Summary: Between fiscal years 1994 and 1998, Congress appropriated $48.9 billion for Defense Health Program (DHP) operations and maintenance expenses, and about $4.8 billion was obligated differently from Department of Defense (DOD) budget allocations. DOD's strategy was to fully fund purchased care activities within available funding levels, leaving less to budget for direct care and other DHP activities, but it is difficult to reliably estimate annual demand and costs for each component. In 1994-96, purchased care obligations were $1.9 billion less than allocated because of faulty physician payment rate and actuarial assumptions; in 1994-98, direct care obligations were $1 billion more than allocated because DOD underestimated direct care requirements. Sizable funding changes like these generally occur without congressional awareness because the movement of DHP funds from one subactivity to another does not require prior congressional notification or approval. DOD officials expect future DHP allocations to track more closely with budget requests and allocations, while acknowledging that some movement of funds is inevitable given the lack of a universally enrolled beneficiary population for direct and purchased care. Repeated failure of DHP to adhere to its own budget requests or reported budget allocations could cause Congress to question their validity. DOD would not be burdened by notifying or reporting to Congress quarterly budget execution reports similar to those required of the TRICARE Management Activity to improve internal budget oversight and budget decisionmaking. Such reporting could help Congress determine whether additional program controls, such as a universal requirement that all beneficiaries enroll in direct care or purchased care, are needed.
