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.