Defense Health Agency Says It Will Come Up $1.8 Billion Short on Cash Due to Pandemic

Air Force technical sergeant administers COVID-19 vaccine
U.S. Air Force Tech. Sgt. Kasey Davidson, a neurology technician with the 88th Health Care Operations Squadron, 88th Air Base Wing, stationed at Wright-Patterson Air Force Base, Ohio, administers a patient’s first dose of the COVID-19 vaccine at the Ford Field Community Vaccination Center (CVC) in Detroit, April 2, 2021. (Airman First Class Nicholas Rupiper/U.S. Air Force)

The Defense Department is anticipating a $1.8 billion budget shortfall as the result of unexpected COVID-19 pandemic expenses, military health officials said Tuesday.

Medical treatment and the military response to the pandemic are expected to push Tricare costs $1 billion higher than anticipated in the fiscal 2021 budget. The remaining $800,000 in unexpected increases will be in the military health system itself, according to Dr. Terry Adirim, acting assistant secretary of defense for health affairs.

And that estimate could rise once the DoD assesses the financial impact of its pandemic response support to the Federal Emergency Management Agency, Adirim told members of the Senate Appropriations defense subcommittee during a hearing on the military medical budget.

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Adirim said the DoD doesn't anticipate asking Congress for additional funds and instead will look inside the department and at "sustainment and modernization funding and postponing facilities maintenance" to cover the costs.

"We are working within the department to try and mitigate these shortfalls, but it's challenging," she said.

Since the beginning of the pandemic, the DoD has seen more than 280,000 cases of COVID-19 among U.S. military personnel, family members, DoD civilians and contractors. The virus has caused 324 deaths across the department, including 24 service members.

For the DoD, the pandemic prompted the unanticipated purchase of millions of pieces of personal protective equipment and ventilators, medical treatment for COVID-19 patients, vaccines and all associated personnel costs of supporting the department's response. That includes the deployment last year of two Navy hospital ships and establishment of at least six expeditionary field hospitals, as well as deployments of medical personnel to civilian medical centers to bolster staff.

As of mid-March 2021, nearly 3,000 military medical and support personnel were deployed to 11 states and the U.S. Virgin Islands to assist with  community vaccinations, according to U.S. Army North.

The Defense Health Agency's total fiscal 2021 budget was nearly $51 billion, including almost $18 billion in personnel, construction and health care accrual costs. The program's nearly $33.6 billion in discretionary funding was $500 million more than the department's budget request, and the health program received an additional $365 million provided to the program from overseas contingency operations.

The department also was awarded $10.5 billion in pandemic relief funding from the Coronavirus Aid, Relief, and Economic Security, or CARES, Act, $4.4 billion of which it planned to use for coronavirus-related medical care, including protective equipment.

The service surgeons general told senators they don't anticipate the budget constraints to affect readiness, saying they "identify our readiness requirements up front."

"Right now, we do not have a shortfall, as we've worked through our readiness requirements ... but we'll have to assess that as the fiscal year continues," said Army Surgeon General Lt. Gen. Scott Dingle.

"Medical readiness of our force is paramount and No. 1," Air Force Surgeon General Lt. Gen. Dorothy Hogg said. "Everything that we do will be directed toward that and so, at this point, no shortfall. I do have a concern as we move forward, if there is a shortfall, how that's going to get covered."

Navy Surgeon General Rear Adm. Bruce Gillingham agreed, saying, "I think this is something that we will watch carefully and continue to work internally."

Two lawmakers on the panel noted several areas where they believe the Defense Health Agency could save money. Sen. Richard Shelby, R-Ala., questioned what he called redundancies between DoD medical research and programs at other agencies, such as the National Institutes of Health.

Sen. Tammy Baldwin, D-Wis., asked why the department spent $1 billion on a mandatory anthrax vaccine in the past five years when much of the force faces a larger threat from the current pandemic and future threats.

"I'm concerned that our spending priorities are not aligned with both current and emerging threats," Baldwin said. "We've known that a pandemic based on a novel virus that would attack the respiratory system could cripple our country, yet we did not purchase PPE, we did not re-shore manufacturing of critical medical supplies or vaccines."  

The Biden administration has not yet released its proposed fiscal 2022 federal budget, although it has issued a statement that it will ask for $715 billion in discretionary funds for the DoD and will eliminate separate funding for overseas contingency operations, rolling those requests into the base budget.

-- Patricia Kime can be reached at Follow her on Twitter @patriciakime.

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