Cost Growth

With concern about personnel costs rising at the Pentagon, here is an interesting item buried in the Defense Department's fiscal year 2008 performance report, released in March: The past fiscal year marked the first time that DOD health care costs rose faster than they did in the civilian sector.

To be precise, the document establishes the point of comparison as the "average percent Defense Health Program annual cost per equivalent life increase compared to average civilian sector increase." The goal, beginning in FY-07, was to "maintain an average Defense Health Program (DHP) medical cost per equivalent life increase at or below the average health care premium increase in the civilian sector," the document reads.

DOD failed to meet that goal. Since FY-05, when DOD's health care costs were 3.2 percent below the growth rate in the civilian sector, the number has gone up steadily. In FY-06, the number was 1 percent below the civilian sector increase; in FY-07, it was 0.8 percent below; and in FY-08, it was an estimated 1.8 percent above.

The Pentagon's request for military healthcare is $47 billion for FY-10, according to a defense budget request overview released by DOD. "The Department expects to continue to work with the Congress to look for ways to slow the growth of medical costs while continuing to provide high-quality care," the document reads.

Adm. Michael Mullen, the Chairman of the Joint Chiefs of Staff, addressed the issue in a speech last week at the Brookings Institution. “We’ve got to figure out a way to get our arms around healthcare costs,” he said.