Assessing the Value of Military Healthcare

The military healthcare program has become increasingly expensive as its fees have remained nearly flat despite rapidly growing costs. Now the recently released 11th Quadrennial Review of Military Compensation (QRMC) and a new report from the Center for Strategic and Budgetary Assessments (CSBA) are providing some interesting perspectives on how much benefit these programs provide.

The QRMC calculated the “expected value of health cost avoidance,” or the cost that active military personnel (who receive free healthcare) could expect to contribute to their health care if they were employed in the civilian sector. Since experienced and college-educated workers are more likely to have employer-provided health insurance, the military benefit is more valuable for enlisted personnel and becomes less valuable over time.

Meanwhile, CSBA surveyed current and retired service members to determine their perceived value from TRICARE Prime coverage for retirees under 65.  Even though the QRMC formula projects that more experienced individuals have less reason to avoid the civilian heath care market, CSBA respondents feel more value from the currently-structured TRICARE Prime as they gain years of service.

This apparent paradox may be less surprising than it sounds, though.  Members become more insistent on avoiding additional fees as they approach and then gain entitlement, while those with fewer years of service were less interested in protecting a benefit they might never receive. As CSBA’s report notes:

The data from the study show that 89 percent of personnel with 6 to 15 years of service would prefer a modest $350 increase in annual pay even if it means the monthly TRICARE fee they would pay in retirement would increase to $80 single/$160 family—an increase of $1400 in annual fees for the family plan.

These reports ultimately serve as an important reminder that military attitudes on health care are not monolithic; service members may value it in different ways.