The collection of the Department of Defense's (DoD's) health plans is known as TRICARE. Beneficiaries covered to one degree or another by the program include:

• Active-duty service members,
  
  
• Dependents of active-duty service members,⁽¹⁾
  
  
• Military retirees,⁽²⁾
  
  
• Dependents of military retirees,
  
  
• Full-time reservists,⁽³⁾
  
  
• Dependents of full-time reservists, and
  
  
• Survivors of military retirees or those who died on active duty.⁽⁴⁾

The TRICARE program combines military medical treatment facilities with regional networks of civilian providers that work together to provide care to eligible beneficiaries. The military medical treatment facilities include 75 hospitals and over 460 clinics in the continental United States and overseas. Those facilities provide care for eligible beneficiaries at no charge and also serve as a training ground for military medical personnel. Because the military health system's capacity is not large enough to serve the health care needs of all eligible beneficiaries, DoD has ensured that active-duty service members receive top priority for care at the facilities, while other beneficiaries can receive care there on a "space-available" basis. Many beneficiaries also seek care from civilian providers paid for through the TRICARE program.

Individuals have access to different levels and types of benefits depending on which type of beneficiary they are. Active-duty service members must go to military medical treatment facilities for their care. Family members of active-duty personnel as well as military retirees and dependents who are not eligible for Medicare can choose from one of three main options:

• TRICARE Prime is similar to a civilian health maintenance organization (HMO). Beneficiaries are assigned to a primary care manager, who coordinates all aspects of their medical care.
  
  
• TRICARE Standard is a fee-for-service plan that allows beneficiaries to seek care from any civilian provider and be reimbursed for a portion of the costs after paying copayments and meeting deductibles. For some services, beneficiaries are required to seek care first from a military medical treatment facility when possible.
  
  
• TRICARE Extra is similar to a civilian preferred provider organization. Beneficiaries pay lower copayments than they would under TRICARE Standard if they seek care from a provider in the TRICARE network.

Retirees and dependents over 65 years of age or otherwise eligible for Medicare are not eligible for those TRICARE plans. Instead, they are eligible for care at military hospitals and clinics as space allows and for TRICARE For Life, a wrap around benefit for those with Medicare.⁽⁵⁾ Under TRICARE For Life, Medicare usually pays first, while TRICARE covers most or all of the rest of the bill. Prescription medications for this population are provided free at military medical treatment facilities or for a modest copayment through the TRICARE Senior Pharmacy benefit.⁽⁶⁾

Several smaller plans provide additional options for individuals living in certain areas. For example, TRICARE Prime Remote is a plan for active-duty service members and their families who live and work more than 50 miles or approximately one hour's drive from a military medical treatment facility.

DoD's recent evaluation of the TRICARE program found that over 76 percent of the family members of active-duty personnel were enrolled in TRICARE Prime in 2002.⁽⁷⁾

The remainder were using some mix of TRICARE Standard, TRICARE Extra, and civilian health insurance plans. By comparison, fewer than 33 percent of military retirees and their family members under age 65 were enrolled in TRICARE Prime in that year. Most other retirees and their dependents under 65 had some type of civilian health insurance, although some were relying on TRICARE Standard or Extra.

The evaluation also found that (after adjusting for the different demographic characteristics) TRICARE Prime enrollees had utilization rates that were 40 percent to 50 percent higher than those for civilian HMO members. The difference in utilization can be traced in part to the very different out-of-pocket costs faced by TRICARE beneficiaries as compared to their civilian counterparts (see Figure A-1). TRICARE beneficiaries, whether they use TRICARE Prime, Standard, or Extra, faced dramatically lower total costs for their coverage. Much of the difference reflects insurance premiums. Only military retirees who enroll in TRICARE Prime face any sort of enrollment fee, although many who use Standard or Extra also purchase a supplemental insurance policy to help cover the copayments and deductibles. The TRICARE Prime enrollment fee is small compared with the employees' share of civilian insurance premiums faced in the private sector. Besides the insurance premiums, other out-of-pocket costs such as copayments and deductibles are dramatically lower for military beneficiaries than they are for their civilian counterparts. Such costs can help temper demand for medical care and thus hold down total costs.
 

Figure A-1.

Out-of-Pocket Costs for Military Families Using the TRICARE Program and for Their Civilian Counterparts, 2002

(2002 dollars)

Source: Department of Defense, Evaluation of the TRICARE Program, Fiscal Year 2003 Report to Congress (April 2003).

Note: For military families, the designations refer to the status of the service member and the TRICARE program in which they are enrolled; for example, Active Duty/Prime refers to families of active-duty service members that are enrolled in TRICARE Prime.