Health insurance eats up 9 percent of Pentagon’s total budget

Introduction

The cost of health insurance for active duty and retired military personnel has increased from $19 billion in 2001 to $49 billion in 2010. The health care program, called TRICARE, accounts for almost 9 percent of the Pentagon’s total budget.

The increase is partly due to the number of eligible beneficiaries increasing, but it could also be linked to employers giving financial incentives to TRICARE-eligible beneficiaries to opt out of employer-paid insurance and shift health care costs to the Pentagon, according to the Government Accountability Office.

In an attempt to rein in costs, the 2007 National Defense Authorization Act prohibits employers with more than 20 employees from offering financial or other incentives to employees who are eligible for TRICARE to decline employer-sponsored health insurance, or to terminate enrollment in private insurance.

As a result, the Pentagon predicts a savings of $436 million by 2015. But even if people opt out, TRICARE might still pay their health care costs since it functions as a second payer for beneficiaries with private insurance.

FAST FACT: The average cost of insuring a retiree and dependent under TRICARE is $3,975, including cost of medical care, pharmaceuticals and administration.

Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities.

FINANCE

• As the Troubled Asset Relief Program enters its 30th month, Treasury has disbursed $410 billion and has received more than $286 billion, mostly from interest, dividends, loan repayments, repurchases of investments, and sales of investments. Treasury still owns a large portion of the companies which borrowed through TARP, such as GM, Ally and AIG. (GAO)