The Military's Deadline to Cut Outside Care Is Five Months Out. The Ledger Hasn't Moved.

The Military Health System treats 9.4 million beneficiaries two ways: inside its own hospitals and clinics — Military Treatment Facilities, or MTFs — and outside them, through TRICARE contracts with civilian doctors, billed to the Pentagon as Private Sector Care.▸ In December 2023 the then–Deputy Secretary of Defense ordered the department to reverse the balance, directing it to "reattract at least 7% of available care from the private sector back to MTFs ... by December 31, 2026," according to the Congressional Research Service's account of the memo. That deadline is five months away. The department's own FY2026 budget request shows how far the ledger still has to move.

The Defense Health Program's operating budget runs through seven activity groups.▸ Two do the clinical work — In-House Care pays for treatment inside DoD's own hospitals, and Private Sector Care pays civilian providers under TRICARE's managed-care contracts. The rest is support: pharmacy and lab services, health IT, base-level facility operations, training, and administration.

Of $39.2 billion in requested O&M funding, per the FY2026 Defense Health Program budget estimates, $21.0 billion — 53.7 cents of every dollar — goes to Private Sector Care.▸ In-House Care, the account that pays for MTFs, gets $10.7 billion: 27.4 cents. The budget document says so itself: the Military Health System "purchases more than 65 percent of the total care provided for beneficiaries through tailored contracts," mostly the Managed Care Support Contracts that administer TRICARE.

The 2023 memo's target was to shrink Private Sector Care's share and grow MTFs'.▸ Compare the two accounts across the three years the FY2026 budget document actually reports.

In-House Care grew from $10.00 billion to a requested $10.73 billion: +7.3% over two years.▸ Private Sector Care grew from $19.49 billion to a requested $21.02 billion: +7.8% — essentially the same rate, per the same budget document. The document does note one deceleration: a $503.6 million reduction to Private Sector Care's earlier funding projection, which it credits in part to MTFs "increas[ing] military and civilian personnel staffing." But two years from the memo that set the target, the underlying split — roughly two dollars of outside care for every one spent in-house — is essentially where it started.

A hospital can't reclaim care it doesn't have the staff to deliver.▸ The Government Accountability Office examined military medical staffing at DoD's own facilities from FY2015 through FY2023 — the most recent full year in its data — and found both the positions DoD authorizes and the people actually filling them in decline.

Authorized positions fell nearly 7% — 63,179 to 58,945.▸ Assigned personnel fell about 16% — 60,479 to 50,590 — a steeper drop than the cuts to the positions themselves, which GAO attributes in part to "fewer medical personnel in the Army, Navy, and Air Force." The gap between what's authorized and who's actually there grew from 2,700 unfilled positions in FY2015 to 8,355 in FY2023 — roughly tripling. GAO reports that senior Defense Health Agency leaders "anticipate substantial shortfalls in military medical personnel until at least 2027" — a year after the department's own deadline to shift care back to the facilities that shortfall affects.

Figures cover the Defense Health Program's Operation & Maintenance appropriation only (In-House Care and Private Sector Care budget activity groups) and exclude DHP's RDT&E, procurement, and Military Construction accounts, along with Military Personnel pay accounts reported separately. Staffing figures are GAO's FY2015–FY2023 analysis, the most recent period covered by its July 2025 report.