TRICARE Contract Values Rise Sharply as DOD Expands Civilian Health Coverage

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The Department of Defense has significantly increased the value of its TRICARE health care contracts with private sector providers, now totaling around $168 billion as of September 2024. This rise, documented in a new Government Accountability Office (GAO) report, reflects changes in coverage areas, contract durations, and the growing cost of healthcare driven by inflation and the COVID-19 pandemic. The report provides an overview of how these contracts—essential to serving over 9 million beneficiaries including active-duty personnel, retirees, and their families—have evolved in recent years.

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Out of 13 active TRICARE contracts covering health, dental, and pharmacy benefits, 11 have increased in value compared to their previous iterations. The reasons for these increases include expanded service areas and longer periods of performance. Officials from the Defense Health Agency (DHA), which oversees the TRICARE program, cited significant health care cost inflation over the last decade as another contributing factor.

In addition to contract values, the GAO analyzed the competitiveness of the bidding process. Seven of the 13 contracts were awarded through a competitive process. Of those, four contracts received fewer bids than in the previous contract cycle, while three maintained the same number of bids. Notably, six of the seven competitively awarded contracts were awarded to the same companies that held the previous contracts, suggesting a trend toward continuity in service providers.

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The GAO report was mandated by the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, which required a detailed assessment of the TRICARE program’s contract structure. The review focused on factors such as contract values, services offered, and the structure of civilian care delivery. The GAO conducted this assessment by examining DHA documentation, federal procurement data, and interviews with DHA officials managing the contracts.

Article by multiple RFHC contributors, based upon information from a GAO press release: “Defense Health Care: Key Characteristics of TRICARE Contracts,” GAO-25-107370, published and released on April 24, 2025.

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