Included within the $1.5 trillion allocated for national defense in the administration’s FY 2027 budget proposal is a reorganization of military health system (MHS) funding that could greatly impact beneficiaries but does not keep pace with rising health care costs.

The budget requests two appropriations in place of the former Defense Health Program (DHP) appropriation to “restore fiscal discipline and protect combat and operational medicine” per the DoW Budget Overview Book. 

MOAA has met with senior Pentagon leaders and requested meetings with subject-matter experts on Capitol Hill to discuss changes to MHS funding and uncover potential downstream impacts for both TRICARE and the direct care system.

What’s Changing

The bulk of MHS funding has traditionally been through DHP, covering both health care delivery in military treatment facilities (MTFs) and costs related to TRICARE (not including TRICARE For Life). Because TRICARE is a must-pay bill, this created uncertainty and other challenges around funding for the direct care system of military hospitals and clinics.

[MOAA PUBLICATON: Transitioning Into Medicare and TRICARE For Life]

The budget released this month proposes a separate appropriation for the direct care system and combat casualty support. The Combat and Operational Medicine Program (COMP) appropriation would finance programs unique to military medicine's combat support function, as well as the direct care system of military hospitals and clinics.

The new setup corrects a system that was “reducing the warfighter access to critical medical care required to deliver a healthy force,” the Budget Overview Book states. COMP will offer transparence and “ensure that every dollar meant for force health and lifesaving battlefield medicine is prioritized and protected.”

The budget also proposes a Private Sector Care Program (PSCP) appropriation that would provide funding for health care services delivered to eligible TRICARE beneficiaries (not including TRICARE For Life) by civilian health care professionals, institutions, and pharmacies.

[RELATED: How the Military CARE Act Will Make a Difference for Many TRICARE Beneficiaries]

Is It Enough?

The requested COMP appropriation of $20.3 billion includes $18.9 billion for operation and maintenance to support the direct care system; $366.7 million for medical equipment procurement; and $1 billion for research, development, testing, and evaluation. The requested PSCP appropriation of $22.2 billion is for operation and maintenance expenses related to TRICARE.

The combined $42.5 billion COMP/PCSP request is 4.9% higher than the FY 2026 DHP funding level of $40.5 billion (inclusive of procurement and research/development costs). This increase falls well short of national growth in health care spending in recent years (7.2% in 2024 and 7.4% in 2023), suggesting military health system funding constraints will continue to pose challenges for readiness, TRICARE coverage policy, and beneficiary access to care.

“The Budget returns the Department of War to its true medical mission of supporting force health and combat medical capability, which are critical components of national security,” according to the budget book, which highlights four pillars that project and sustain a lethal joint force:

• Enable a medically ready force that is prepared to deploy and win in combat (“fight tonight” ready).
• Generate a medical force with the unique clinical skills and operational training to deliver lifesaving capability on the future battlefield.
• Deliver military-unique capabilities, like the globally integrated Joint Trauma System and the forward-deployed blood programs that are essential for combat casualty care.
• Provide a comprehensive medical benefit that ensures families and retirees receive safe, effective care through TRICARE and MTFs, supporting the total health of the force.

[RELATED: Advocates Outline Concerns With TRICARE Contract Plans]

MOAA’s Role

MOAA appreciates the need to protect budgets for operational medicine and the medical readiness mission, but we have concerns about overall MHS funding levels that continue to lag health care inflation.

Addressing growing TRICARE coverage gaps and access to care problems will require an investment in the MHS that is not reflected in this budget request despite historic funding levels for the Pentagon. MOAA will continue to take these concerns to DoW leadership and elected officials as part of our mission to preserve and protect the military health care benefit.