FY2022 Budget Request for the Military Health System

FY2022 Budget Request for the Military Health System

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June 15, 2021
FY2022 Budget Request for the Military Health System
On May 28, 2021, President Biden submitted his Fiscal
FY2022 MHS Budget Request
Year (FY) 2022 budget request to Congress. The
The FY2022 MHS budget request is 5.2% ($2.7 billion)
Department of Defense (DOD) budget request totals $715.0
above the FY2021 appropriation (including supplemental
billion, including $54.0 billion (7.6%) to fund the Military
appropriations from the Coronavirus Aid, Relief, and
Health System (MHS). The MHS delivers certain health
Economic Security (CARES) Act (P.L. 116-136). Table 1
entitlements under Chapter 55 of Title 10, United States
shows the FY2022 request and previously enacted amounts
Code to military personnel, retirees, and their families. The
for the MHS.
MHS provides health care to nearly 9.7 million
Defense Health Program (DHP)
beneficiaries in DOD hospitals and clinics—known as
The DHP, a sub-account under the O&M account, funds the
military treatment facilities (MTFs)—and through civilian
following MHS functions: health care delivery in MTFs;
health care providers participating in TRICARE, a DOD-
TRICARE; certain medical readiness activities and
administered health insurance-like program.
expeditionary medical capabilities; education and training
Congress traditionally appropriates mandatory and
programs; research, development, test, and evaluation
discretionary funding for the MHS in several accounts
(RDT&E); management and headquarters activities;
within the annual defense appropriations bill. These
facilities sustainment; procurement; and civilian and
accounts include Operation and Maintenance (O&M),
contract personnel. The FY2022 request for the DHP
Military Personnel (MILPERS), and Military Construction
account is $35.6 billion, which is 4.4% ($1.5 billion) above
(MILCON). DOD refers to these portions of the budget as
the appropriated amount for FY2021. Table 2 highlights
the unified medical budget (UMB). In previous years, DOD
selected programs that DOD intends to create, maintain,
requested and Congress appropriated MHS funding in
expand, reduce, or transfer to the military services.
DOD’s base and overseas contingency operations (OCO)
Military Personnel (MILPERS)
budgets. For FY2022, DOD requests MHS funding
Medical MILPERS funds military personnel operating the
(including those for direct war costs) in the base budget
MHS. This includes various pay and allowances, such as
only. The request does not include a proposal to modify
basic, incentive, and special pays; subsistence for enlisted
statutory cost-sharing requirements for beneficiaries.
personnel; permanent change of station travel; and
retirement contributions.
Table 1. Military Health System Funding, FY2018-FY2022 Request
($ in bil ions)
FY2018
FY2019
FY2020
FY2021
FY2022

Enacted
Enacted
Enacted
Enacted
Request
O&M (DHP)
$33.5
$34.4
$37.1
$34.1
$35.6
DHP Operation & Maintenance
$30.8
$31.3
$33.0
$31.1
$34.2
Research, Development, Testing, and Evaluation
$2.0
$2.2
$3.7
$2.4
$0.6
Procurement
$0.7
$0.9
$0.5
$0.5
$0.8
MILPERS
$8.6
$8.4
$8.9
$8.3
$8.5
MILCON
$0.9
$0.4
$0.3
$0.5
$0.5
MERHCF Contributions
$8.1
$7.5
$7.8
$8.4
$9.3
Grand Total
$51.1
$50.7
$51.4
$51.3
$54.0
Sources: Department of Defense (DOD), “Defense Budget Overview,” May 2021, p. 5-5; DOD “Defense Health Program Fiscal Year (FY) 2022 Budget
Estimates,” May 2021, p. 1; DOD “Defense Budget Overview,” February 2020, p. 2-4; and DOD, “Defense Health Program Fiscal Year (FY) 2020 Budget
Estimates,” March 2019, p. DHP-13.
Notes: Numbers may not add up due to rounding. DHP sub-totals include MHS funding for overseas contingency operations (OCO) and direct war
costs. The FY2022 request does not include funding that Congress has added to the DHP in the past, such as unrequested medical research funding. The
FY2020 and FY2021 enacted amounts include supplemental funding appropriated from the CARES Act. O&M (DHP) refers to one of the overarching
DOD budget accounts, whereas DHP Operation & Maintenance refers to a subordinate budget activity. The Medicare-Eligible Retiree Health Care Fund
(MERHCF) refers to the accrual contributions that pay for future health care expenses of Medicare-eligible TRICARE beneficiaries.
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FY2022 Budget Request for the Military Health System
Table 2. Selected Highlights from the FY2022 Defense Health Program Request

$1.5 bil ion to fund facilities operations, sustainment,

$15 mil ion to fund development of COVID vaccine
restoration, and modernization
capabilities and wearables

$606.0 mil ion to fund COVID-19 testing and vaccine

$8.7 mil ion to fund software enhancements to the Defense
boosters (private sector care)
Occupational and Environmental Health Readiness System

$272.8 mil ion to fund COVID-19 testing and vaccine

$8 mil ion decrease in anticipation of proposed authority to
boosters (MTF care)
col ect civil monetary penalties associated with fraud,

$251.9 mil ion to fund direct war costs (previously assigned
waste, and abuse by TRICARE providers
as OCO funding)

$5.7 mil ion decrease for MTF care requirements

$198.7 mil ion increase for deployment of MHS Genesis
associated with the reduction of the Army’s overall active
component end strength

$191.4 mil ion increase for private sector care resulting
from National Health Expenditure inflationary growth

$3.5 mil ion decrease for combat casualty care and clinical
and rehabilitation medicine research

$96.7 mil ion for delayed implementation of Defense Wide
Review and other MHS reforms

$2.9 mil ion (1.6%) decrease for the Uniformed Services
University of the Health Sciences (baseline: FY2021)
DOD requests $8.5 billion for medical MILPERS for
Controlling Health Care Costs and Transparency
FY2022, but does not break out the specific costs assigned
 What is DOD’s long-term strategy to control health care
to the MHS at the budget activity group, program element,
costs while sustaining military medical readiness
or line item level. This request is higher than the FY2021
requirements and direct war costs?
appropriation and reflects DOD’s plan to increase military
 How and why does DOD’s health care cost containment
medical end strength (+1,548 positions) and civilian end
strategy differ from commercial health sector strategies?
strength (+1,043 positions). The FY2021 budget request
 For MTFs with the new electronic health record (i.e.,
included a plan to reduce military medical end strength (-
MHS Genesis) that are unable to provide data for MHS
7,422 positions); however, Section 717 of the FY2021
performance metrics requirements, how is DOD
William M. (Mac) Thornberry National Defense
monitoring annual cost growth and workload targets?
Authorization Act (P.L. 116-283) extended certain
MHS Reform and Military Medical End Strength
limitations on how DOD may make such reductions.
 Does DOD require additional time (beyond 2021) to
Military Construction (MILCON)
implement congressionally directed MHS reform efforts
Medical MILCON funds MHS construction projects. In
(e.g., those directed in the FY2017 NDAA)?
general, the Defense Health Agency (DHA) coordinates
 The FY2020 and FY2021 budget requests proposed
with the military services to identify, prioritize, and fund
reductions in military medical end strength; however,
certain medical MILCON projects. For FY2022, DOD
DOD proposes an increase for FY2022. What are the
requests $508.3 million for ongoing, future, and minor
military departments’ force-shaping strategies for
construction projects. The three requested projects with
military medical personnel?
highest cost are:
Access to Care and Beneficiary Satisfaction
 Hospital replacement (increment #4), Fort Leonard
 Compared to FY2020, DOD projects a 4.8% growth in
Wood, MO ($160.0 million);
private sector care utilization in FY2022. Are the
 Hospital expansion/modernization (increment #5),
TRICARE networks able to support an increased health
Naval Support Activity Bethesda, MD ($153.0 million);
care demand?
and
 What lessons learned during the Coronavirus Disease
 Ambulatory care center/dental clinic replacement, Oak
2019 pandemic would DOD implement for long-term
Harbor, WA ($59.0 million).
improvements in access to care and beneficiary
Medicare Health Care Accrual Contributions
satisfaction?
(MERHCF)
Resources
Medicare health care accrual contributions fund the
Department of Defense, “Defense Health Program Fiscal Year
MERHCF. In turn, the MERHCF funds health care
(FY) 2022 Budget Estimates,” May 2021
expenses for Medicare-eligible military retirees and their
families. Each uniformed service annually contributes to the
CRS In Focus IF11442, FY2021 Budget Request for the Military
MERHCF based on its “expected average force strength
Health System, by Bryce H. P. Mendez
during that fiscal year” and investment amounts determined
CRS In Focus IF10530, Defense Primer: Military Health System,
by the Secretary of Defense. For FY2022, DOD requests
by Bryce H. P. Mendez
$9.3 billion. The MILPERS account typically assigns
CRS In Focus IF11273, Military Health System Reform, by Bryce
MERHCF contributions as mandatory spending.
H. P. Mendez
Considerations for Congress

As the annual defense appropriations cycle begins,
Congress is to consider all of DOD’s funding and policy
Bryce H. P. Mendez, Analyst in Defense Health Care
priorities. The following inquiries may assist Congress in
Policy
considering the FY2022 MHS budget request.
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FY2022 Budget Request for the Military Health System

IF11856

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