“Prioritization of payments to health insurance companies degraded medical readiness platforms and military medical staff skills,” DoD wrote.
April 22, 2026 5:35 pm
3 min read
The Defense Department is restructuring how it funds and delivers military health care in fiscal 2027, splitting its longstanding single funding account into two separate programs.
In its fiscal 2027 budget request, the Pentagon proposes ending the Defense Health Program — the account that has funded military medical care for decades. Two distinct accounts would take its place — Combat Operational and Medical readiness, or COMP, and a Private Sector Care Program, or PSCP.
COMP would “protect and prioritize the critical resources needed to sustain warfighter health and medical readiness,” while PSCP would cover care provided to beneficiaries through TRICARE contracts.
Under the new structure, changes on one side would no longer automatically affect the other, allowing military and private-sector care to be funded and managed independently of each other.
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“By splitting out the cost of private sector care into its own account, the department is enhancing transparency and accountability, making it easier to track how resources are balanced between military medical platforms and the care from our civilian partners,” Lt. Gen. Steven Whitney, director of force structure, resources and assessment for the Joint Staff, said in a Tuesday press briefing at the Pentagon.
The Defense Department said in its budget overview document that prioritizing payments to health insurance companies has “degraded medical readiness platforms and military medical staff skills.”
“This structural approach ensures that funding for essential battlefield medicine and medical force generation is managed alongside other warfighting capabilities, enhances transparency, and strengthens alignment between resources and mission,” DoD’s budget overview document reads.
The department is seeking $42.5 billion in discretionary military health spending in fiscal 2027 — including $20.3 billion for COMP and $22.2 billion for PSCP. By comparison, the Defense Health Program request for fiscal 2026 totaled about $40.5 billion.
COMP would fund everything within the military direct care system, including military hospitals, operational medicine, research and combat casualty training. PSCP, by contrast, would fund all health care provided by the private sector through TRICARE contracts.
The largest portion of funding within Combat Operational and Medical readiness — $10.86 billion — would go toward in-house care delivered at military treatment facilities.
Another $2.6 billion is allocated for information management, $2.38 billion would fund consolidated health support services, and $2.46 billion is designated for base operations and communications.
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The department is also seeking a little over $1 billion for research, development, tests and evaluation — a significant drop from $2.47 billion enacted in fiscal 2026. Procurement funding would increase slightly to about $366.7 million — the budget includes $231.4 million for replacement and modernization of existing systems and infrastructure, $31.2 million for the Joint Operational Medicine Information System, and $78.6 million for Military Health System IT infrastructure. The budget does not include funding for the Healthcare Management System Modernization line, which received $26.6 million in fiscal 2025.
The $42.5 billion in discretionary funding, however, does not account for all military health spending in fiscal 2027 — the department is also seeking an additional $3.1 billion in COMP mandatory funding for facilities sustainment, restoration and modernization of medical infrastructure.
The budget proposal aligns with the Defense Health Agency’s broader push to strengthen its combat support role as well as bring more patients back into its military treatment facilities. The agency recently issued a “mission-focused directive” — the plan’s first priority is “preparing for war daily.” A DHA official told Federal News Network that the agency’s strategic focus moving forward is “driven by the need to provide unified, effective and agile health services so we are prepared for war.”
Over the past two decades, the department has been outsourcing medical care for service members and their families to the private sector in an effort to cut costs, which in turn hollowed out military hospitals. DoD is now working to reverse its course in an effort to “stabilize” the military’s health care system.
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