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Updated November 3, 2021
Defense Primer: Military Health System
The Department of Defense (DOD) administers a statutory
Beneficiaries
health entitlement (under Chapter 55 of Title 10, U.S.
In FY2020, there were 9.62 million total MHS beneficiaries
Code) through the Military Health System (MHS). The
(see Figure 1).
MHS offers health care benefits and services through its
TRICARE program to approximately 9.62 million
Figure 1. MHS Beneficiaries, FY2020
beneficiaries composed of servicemembers, military
retirees, and family members. Health care services are
available through DOD-operated hospitals and clinics,
referred to collectively as military treatment facilities
(MTFs), or through civilian health care providers
participating in the TRICARE program.
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 2021 Report to Congress, Washington, DC, 2021, p. 33.
Organization
Note: Numbers may not add up to total because of rounding.
The Under Secretary of Defense for Personnel and
Military Treatment Facilities (MTFs)
Readiness (USD[P&R]) is the principal staff assistant and
DHA administers all MTFs in the United States. In
advisor to the Secretary of Defense and to the Deputy
FY2021, DOD plans to transfer the administration of its
Secretary of Defense, for Total Force Management as it
overseas MTFs from the Service Surgeons General to the
relates to readiness issues, including health affairs (see 10
DHA. There are three types of MTFs that provide a wide
U.S.C. §136).
range of clinical services depending on size, mission, and
Key MHS Organizations
level of capabilities: medical centers, hospitals, and
ï‚·
ambulatory care centers. There are 721 MTFs, with 109
Office of the Assistant Secretary of Defense for Health Affairs
located overseas. The facilities are generally on or near a
(OASD[HA])
U.S. military base and are typically staffed by military, civil
ï‚·
service, and contract personnel.
Defense Health Agency (DHA)
TRICARE Options
ï‚· Army Medical Command, Navy Bureau of Medicine and
With the exception of active duty servicemembers (who are
Surgery, and the Air Force Medical Readiness Agency
assigned to the TRICARE Prime option and pay no out-of-
pocket costs for TRICARE coverage), MHS beneficiaries
The Assistant Secretary of Defense for Health Affairs
may have a choice of TRICARE plan options depending
(ASD(HA)) reports to the USD(P&R). The ASD(HA) is the
upon their status (e.g., active duty family member, retiree,
principal advisor to the Secretary of Defense on all "DOD
reservist, child under age 26 ineligible for family coverage,
health policies, programs and activities" and has primary
Medicare-eligible) and geographic location. Each plan
responsibility for the MHS (see DOD Directive 5136.01).
option has different beneficiary cost-sharing features. Cost
Reporting to the USD(P&R) through the ASD(HA), the
sharing may include an annual enrollment fee, annual
Defense Health Agency (DHA) is a joint combat support
deductible, monthly premiums, copayments, and an annual
agency whose purpose is to enable the Army, Navy, and Air
catastrophic cap. Pharmacy copayments are established
Force medical services to provide a medically ready force
separately and are the same for all beneficiaries under each
and a ready medical force to combatant commands in both
option. The current major plan options are listed below.
peacetime and wartime.
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Defense Primer: Military Health System
TRICARE Prime
Also, DOD is to transfer certain medical research and
TRICARE Prime is a health maintenance organization
public health activities from the Services to DHA by
(HMO)-style option in which beneficiaries typically get
September 30, 2022, while other reforms are ongoing.
most care at an MTF. Certain retirees may be eligible to
Reductions in Military Medical Personnel
enroll in this option if they live within or near a designated
In a 2021 report to Congress, DOD described a plan to
Prime Service Area. TRICARE Prime features an annual
reduce its active duty medical force by 12,801 positions
enrollment fee for retirees but does not have an annual
deductible and has minimal copayments.
(i.e., billets) in order to “support the operational medical
requirements to meet the National Security Strategy (NSS),
TRICARE Select
National Defense Strategy (NDS), and Defense Planning
TRICARE Select is a self-managed, preferred-provider
Guidance.” DOD plans to implement these reductions
option (PPO). This plan allows beneficiaries greater
between FY2023 and FY2027 by removing already vacant
flexibility in managing their own health care and typically
positions, attrition, retraining or converting billets, or “force
does not require a referral for specialty care. Eligible
management actions.”
beneficiaries must enroll annually and may be subject to an
Sustaining Wartime Medical Readiness Skills
enrollment fee, annual deductible, and copayments
Sustaining readiness of the medical force remains an
depending on their status. Lower out-of-pocket costs are
ongoing challenge for DOD. The FY2017 NDAA created
associated with care delivered by a TRICARE network
provider.
new authorities for the Secretary of Defense to expand
partnerships with certain civilian health care systems and
TRICARE for Life
Veterans Affairs medical facilities and to expand access to
In general, certain retired TRICARE beneficiaries must
care at MTFs to non-beneficiaries for the purposes of
enroll in Medicare and pay Medicare Part B premiums to
preserving core clinical competencies, combat casualty care
retain TRICARE coverage. The coverage provided is
capabilities, and enhancing wartime medical readiness
known as TRICARE for Life. There is no enrollment fee or
skills.
premium; beneficiaries pay no out-of-pocket costs for
TRICARE’s Next Generation Contracts
services covered by both Medicare and TRICARE for Life.
In July 2016, DHA awarded its current generation of
Budget
TRICARE contracts (i.e., T-2017). Shortly after, multiple
Congress historically funds the MHS through several
bid protests were filed with the Government Accountability
accounts in the annual Defense appropriations bill. These
Office and in the U.S. Court of Federal Claims,
include the Operation & Maintenance account for the
subsequently delaying the contract start dates by three
Defense Health Program and the services’ Military
months. In April 2021, DHA released a request for
Personnel accounts for military personnel costs and the
proposals for TRICARE’s next generation contracts, called
Medicare-Eligible Retiree Health Care Fund (MERHCF).
T-5. The T-5 contracts could exceed the total value of the
Congress also funds MHS construction projects through the
T-2017 contracts ($58 billion in 2016). DHA anticipates
Defense-wide Military Construction account within the
awarding the T-5 contracts in November 2022.
annual Military Construction, Veterans Affairs and Related
Agencies appropriations bill. Together, DOD refers to these
Relevant Statutes and Regulations
funds as the Unified Medical Budget (UMB). The FY2022
Title 10, U.S. Code, Chapter 55 – Medical and Dental Care
request for the UMB is $54.0 billion—about 7.6% of
DOD’s total budget request. The request includes $35.6
Title 10, U.S. Code, Chapter 56 – DOD MERHCF
billion for the Defense Health Program, of which $9.7
Title 32, Code of Federal Regulations, Part 199 – Civilian Health
billion would be for MTF care (also called “In-House
and Medical Program of the Uniformed Services
Care”) and $18.1 billion would be for “Private Sector
Care.” Also included in the request are $8.5 billion in the
CRS Products
Military Personnel account, $0.5 billion for Military
CRS Report R45399, Military Medical Care: Frequently Asked
Construction, and $9.3 billion for accrual payments to the
Questions, by Bryce H. P. Mendez
MERHCF.
CRS In Focus IF11856, FY2022 Budget Request for the Military
Current Challenges
Health System, by Bryce H. P. Mendez
There are a number of perceived areas for potential
CRS In Focus IF11273, Military Health System Reform, by Bryce
improvement within the MHS, many of which have
H. P. Mendez
attracted congressionally directed reform efforts and
ongoing oversight activities.
CRS Insight IN11719, TRICARE’s Next Generation Contracts: T-5,
by Bryce H. P. Mendez
MHS Modernization
The FY2017 NDAA (and subsequent legislation) directed
Other Resources
several modernization efforts, including: (1) reassignment
DHA, Evaluation of the TRICARE Program: Fiscal Year 2021 Report
of responsibilities for administering MTFs from the Service
to Congress, 2021.
Surgeons General to the DHA Director; (2) evaluation and
realignment of MHS staffing to the DHA; and (3)

evaluation and restructuring the mission and scope of each
MTF. Congress directed these reforms to streamline the
Bryce H. P. Mendez, Analyst in Defense Health Care
MHS; enhance medical force readiness; and improve
Policy
access, quality, and experience of care for beneficiaries.
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Defense Primer: Military Health System

IF10530


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