Military health care system and Tricare: an economic analysis indicates the occurrence of self-selection

Abstract

The military health care system has been plagued by increasing health care costs for the past few decades. The military has implemented a couple of programs in an effort to control costs while maintaining quality health care for beneficiaries. The CHAMPUS program was DoD's first attempt to allow beneficiaries to receive care from civilian physicians for a small fee. This program was replaced with the Tricare program which offered a three option health plan and provided easy access to medical care for beneficiaries, but it failed to control costs. This project initially attempted to demonstrate that by increasing cost shares to beneficiaries associated with the Tricare program, greater efficiency and cost savings in the military health care system could be achieved. While unable to prove this, we found evidence of self-selection occurring among Tricare Standard enrollees. Standard enrollees are using inpatient and outpatient care at higher rates than their Prime counterparts. Analysis of this self-selection could have implications for future policy decisions concerning the military health care system.