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The Department of Defense (DoD) provides health benefits to qualified retired service personnel. Active duty personnel who retire with at least 20 years of service are immediately eligible to receive retiree health benefits for themselves, their spouses, and dependent children through TRICARE, the DoD-sponsored health care plan. A substantial majority of retirees have second careers after retirement and have access to civilian health insurance. However, many choose to rely primarily on TRICARE, in large part because of the significant price differential between TRICARE and civilian insurance. In order to understand the implications of this reliance for DoD health care expenditures, DoD asked RAND to explore the available civilian health insurance options of working-age military retirees and the impact of those options on TRICARE utilization. The authors surveyed a random sample of 1,600 military retirees (officers and enlisted personnel) under age 65 who were entitled to TRICARE benefits. This pilot survey was designed to ask about the current employment of the retiree and his or her spouse, participation in a civilian health insurance plan, use of TRICARE for medical care, and the likely effect of premium increases or decreases on participation in civilian heath plans. Key findings showed that although a large majority of retirees have access to civilian health insurance, many choose not to enroll, most frequently citing the cost of premiums. Among those enrolled in civilian plans, many still rely on TRICARE for medical care and prescription drugs, and many would drop their civilian plans if costs rose substantially. As long as DoD premiums are considerably lower than civilian premiums, a shift away from TRICARE use is unlikely. A larger survey, collecting data from retirees and their civilian employers, would be needed for DoD to analyze the effects of benefit design changes to TRICARE on retiree reliance.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Survey Methodology, Fielding, and Response Rates

  • Chapter Three

    Profile of Military Retirees

  • Chapter Four

    Eligibility of Military Retirees for Civilian Health Insurance

  • Chapter Five

    Participation of Military Retirees in Civilian Health Care Plans

  • Chapter Six

    Use of TRICARE for Medical Care and Prescription Costs

  • Chapter Seven

    Conclusions

  • Appendix A

    Survey of Military Retirees, 2005

  • Appendix B

    95% Confidence Intervals for Figures in Chapters Three Through Six

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted jointly by the Center for Military Health Policy Research, a RAND Health program, and the Forces and Resources Policy Center, a RAND National Defense Research Institute (NDRI) program. NDRI is a federally funded research and development center supported by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies and the defense Intelligence Community.

This report is part of the RAND Corporation monograph series. RAND monographs present major research findings that address the challenges facing the public and private sectors. All RAND monographs undergo rigorous peer review to ensure high standards for research quality and objectivity.

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