FY2023 Budget Request for the Military Health System

FY2023 Budget Request for the Military Health System

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April 29, 2022
FY2023 Budget Request for the Military Health System
On March 28, 2022, President Biden submitted his Fiscal
FY2023 request and previously enacted amounts for the
Year (FY) 2023 budget request to Congress. Discretionary
MHS.
funding in the Department of Defense (DOD) budget
request totals $773.0 billion, including $55.8 billion (7.2%)
Defense Health Program (DHP)
to fund the Military Health System (MHS), which delivers
The DHP, a sub-account under the O&M account, funds the
certain health entitlements under Chapter 55 of Title 10,
following MHS functions: health care delivery in MTFs;
United States Code, to military personnel, retirees, and their
TRICARE; certain medical readiness activities and
families. The MHS provides health care to 9.6 million
expeditionary medical capabilities; education and training
beneficiaries in DOD hospitals and clinics—known as
programs; research, development, test, and evaluation
military treatment facilities (MTFs)—and through civilian
(RDT&E); management and headquarters activities;
health care providers participating in TRICARE, a DOD-
facilities sustainment; procurement; and civilian and
administered health insurance-like program.
contract personnel. The FY2023 request for the DHP
account is $36.9 billion, which is 1.3% ($0.5 billion) below
Congress traditionally appropriates discretionary funding
the appropriated amount for FY2022. Table 2 highlights
for the MHS in several accounts within the annual defense
selected programs that DOD intends to create, maintain,
appropriations bill. These accounts include Operation and
expand, reduce, or transfer to the military services.
Maintenance (O&M), Military Personnel (MILPERS), and
Military Construction (MILCON). DOD refers to these
Military Personnel (MILPERS)
portions of the budget as the unified medical budget
Medical MILPERS funds military personnel operating the
(UMB). The request does not include a proposal to modify
MHS. This funding includes various pay and allowances,
statutory TRICARE cost-sharing requirements for
such as basic, incentive, and special pays; subsistence for
beneficiaries.
enlisted personnel; permanent change of station travel; and
FY2023 MHS Budget Request
retirement contributions.
The FY2023 MHS budget request is 0.2% ($0.1 billion)
more than the FY2022 appropriation. Table 1 shows the
Table 1. Military Health System Funding, FY2018-FY2023 Request
($ in bil ions)
FY2018
FY2019
FY2020
FY2021
FY2022
FY2023

Enacted
Enacted
Enacted
Enacted
Enacted
Request
O&M (DHP)
$33.5
$34.4
$37.1
$34.1
$37.4
$36.9
DHP Operation & Maintenance
$30.8
$31.3
$33.0
$31.1
$34.0
$35.3
Research, Development, Testing, and Evaluation
$2.0
$2.2
$3.7
$2.4
$2.6
$0.9
Procurement
$0.7
$0.9
$0.5
$0.5
$0.8
$0.6
Software & Digital Technology Pilot Program
-
-
-
-
-
$0.1
MILPERS
$8.6
$8.4
$8.9
$8.3
$8.5
$8.7
MILCON
$0.9
$0.4
$0.3
$0.5
$0.5
$0.4
MERHCF Contributions
$8.1
$7.5
$7.8
$8.4
$9.3
$9.7
Grand Total
$51.1
$50.7
$51.4
$51.3
$55.7
$55.8
Sources: Department of Defense (DOD), “Defense Budget Overview,” April 2022, p. 4-27; DOD “Defense Health Program Fiscal Year (FY) 2023
Budget Estimates,” April 2022, p. 1; DOD “Defense Budget Overview,” May 2021, p. 5-5; DOD, “Defense Health Program Fiscal Year (FY) 2022 Budget
Estimates,” May 2021, p. 1; and CRS In Focus IF11206, FY2020 Budget Request for the Military Health System, by Bryce H. P. Mendez.
Notes: Numbers may not add up due to rounding. For FY2018 through FY2021, DHP sub-totals include MHS funding for overseas contingency
operations (OCO) and direct war costs. The FY2023 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 a DOD budget account, 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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FY2023 Budget Request for the Military Health System
Table 2. Selected Highlights from the FY2023 Defense Health Program Request
Selected Increases
Selected Account Transfers

$85.8 mil ion increase in retail pharmacy utilization

$42.1 mil ion transfer from the Army to DHP for medical

$12.3 mil ion increase for DOD cancer research projects in
products and support system development
support of the President’s Cancer Moonshot initiative

$30.2 mil ion transfer from the Army to DHP for basic

$2.0 mil ion (1.1%) increase for the Uniformed Services
research of infectious diseases, operational medicine, and
University of the Health Sciences (baseline: FY2022)
combat care

$0.5 mil ion increase to implement recommendations of
Selected Activities of Interest
the Independent Review Commission on Sexual Assault in

$234.2 mil ion for medical equipment replacement or
the Military
modernization
Selected Decreases

$38.1 mil ion to fund health care and research activities for

$391.9 mil ion decrease for COVID-19-related care and
anomalous health incident victims
program effects

$28.6 mil ion for facility restoration and modernization

$192.7 mil ion decrease in procurement for the new

$19.0 mil ion for military infectious disease research
electronic health record (i.e., MHS Genesis), as installations

$17.5 mil ion for Joint Battlefield Healthcare research
of the technology are completed
activities (i.e., combat casualty care)

$8 mil ion decrease in anticipation of proposed authority to  $14.1 mil ion for brain injury and disease prevention,
col ect civil monetary penalties associated with fraud,
treatment, and research
waste, and abuse by TRICARE providers
DOD requests $8.7 billion for medical MILPERS for
Considerations for Congress
FY2023, but does not break out specific costs assigned to
As part of the defense appropriations process, Congress
the MHS at the budget activity group, program element, or
may consider the funding and policy priorities in DOD’s
line item level. This request is higher than the FY2022
FY2023 MHS budget request.
appropriation, but reflects a 2% decrease in military
medical end-strength (-1,443 positions). In previous years,
Controlling Health Care Costs
DOD planned to reduce military medical end-strength;
 DOD noted that over half of the DHP O&M account is
however, Congress has acted to limit these reductions.
spent on private sector care and that they will “continue
Section 731 of the National Defense Authorization Act for
to monitor” its growth in FY2023. What is DOD’s long-
Fiscal Year 2022 (P.L. 117-81) extended certain limitations
term strategy to control these health care costs while
until December 2022.
sustaining military medical readiness requirements and
direct war costs?
Military Construction (MILCON)
Medical MILCON funds MHS construction projects. In
Medical End-Strength
general, the Defense Health Agency (DHA) coordinates
 In FY2023, DOD projects a 2% decrease in military
with the military services to identify, prioritize, and fund
medical end-strength and a 1% increase in civilian
certain medical MILCON projects. For FY2023, DOD
medical end-strength. DHA is “formulating plans” to
requests $433.9 million for ongoing, future, and minor
ensure beneficiaries have “uninterrupted access to high-
construction projects. Of these, there are three line-item
quality care through a combination of new civilian and
requests to fund existing or new MILCON projects:
contract personnel, outside partnerships, and the

TRICARE network.” How will DHA recruit and retain
Medical center replacement, Rhine Ordnance Barracks,
an adequate civilian medical workforce to meet these
Germany ($299.8 million);

goals and what are the anticipated challenges?
Hospital expansion/modernization, Naval Support
Activity Bethesda, MD ($75.5 million); and
Resources
 Dental clinic replacement, Joint Base San Antonio, TX
Department of Defense, “Defense Health Program Fiscal Year
($58.6 million).
(FY) 2023 Budget Estimates,” April 2022
CRS In Focus IF11856, FY2022 Budget Request for the Military
Medicare Health Care Accrual Contributions
Health System, by Bryce H. P. Mendez
(MERHCF)
CRS In Focus IF10530, Defense Primer: Military Health System,
Medicare health care accrual contributions fund the
by Bryce H. P. Mendez
MERHCF. In turn, the MERHCF funds health care
CRS In Focus IF11273, Military Health System Reform, by Bryce
expenses for Medicare-eligible military retirees and their
H. P. Mendez
families. Each uniformed service annually contributes to the
MERHCF based on its “expected average force strength

during that fiscal year” and investment amounts determined

by the Secretary of Defense. For FY2023, DOD requests
$9.7 billion for the MERHCF.
Bryce H. P. Mendez, Analyst in Defense Health Care
Policy
IF12087
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FY2023 Budget Request for the Military Health System

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