Pursuant to a congressional request, GAO discussed proposed changes and improvements to the military health system (MHS), focusing on: (1) the various proposals to expand the military health care benefit, especially those for older retirees, including describing the nature of the enhancement, the present or potential challenges in implementing these proposals, and overall cost implications; (2) the broader perspective of the appropriate size and structure of the military health system; and (3) the obstacles that impede improvements in the TRICARE program, particularly in terms of accessing appointments and claims processing.

GAO noted that: (1) the various legislative proposals and the Department of Defense's (DOD) fiscal year 2001 budget request offer benefit enhancements much-sought-after and popular with the beneficiaries, but would have limited impact on retention; (2) several would expand or make permanent existing demonstration projects aimed at improving access and pharmacy coverage for older retirees, who have seen their military health care benefits erode and are not eligible for the Federal Employees Health Benefits Program (FEHBP) like civilian government retirees; (3) however, the experience to date of the Medicare subvention and FEHBP demonstrations pose many cost and operational concerns that should be fully assessed before final decisions to expand these projects are made; (4) the cost implications of expanding the benefit as contained in the proposals are significant, potentially adding as much as $10 billion a year; (5) other proposals would eliminate cost sharing for active-duty dependents who obtain care from civilian providers, thus removing what many see as an inequity in the benefit structure; (6) eliminating cost sharing for health benefits, however, runs counter to conventional health care cost containment strategy because research has shown that the lack of cost sharing leads to unnecessary utilization and higher costs; (7) it appears to GAO that the most significant gap in military health care coverage is a pharmacy benefit for those older retirees who do not have access to military pharmacies; (8) targeting benefit enhancement to this need may provide the most benefit for the least cost in the short term; (9) in the longer term, and on a broader level, GAO believes that the MHS size and structure need to be fundamentally reassessed in terms of how to best achieve its readiness mission; (10) some have suggested that the system can be made significantly smaller and provide even better training for wartime needs; (11) if this is true, the savings achieved from such a substantial downsizing effort could provide the fiscal resources to fund expanded benefits, such as the government share of FEHBP premiums; (12) GAO has issued a number of reports concerning the obstacles and impediments that need to be overcome to make TRICARE more user-friendly and efficient, and generally speaking, improvements can and should be made; (13) among the most important are improvements in appointment scheduling and claims processing--the subject of most of the complaints voiced by beneficiaries and providers; and (14) additionally, there appear to be significant efficiency opportunities remaining in DOD's pharmacy program.