Department Of Defense Awards Major Health Care Contracts

(MoneyWatch)  The Department of Defense in the United States is responsible for providing health care to its active duty forces, their dependents and retirees. They operate in conjunction with the Veterans Administration to care for a large swath of the U.S. population. In the old days there were limited numbers of retirees and dependents as the average draftee was young, not married and tended to serve his two or four year hitch. Since the beginning of the "Volunteer" military back in the early Seventies you now see large numbers of military with wives, children as well as those who served their twenty years. There has also been a change in the mix from reasonably healthy young men to an older force with more women which has changed the health care requirements as well.

The U.S. military now uses a program called Tricare that provides for civil doctors and institutions to provide the majority of health care for its members. To manage the program the Department lets contracts with companies who cover a certain region of the United States. Because of the amount of people involved and the length these are rather large contracts going to one company. This week two major contracts of these types were awarded.

UnitedHealth won a five year contract that covers Florida and ten other nearby states. There are a great deal of military facilities and people located in this area. The value of the contract is over $21 billion dollars. True four billion a year is a drop compared to the total defense budget of $600 billion or more but it indicates the scope of the costs involved. It also reinforces that the expense of the U.S. military is not their equipment but the cost of the troops, their pay and benefits and support for their operations. There are very few acquisition programs be they for the F-22 or Future Combat Systems (FCS) that cost $4 billion a year.

TriWest was also awarded a contract for twenty-one states. This contract is only valued at $17 billion. The company has had previous contracts and brags that cost control and innovation helped them keep it. As the military population grows with the planned expansion of the military currently, the increase in number of former military due to the enhanced operations and more dependents the costs associated with this program will continue leading to even larger contracts.

Of course the proposed health care reform working its way through Congress could absorb some of these costs. It might be possible to roll the rather unique military health care system into the new national one. That of course will have to be all worked out in the next few years. There is no doubt that the costs to the Government for military and veterans related health care will only grow.