Relations
  • Medicine and Medical Research

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