The Military Health System: Orientation and Overview Dr. William Winkenwerder Jr, MD Assistant Secretary of Defense for Health Affairs 29 June 2005.

The Military Health The Military Health System:System:

Orientation and OverviewOrientation and Overview

Dr. William Winkenwerder Jr, MDDr. William Winkenwerder Jr, MDAssistant Secretary of Defense for Health AffairsAssistant Secretary of Defense for Health Affairs

29 June 200529 June 2005

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Patient Care, Sustain Skillsand Training

Promote & Protect Health of the Force

Deploy toSupport the CombatantCommanders

to

Military Health System Mission

and

In Peace & War

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Manage Beneficiary Care

Deploy Healthy Force

Manage Beneficiary Care

Deploy Healthy Force

Deploy Medical Force

Manage Beneficiary Care

3

Military Health System – FY 2005 Military Health System – FY 2005 SnapshotSnapshot

Military Health System – FY 2005 Military Health System – FY 2005 SnapshotSnapshot

(Includes Accrual Fund payments)

World-Wide Fixed Asset Base

10 Medical Centers 60 Hospitals 387 Ambulatory Clinics439 Dental Clinics184 Veterinary Clinics

11 Medical Installations2 Universities (Training)

7 Research Laboratories

10 Medical Centers 60 Hospitals 387 Ambulatory Clinics439 Dental Clinics184 Veterinary Clinics

11 Medical Installations2 Universities (Training)

7 Research Laboratories

Defense Medical Summary

Over 1,200 Fixed Assets

$20 B Replacement Value

Defense Medical Summary

Over 1,200 Fixed Assets

$20 B Replacement Value

The MHS Research Portfolio USAMRIID, Fort Detrick

Cornerstone of National Interagency Biodefense Strategy

Existing USDA

Existing USAMRIID

New USAMRIID

New NIAID

New DHSNBACC

Already at Detrick • DoD, USAMRIID• DoD, Armed Forces Medical Intelligence Center• National Cancer Institute• Department of AgricultureNew Tenants & Construction• NIH, National Institute of Allergy and

Infectious Diseases (NIAID) FY03 $105M

• Department of Homeland Security, National Biodefense Analysis and Countermeasures Centers (NBACC), FY04/05 ~$200M

National Interagency Biodefense Campus at Fort Detrick

Scientific Expertise, Security & Synergy

Proposed New USAMRIID

• Medical countermeasures to support the Joint Warfighter

• Medical Product Testing to Support the national biodefense consortium

Proposed New USAMRIID

• Medical countermeasures to support the Joint Warfighter

• Medical Product Testing to Support the national biodefense consortium

$1B over 8 Years in two Stages$1B over 8 Years in two Stages

Joint Chiefs of Staff

SECDEF

DEPSECDEF

USD (P+R) CJCS

ASD (HA)

TMA

MilitaryDepartments

Service Surgeons

General

CINCs

Organizational Relationships

TRICARERegional Offices

The Assistant Secretary for Health Affairs is the Principal Staff Assistant to the SECDEF for all DoD Health Policies (DoDD 5136.1)

• DoD Officer Responsible for the Effective Execution of the Department’s Medical Mission

• Functional Areas:– Medical Readiness; Health Benefits Programs; Medical Information Systems;

Research & Development; Military Construction; Professional Development; Training

• Medical Personnel, Facilities, Programs, Funding, and Other Resources Within the DoD shall be subject to the Authority, Direction, and Control of the ASD(HA)

ASD (HA) Responsibilities

• Unified Medical Program Appropriations:– Medical and Dental Services to all DoD eligible

beneficiaries– Medical Education and Training– Uniformed Services University– Medical Command Headquarters– Occupational and Industrial Healthcare– Veterinary Services– Specialized Services for Training of Medical

Personnel– Infrastructure Maintenance and Support Services– Capitol Equipment– Information Management Systems

Defense Health Program

• TRICARE is our health care benefit program using medical treatment facilities as the main delivery system:– Augmented by a civilian network of providers and

facilities ($45 B in contracted services FY 05-09)– Providing integrated health care services to our

active duty, their families, retired military, their families and survivors

• Features of TRICARE– Uniform Benefit– Access and Quality Standards– Regional Military Managers supported by Managed

Care Contractors

TRICARE

TRICARE Regions

North

South

West

Colu

TRICARE Regional Offices

Washington, DC

San Antonio, TX

San Diego, CA

National CapitalRegion

Tidewater

Fort BraggPope AFB

Multi-Services Market Areas

Fort JacksonShaw AFB

Charleston Naval HospitalAFB Clinic

Colorado Springs

Fairbanks

HawaiiAnchorage

Puget Sound

MississippiDelta

DHP Operations Overviewas of the President’s Budget

Submission($ in thousands)

FY 04/05 FY 05/06FY 2004 FY 2005 FY 2006 % Change % Change

DHP AppropriationOperation & Maintenance O&M (less GWOT funding) $15,530,168 $17,302,504 $19,247,137 11.4% 11.2% GWOT funding $1,448,700 $0 $0Total O&M $16,978,868 $17,302,504 $19,247,137 1.9% 11.2%Procurement $304,250 $367,035 $375,319 20.6% 2.3%RDT&E $486,346 $506,982 $169,156 4.2% -66.6%

Subtotal $17,769,464 $18,176,521 $19,791,612 2.3% 8.9%

DoD Support to DHPMilitary Personnel $6,792,634 $6,395,590 $6,354,935 -5.8% -0.6%MILCON $177,130 $222,240 $292,013 25.5% 31.4%

Subtotal $6,969,764 $6,617,830 $6,646,948 -5.0% 0.4%

Medicare Eligible Retiree Health Care Fund (MERHCF) Military Personnel Appropriation $470,675 $420,746 $441,374 -10.6% 4.9% DHP O&M Appropriation $4,901,040 $5,468,335 $5,911,084 11.6% 8.1%

Subtotal $5,371,715 $5,889,081 $6,352,458 9.6% 7.9%

Total $30,110,943 $30,683,432 $32,791,018 1.9% 6.9%

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Past and Projected Resourcesfor the Military Medical System

Source: Congressional Budget Office

(Billions of 2005 dollars)

FY 2005 NDAA

New Benefits?

13Wall Street Journal January 25, 2005

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Cost for a Family of 3 1999 2004 %Chg 1999 2004 %Chg 1999 2004 %Chg 1999 2004 %Chg

Enrollee Premium $460 $460 0% $1,440 $2,260 57% $0 $0 0% $1,620 $2,930 81%

Other Out-of-Pocket $211 $301 43% $360 $940 161% $1,341 $1,751 31% $1,410 $1,510 7%

Total Out-of-Pocket $671 $769 14% $1,800 $3,200 78% $1,341 $1,751 31% $3,030 $4,440 47%

Government Cost $5,232 $8,070 54% $4,170 $6,780 63% $5,232 $8,070 54% $4,170 $7,200 73%

Total Cost $5,903 $8,832 50% $5,970 $9,980 67% $6,573 $9,821 49% $7,200 $11,640 62%

Enrollee Share of Total 11% 9% 30% 32% 20% 18% 42% 38%

Govt Share of Total 89% 91% 70% 68% 80% 82% 58% 62%

* Per Checkbook Magazine

FEHBP Kaiser Mid-Atlantic*

TRICARE Standard/ Extra NADD < 65

FEHBP Blue Cross Standard*NADD < 65

TRICARE Prime

Why is TRICARE so popular?

Lowest out-of-pocket cost

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Retirees are Increasingly Using TRICARE

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Tricare Users Total Retirees Under Age 65

66% 69%72%

75%78%

80%82% 84% 85% 87%

Total Retirees Under Age 65

TR

ICA

RE

Use

rs

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Beneficiary SharePercent of DHP Health Care Expenditures by Beneficiary Group

With <65 Retired Users Reaching 87% by 2011 and Growth Limited to MCSC

23.7% 25.0% 24.5%20.6% 19.9% 19.7% 19.9% 19.4% 18.6% 18.5% 18.4% 18.3% 18.1%

33.1% 31.8% 30.4%

26.0% 25.4% 23.6% 22.2% 20.7% 19.4% 18.9% 18.3% 17.8% 17.3%

33.7% 33.4%34.0%

31.1%30.5%

30.6% 31.5% 32.8% 34.0% 34.4% 34.8% 35.1% 35.6%

9.6% 9.8% 11.1%

22.3% 24.3% 26.1% 26.3% 27.1% 27.9% 28.2% 28.5% 28.8% 29.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

>65

<65

ADD

AD

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• Future medical cost growth is a significant Department issue

• Military health benefit is extremely rich…individual retirees and employers are now incented to use TRICARE vs. employer coverage

• The military health system is becoming more efficient and fiscally accountable…but, this will not be enough

• Current/projected increased program expenditures cannot be funded without dramatic incursions into Service line budgets, or significant DoD “top line” increases

Key Issues for Managing Benefits

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Way Ahead • Informing Congressional Leadership about

future health care cost growth impact

• Working with Administration on options

• Pursue politically feasible options

• Continue to fulfill commitments to our military service members and their families, and other beneficiaries