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Analysis of the impact of TRICARE on ambulatory health services utilization

Stephen Douglas Tela, University of Massachusetts Amherst


The Military Health Services System (MHSS) is one of the largest health care systems in the United States comprising over 115 hospitals, 471 clinics and an annual operating budget in excess of 15 billion dollars. In 1993, Congress directed the Secretary of Defense to implement a model of health care reform emphasizing the principles of managed care and regional contracting as cost containment tools, while improving the uniformity of aocess and benefit structure. The TRICARE program was proposed by the Department of Defense (DOD) and approved by Congress in 1994. TRICARE presents a triple option of a health maintenance organization, preferred provider organization, or a fee for service indemnity plan. The health maintenance organization option presents the greatest potential for cost savings to DOD through utilization management and large-scale, regional contracting to augment variability in the MRSS access and benefit structure. A twenty-four month population-based time series design presented significant changes in the utilization of ambulatory health services when subjects enrolled in a program grounded in managed competition within a budget. Improved access to an integrated health care system, including shifts to more cost-effective portals was found among the broader population as well as high-risk chronic subjects. The findings validate the theoretical constructs of managed competition under global budgets, previously untested in the literature. The data also refute concerns for high-risk populations to be undeserved and undercared for in managed care models of delivery. The DOD program with its variant of the Health Alliance or Health Insurance Purchasing Cooperative demonstrates that access to a national uniform benefit package, movement toward universal coverage, community rating, and cost-conscious decision making among consumers is a feasible mechanism for achieving the objectives of health care reform. The initial findings from DOD health care reform offer the first empirical and applied outcome evidence from one of the most important theoretical developments in health care policy and economics in the twentieth century.

Subject Area

Health care|Public health

Recommended Citation

Tela, Stephen Douglas, "Analysis of the impact of TRICARE on ambulatory health services utilization" (2000). Doctoral Dissertations Available from Proquest. AAI9978563.