Updated December 13, 2018
Defense Primer: Military Health System
The Department of Defense (DOD) operates a health care
provide a medically ready force and a ready medical force
delivery system that in fiscal year (FY) 2019 will serve an
to combatant commands in both peacetime and wartime.
estimated 9.4 million beneficiaries. In the President’s 2019
budget request of $50.6 billion, DOD’s unified medical
Beneficiaries
program represents about 8% of DOD’s total budget.
In FY2017, there were 9.42 million total MHS
Beneficiaries may obtain care from DOD-operated and
beneficiaries.
staffed medical and dental facilities (referred to collectively
as military treatment facilities) or through care from
Figure 1. MHS Beneficiaries, FY2017
civilian providers purchased through an insurance-like
program known as TRICARE. Purchased care accounts for
approximately 60% of the total cost of care delivered
through the Military Health System (MHS).
Purpose
The fundamental reason for an MHS is to support medical
readiness. The medical readiness mission involves
promoting “a healthy and fit fighting force that is medically
prepared to provide the Military Departments with the
maximum ability to accomplish their deployment missions
throughout the spectrum of military operations.” The MHS
also serves to “create and maintain high morale in the
uniformed services by providing an improved and uniform
program of medical and dental care for members and
certain former members of those services, and for their
dependents” (10 U.S.C. §1071). In addition, the resources
of the MHS may be used to provide humanitarian assistance

(10 U.S.C. §401) and to perform medical research (10
Source: Defense Health Agency, Evaluation of the TRICARE Program:
U.S.C. §2358).
Fiscal Year 2018 Report to Congress, Washington, DC, 2018, p. 18.
Note: Numbers may not add up to total because of rounding.
Organization
The Under Secretary of Defense for Personnel and
Military Treatment Facilities (MTFs)
Readiness (USD(P&R)) is the principal staff assistant and
On October 1, 2018, administration and management of the
advisor to the Secretary and Deputy Secretary of Defense
MTFs began to transfer from each Military Department to
for Total Force Management as it relates to readiness issues
the DHA. Most MTFs are currently administered by each
including health affairs (see 10 U.S.C. §136).
respective Service Surgeon General and provide a wide
range of clinical services depending on its size, mission,
Key MHS Organizations
and level of capabilities. These include inpatient and

outpatient medical care, dental, and veterinary services.
There are a total of 681 MTFs, with 126 located overseas.

Office of the Assistant Secretary of Defense for

The facilities are generally on or near a U.S. military base
Health Affairs (OASD (HA))
and are typically staffed by military, civil service, and



Defense Health Agency (DHA)
contract personnel.

Surgeons General of the Army, Navy, and Air

Force
TRICARE Options
With the exception of active duty service members (who
The Assistant Secretary of Defense for Health Affairs
are assigned to the TRICARE Prime option and pay no out-
(ASD(HA)) reports to the USD(P&R). The ASD(HA) is the
of-pocket costs for TRICARE coverage), MHS
principal advisor to the Secretary of Defense on all "DOD
beneficiaries may have a choice of TRICARE plan options
health policies, programs and activities" and has primary
depending upon their status (e.g., active duty family
responsibility for the MHS (see Department of Defense
member, retiree, reservist, child under age 26 ineligible for
Directive 5136.01). Reporting to the USD(P&R) through
family coverage, Medicare-eligible, etc.) and geographic
the ASD(HA), the Defense Health Agency (DHA) is a
location. Each plan option has different beneficiary cost-
joint, integrated combat support agency whose purpose is to
sharing features. Cost sharing may include an annual
enable the Army, Navy, and Air Force medical services to
enrollment fee, annual deductible, monthly premiums,
copayments, and an annual catastrophic cap. Pharmacy
https://crsreports.congress.gov

---

Defense Primer: Military Health System
copayments are established separately and are the same for
quality of care, and create a better experience for
all beneficiaries under each option. The current major plan
beneficiaries. DOD must implement this organizational
options are listed below.
change by September 30, 2021.
TRICARE Prime
Access and Quality
TRICARE Prime is a health maintenance organization
DOD continues to focus on improving access to care to
(HMO)-style option in which beneficiaries typically get
meet defined standards, expanding the use of telehealth
most care at an MTF. Certain retirees may be eligible to
services, enhancing the health care experience for
enroll in this option if they live within or near a designated
beneficiaries, and ensuring quality of care meets or exceeds
Prime Service Area. TRICARE Prime features an annual
defined benchmarks. As directed in the FY2017 NDAA,
enrollment fee for retirees but does not have an annual
DOD has also expanded access to primary care and urgent
deductible and has minimal copayments.
care services, reduced requirements for prior authorization
and referrals, and is developing high performance military-
TRICARE Select
civilian partnerships to deliver integrated health care.
TRICARE Select is a self-managed, preferred-provider
option. This plan allows beneficiaries greater flexibility in
Sustaining Wartime Medical Readiness Skills
managing their own health care and typically does not
As U.S. combat operations decline, sustaining readiness of
require a referral for specialty care. Eligible beneficiaries
the medical force continues to be an ongoing challenge for
must enroll annually and may be subject to an enrollment
DOD. The FY2017 NDAA created new authorities for the
fee, annual deductible, and copayments depending on their
Secretary of Defense to expand partnerships with certain
status. Lower out of pocket costs are associated with care
civilian health care systems and Veterans Affairs medical
delivered by a TRICARE network provider.
facilities, and to expand access to care at MTFs to non-
beneficiaries for the purposes of preserving core clinical
TRICARE for Life
competencies, combat casualty care capabilities, and
In general, a retired TRICARE beneficiary must enroll in
enhancing wartime medical readiness skills.
Medicare and pay Medicare Part B premiums in order to
retain TRICARE coverage. The coverage provided is
Implementing a New Electronic Health Record
known as TRICARE for Life. There is no enrollment fee or
In 2015, DOD awarded a $4.3 billion contract to develop a
premium and beneficiaries pay no out-of-pocket costs for
modern, interoperable electronic health record that can be
services covered by both Medicare and TRICARE for Life.
utilized in all care settings, including austere operational
environments and in MTFs. Initial deployment of this
Budget
system began in February 2017 in the Pacific Northwest
Most health-related spending in DOD is reported as the
and is designed to be a multi-year rollout across the MHS.
unified medical program. The unified medical program for
FY2019 consists of requests for $33.7 billion in
Relevant Statutes, Regulations, and Policies
discretionary funding for the Defense Health Program
budget account under Operation & Maintenance in the
Title 10, U.S. Code, Chapter 55 – Medical and Dental Care
annual defense appropriation, $8.9 billion in Military
Title 10, U.S. Code, Chapter 56 – Department of Defense
Personnel, $0.4 billion for Military Construction, and $7.5
Medicare-Eligible Retiree Health Care Fund
billion for accrual payments to the Medicare-Eligible
Title 32, Code of Federal Regulations, Part 199 – Civilian Health
Retiree Health Care Fund that finances TRICARE for Life.
and Medical Program of the Uniformed Services
The two largest budget activity groups under the annual
Defense Health Program appropriation are “In-House Care”
Department of Defense Directive 6010.04, Healthcare for
(also called “Direct Care”) with an FY2019 request for $9.7
Uniformed Services Members and Beneficiaries, June 1, 2018.
billion and “Purchased Care” with an FY2019 request for
$15.1 billion. Health-related DOD spending that is not
CRS Products
reflected in the unified medical program includes medical
CRS Report R45399, Military Medical Care: Frequently Asked
activities covered by overseas contingency operations and
Questions, by Bryce H. P. Mendez
medical research performed by the Defense Advanced
CRS Report R45343, FY2019 National Defense Authorization Act:
Research Projects Agency or other military research
Selected Military Personnel Issues, by Bryce H. P. Mendez et al.
agencies.
CRS In Focus IF10349, Congressionally Directed Medical Research
Current Challenges
Programs Funding for FY2019, by Bryce H. P. Mendez
There are a number of perceived areas for potential
improvement within the MHS, many of which have
Other Resources
recently attracted congressionally directed reform efforts
Defense Health Agency, Evaluation of the TRICARE Program: Fiscal
and ongoing oversight activities.
Year 2018 Report to Congress, 2018.
MHS Modernization

The FY2017 NDAA reassigned responsibilities for
administering MTFs from each respective Service Surgeon
Bryce H. P. Mendez, Analyst in Defense Health Care
General to the DHA. Congress directed this reform to
Policy
enhance medical force readiness, improve access and
IF10530
https://crsreports.congress.gov

---

Defense Primer: Military Health System


Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10530 · VERSION 6 · UPDATED

---