Defense Health Care: Additional Analysis of Costs and Benefits of Potential Governance Structures Is Needed

Abstract : Over the past decade, the cost of the Military Health System (MHS) has grown substantially and is projected to reach nearly $95 billion by 2030, according to the Congressional Budget Office. As health care costs consume an increasingly large portion of the defense budget, current DoD leadership and Congress have recognized the need to better control these costs. Section 716 of the National Defense Authorization Act for Fiscal Year 2012 required DoD to submit a report analyzing potential MHS governance options under consideration, and also required GAO to submit an analysis of these options. In response to this mandate, GAO determined the extent to which DoD's assessment provides complete information on cost implications and the strengths and weaknesses of potential MHS governance options. To conduct this review, GAO analyzed DoD's governance report along with supporting documents, and interviewed Task Force members. GAO recommends that DoD develop the following: (1) a comprehensive cost analysis for its potential MHS governance options, (2) a business case analysis and strategy for implementing its shared services concept, and (3) more complete analyses of the options' strengths and weaknesses. DoD concurred with developing a business case analysis for its shared services concept. DoD did not concur with the other two recommendations, stating that further analysis would not alter its conclusions. GAO disagrees and believes that more comprehensive analysis will help to distinguish the differences among the costs and benefits of the options.