Modernizing Military Compensation: Value Based Practices for Military Health Care

Military health care costs have grown significantly over the past decade and are now threatening to consume a larger portion of the military budget. If the military is to maintain the current budgetary mix where most of the spending is dedicated to warfighting capability and preparation, the Department of Defense (DoD) must implement strategies that better control such costs.

This paper presents three strategies shown to curb or reduce health care costs in the private sector and recommends policy makers closely evaluate and consider their implementation within DoD. These strategies address areas where production-loss or unnecessary expense is evident and offers measures that alleviate inefficiencies within the system. As an example, the first strategy, minimizing or eliminating clinical variation in accordance with evidence-based care, eliminates procedures health care professionals do not deem to be medically sound. This strategy would reduce the number of unnecessary procedures patients endure and the number of procedures for which DoD must financially compensate. Furthermore, the other two recommended strategies protect DoD from fraudulent claims by health care providers and takes further advantage of a program already shown to reduce costs of for both the health care beneficiary and DoD.

Moreover, to reduce DoD’s overhead and burden of oversight for implementing these measures, insurance intermediaries who are already paid to process DoD claims and are responsible for managing costs and detecting fraud-and-abuse should also be responsible for ensuring the measures discussed in this paper are implemented. Adding requirements into contracts that ensure a provider is minimizing clinical variation, for example, is a practice utilized in private sector health care.