The government might be able to help activated reservists continue private health coverage for their dependents for less than $2 billion per year over the next 5 years.[@@]

Figures supporting that estimate appear in a report on defense health care developed by a team led by Derek Stewart, a director at the U.S. General Accountability Office.

Stewart and his colleagues wrote the report the request of the House and Senate armed services committees.

Members of Congress are worried that members of the Guard and Reserve are serving on active duty for increasingly long periods and that many are having difficulty maintaining the private coverage their families had before they were activated.

The military offers dependents of members of the Guard and Reserve who are activated more than 30 days access to Tricare, a large managed care program.

But only 30% of activated “reserve component” members with dependent members now move their depends to Tricare when activated, in part because of concerns that spouses and children will have trouble keeping their current doctors or finding new doctors, Stewart and his colleagues write in the GAO report.

Many private employers now pay all or most of the cost of continuing health coverage for activated reservists, but the law requires only that the employers offer activated reservists a chance to continue the coverage for 102% of the full cost of the coverage.

Stewart and his colleagues assume that the military could hold the cost of a private health insurance stipend to the amount that employees normally pay for their share of the cost of employer-sponsored coverage. The GAO analysts also assume that the number of activated reservists will start at 165,000 in 2006 and decline to 55,000 by 2010.

Under those assumptions, a military stipend program could cost just $147 million per year over 5 years, the GAO analysts estimate.

But the U.S. Defense Department points out in its response that, in the real world, activated reservists might have to pay for the full cost of the continued private health coverage, or about 3 to 4 times the amount that the GAO analysts have estimated.

The Defense Department officials also warn that the idea that the number of activated reservists may fall to 55,000 in the next 5 years may be overoptimistic.

“The number of deployed reserve members is projected to decline by two-thirds,” the Defense Department officials write in their response to the GAO report. “Continued deployments at [fiscal year] 2006 levels could easily triple these estimates.”

Moreover, continuing involvement with conflicts in Iraq and elsewhere could keep the number of reservists activated at current levels for the next 5 years, Defense Department officials warn.

If the activated reservists had to pay the full cost of continuing private coverage themselves and the number of reservists stayed at 2006 levels, that could increase the cost of the stipend program to about $1.8 billion per year, according to National Underwriter calculations using GAO data.

The GAO report is on the Web at http://www.gao.gov/new.items/d06128r.pdf