CRS Insights
Defense Health Program Funding Shortfall for Fiscal Year 2015
Pat Towell, Coordinator, Specialist in U.S. Defense Policy and Budget (ptowell@crs.loc.gov, 7-2122)
Don J. Jansen, Specialist in Defense Health Care Policy (djansen@crs.loc.gov, 7-4769)
July 30, 2015 (IN10332)
As reported in an online article (behind subscription wall) dated July 27, 2015, by Austin Wright in Politico
and a
Stars and Stripes online article dated July 28, 2015, a letter from the Assistant Secretary of Defense for Health
Affairs and the service Surgeons General to the armed services and appropriations committee chairs dated July 16,
2015, states that the Defense Health Program (DHP) budget account faces a projected "shortfall of over $2 billion
in fiscal year (FY) 2015." The letter attributes the shortfall to three factors: (1) unexpected growth in retail
prescription drug spending, (2) more beneficiaries than expected, and (3) a general increase in the inflation rate of
medical costs. The letter asks for committee approval of various reprogramming requests as well as abstention
from reductions to the FY2016 DHP appropriation request. The article reports that the shortfall is being cited as an
argument in support of a provision in the Senate-passed defense authorization bill to increase TRICARE pharmacy
copayment. The copayment issue is one of several that have reportedly been holding up conferees' progress in
negotiating a final version of the FY2016 national defense authorization act (H.R. 1735).
What Is the Defense Health Program?
"Defense Health Program" is the title for the appropriation and budget account that funds, among other things, both
the in-house care provided through Department of Defense (DOD) facilities and personnel and the private sector
care (or "purchased care") portions of the TRICARE health insurance program that will be used by an estimated
9.3 million military service members, retirees, and family members worldwide in FY2015. Both in-house care and
private sector care are budget activity groups. Each includes the cost of prescription drugs provided to
beneficiaries through military pharmacies and treatment facilities in the case of in-house care or by mail order,
retail drug stores, and non-DOD medical facilities in the case of private sector care.
How Much Was Requested and Appropriated for DHP in FY2015?
The base (not including overseas contingency operation funding) DHP FY2015 appropriation totaled
$32,069,772,000, of which $14,503,759,000 was for private sector care. The base DHP request was for a total of
$31,994,918,000, of which $15,412,599,000 was for private sector care. The explanatory statement stated that the
reduction of $908,840,000 to the in-house care request was accounted for in part by what was designated as
$855,000,000 in "historical under execution" and $200,000,000 in "excess growth in pharmaceutical drugs." The
2015 budget request assumed inflation of 3.7 percent for FY2015 for DHP purchases (excluding fuel and pay).
Table 1. Defense Health Program Appropriations, FY2015
Amounts are discretionary budget authority in thousands of dollars
FY2015 Budget
Request
FY2015 Appropriation
(P.L. 113-235
/H.R. 83)
Operation and Maintenance
In-House Care 8,799,086 8,680,970
Private Sector Care 15,412,599 14,503,759
historical underexecution
(-855,000)
pharmaceutical drugs—excess growth
(-200,000)
other congressional changes (net)
