"The military’s most expensive case of overuse is the Defense Health Program (DHP). ... DOD’s subsidy of health care benefits for those beneficiaries significantly exceeds the subsidies civilian employers typicallyoffer their workers or what the DOD provides its civilian employees. ... One result is that beneficiaries of DHP use 40 to 50 percent more health care than people in comparable civilian programs. ... The result for taxpayers is expensive. Health costs come to about $33 billion—eight percent of DOD's budget—in 2006,and by 2015 they can be expected to rise to $64 billion—12 percent of dod’s budget—absent changes in policy. Taxpayers spend 55 cents on health care for every dollar of cash compensation offered to military personnel, compared with less than 10 percent among private-sector employees."

Decision makers should consider the following recommendations:

• Convert in-kind benefits to cash.
• Increase the beneficiary share of costs for the defensehealth program.
• Improve the cost-effectiveness and responsiveness ofgovernment-operated businesses providing goods andservices to military personnel and families.
• Make the costs of in-kind benefits more transparent.

The most useful change would be to convert as many in-kind benefits as possible into cash benefits. Installation-centered benefits like family housing, subsidized military grocery stores, and on-base child care centers would be especially appropriate forsuch “cashing out.” Another area where a cash alternative would be appropriate is in the Defense Health Program. Giving active duty families a choice between DHP and a cash allowance would allow them to take advantage of less expensive plans while reaping a cash reward, saving taxpayers hundreds of millions of dollarsa year according to the Congressional Budget Office."

¶ Thursday, May 24, 2007