fact, we now have before the subcommittee several bills addressed to military health care and CHAMPUS. Those measures are before each member of the subcommittee with a summary.

In conducting these hearings we hope to arrive at objective and constructive recommendations that will assist the services in improving the health care delivery system. In addition to the Assistant Secretary for Health Affairs and members of his staff who are with us today, we will call upon the surgeons general of all of the services and the chief dental officers, as well as witnesses outside the immediate offices of the Department of Defense, who will, I am sure, contribute much to the purpose of the hearings.

We expect to continue our inquiry following the Memorial Day district work period and thereafter publish our report at the earliest possible time. Hopefully, the subcommittee can then take up other matters involving complaints and grievances of military personnel, and following that, an indepth inquiry into our Reserve Forces. We have an ambitious plan for the remainder of this session involving other priority items but, of course, must depend upon availability of time as dictated by the calendar of the full committee and the business on the floor of the House.

Prior to hearing from Dr. Smith, we have arranged a briefing on the fundamentals of military health care and the CHAMPUS program in order that the members may have the basics of health care delivery prior to receiving testimony.

At this point, I would like to ask our ranking member, Mr. Treen, for his comments.

Mr. TREEN. Thank you, Mr. Chairman.

I welcome this opportunity to join with you in what we all hope will be a fruitful inquiry into the entire military health care delivery system, including civilian medical care under CHAMPUS.

For some time I have been concerned over what has been perceived by many military members, including those in the retired community, as yet another example of deteriorating benefits and an implied breach of faith on the part of the Office of the Secretary of Defense. A recent example, as mentioned by the chairman, was the back-door attempt to close the military medical school. An earlier example was the plan to emasculate the commissary system. In both instances, initiatives taken by the House Armed Service Committee were instrumental in blocking those efforts.

Thus, Mr. Chairman, whatever the perceptions of congressional attitude in this regard, I must say that since I have been in Congress it has been my observation that this committee has worked longer and harder for the welfare of military personnel and their dependents than any other panel in the House or Senate with jurisdiction over military matters.

Nonetheless, we cannot rest on our oars and must continue our vigilance to assure, insofar as possible, that all facets of military medical care are maintained at the highest possible level consistent with the availability of funds to accomplish that purpose.

Accordingly, Mr. Chairman, we join with you enthusiastically in fulfilling the mission of the subcommittee by scheduling these hearings on health care.

Mr. WHITE. Mr. Treen, you are a veteran on this committee and I know you have put a lot of input into matters benefiting the military personnel in the past. I hope we can come up with very effective and salutary recommendations.

Secretary Smith, we welcome you and your colleagues, Principal Deputy Assistant Secretary McKenzie and Deputy Assistant Secretary Maj. Gen. Benjamin Baker, along with other staff members.

I understand that Mr. McKenzie is going to give us a briefing, but I must say that our review of the comprehensive hearings held in the fall of 1974 reminds us that we had an extensive review of the history of the CHAMPUS program and of military medical care delivery. Thus, I believe we can just briefly touch on those historical points and incorporate the details in these hearings by reference.

But, of course, don't be so brief that we don't understand what you are saying.

STATEMENTS OF HON. ROBERT N. SMITH, ASSISTANT SECRETARY FOR HEALTH AFFAIRS, DEPARTMENT OF DEFENSE; HON. VERNON MCKENZIE, PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR HEALTH AFFAIRS, DEPARTMENT OF DEFENSE, AND MAJ. GEN. BENJAMIN BAKER, USAF, MC, DEPUTY ASSISTANT SECRETARY FOR HEALTH RESOURCES AND PROGRAMS, OFFICE OF THE ASSISTANT SECRETARY FOR HEALTH AFFAIRS, DEPARTMENT OF DEFENSE

Mr. MCKENZIE. In accordance with your request, we have prepared a short briefing on the background and organization of the system. What we commonly and somewhat loosely refer to as the military health care system actually is the aggregation of four subsystems, on the one hand we have the Army subsystem, the Navy subsystem, the Air Force subsystem and then on the other hand, the CHAMPUS subsystem.

Since CHAMPUS is an acronym, I might mention that it stands for the Civilian Health and Medical Program of the Uniformed Services.

In addition to covering the four military services that the Department of Defense normally has jurisdiction over, CHAMPUS also covers the Coast Guard, the Commissioned Corps of the Public Health Service and the National Oceanic and Atmospheric Administration.

The three military surgeons general, of course, preside, respectively, over the Army, Navy, and Air Force subsystems. The CHAMPUS subsystem is administered by an office in Denver that I will describe more fully later which has a civilian director.

Presiding over the entire system is the Assistant Secretary of Defense for Health Affairs. His is a statutory position established by section 136-B of title 10, United States Code. That section states specifically that the Assistant Secretary of Defense for Health Affairs shall have as his principal duty the overall supervision of the health affairs of the Department of Defense.

Care in the three military subsystems is provided in approximately 180 hospitals and the clinics associated with those hospitals, plus an additional 200 or so freestanding, separate clinics. The CHAMPUS

subsystem generally provides care in civilian hospitals, in doctors' offices and in clinics, and under group practice type arrangements.

The annual operating costs for the entire system amount to approximately $3 billion.

The primary mission of the military health care system is to plan, prepare for and provide medical support for military operations. Inherent in that mission, of course, is the requirement to maintain a mobilization base and an emergency response capability.

An important additional mission is to create and maintain high morale in the uniformed services by providing a comprehensive health care program for active duty members, their dependents and survivors and for retired members and their dependents and survivors.

You may recognize some of the language in this additional mission as a stemming from chapter 55 of title 10 which is the basic statutory authority under which the military health care system operates.

In 1972 and 1973 we tested a DOD regional concept and when we completed the test and analyzed the results, we decided that it was a success and that it should be fully implemented which we then did in

1974.

At that time we divided the United States into 13 military medical regions. We have just recently revised that concept so that we will shortly be publishing a new directive which will reduce that to nine regions.

In addition, we have a European region and a Pacific region.

The objectives of the DOD regionalization concept were to, one, encourage cooperation on a triservice basis within the system in a particular area, second, to improve the delivery of health services to authorized beneficiaries, third, to avoid interference in existing command relationships and, finally to achieve optimum use of regional Army, Navy, and Air Force resources.

The third item is a key one, that is, to avoid any restructuring of the existing command and budgetary relationships. What that means is that the chairman of the local regional coordinating committees does not have command jurisdiction over the facilities of the other military services in his region. In fact, you might say that his principal weapon is his powers of persuasion. What he can't accomplish by persuasion he refers up the chain within the organization for further resolution.

Mr. WON PAT. Mr. Chairman?

Mr. WHITE. Mr. Won Pat.

Mr. WON PAT. Can he clarify the statement about that relationship? In other words, the interfering with respect to the authority?

Mr. MCKENZIE. The hospital and clinic commanders of the Army and Navy and Air Force in a particular region remain under the command jurisdiction of their respective services.

One of the major hospital commanders in an area is periodically designated as the chairman of the regional coordinating committee for that area. He very closely keeps tab over what is going on in the region. He suggests and attempts to persuade the commanders, over whom he doesn't have command jurisdiction, to make improvements as he perceives them within the system.

Mr. WHITE. Are you speaking about the commanders of the post or the commanders of the hospital?

Mr. MCKENZIE. The commanders of the hospital. This is a medical system rather than an overall command system.

Mr. WON PAT. Let's take this illustration. In Hawaii you have Tripler Hospital. That hospital takes care of the three military services, the Navy, Army, and Air Force.

Mr. MCKENZIE. That is correct. That is a fairly unique situation in that that is the only military hospital in that area. In all the other areas to which I am referring, there are five, six, or even seven hospitals with one or more belonging to each of the three military departments.

We have approximately 9 million beneficiaries of the system. This breaks down into 2.1 million active-duty members, about 3.1 million dependents and survivors of those active-duty members, a little over 1 million retired members, about 2.4 million dependents and survivors of retired members, and finally a catchfill category simply referred to as "others."

This is a relatively small category. Its members fluctuate constantly. I would say it probably runs between 30,000 and 40,000 people and consists primarily of U.S. civilian employees overseas and their families. These recoups of beneficiaries are arranged in a priority sequence, obviously, on the table. These reflect language that appears in chapter 55 of title 10 which has the effect of creating this kind of priority system.

Mr. Hogan, you will recall that you observed during the 1974 hearings that the word "priority" does not appear in the statute. But the General Counsel of the Department of Defense has interpreted the statute as having the effect of creating this kind of priority system.

The first priority naturally consists of active duty members. The second priority consists of the active-duty member's dependents and the survivors of active-duty members. Finally, the third statutory priority consists of retired members and their dependents and survivors.

The "other" category is not in any way alluded to in the statute. Another small group of so-called others has to do with a portion of the NATO status forces agreement in which members of NATOmembers traveling through or stationed in the United States in connection with their official duties are entitled to care in our facilities and also under CHAMPUS.

The next chart deals with the care that is authorized within military medical facilities. For the active duty member, the entitlement is complete and not qualified in any way whatsoever. Or put another way: The active duty member is authorized any type of care that an appropriate medical authority determines is necessary.

Retired members start out on the same plane as the active-duty member; in other words, they are eligible and entitled to all of the things that an active-duty member is, but there is one string on it and that is that, again, while the active-duty member has a total, complete, and unqualified entitlement, the entitlement of the retired member is subject to the availability of space facilities and personnel. In other words, he can get the same things if they are available.

The dependents of both the active-duty member and the retired member are lumped together for entitlement. Generally, they are entitled to broad, complete comprehensive care, although the law does prescribe a few exclusions.

One of those is domiciliary or custodial care. Another has to do with prosthetic devices. Still another has to do with spectacles. We may not provide spectacles to dependents, although there is a provision in the law that in an area where they would not be available from civilian sources, we are able to sell them to the dependents at cost to the Government.

The entitlements of the "others" vary from subcategory to subcategory and are generally much less than those I have just described for the statutory groups.

There is one other significant point. That has to do with dental care. The active-duty member, of course, and the retired members with the space-available qualifier, are eligible for all types of dental care in our facilities. Dependents, however, can get emergency dental care and preventive dental care on a worldwide basis, but insofar as the bulk of their dental care-so-called routine dental care-they may only get that if they are stationed outside the United States or inside the United States at one of approximately 75 bases where it has been determined that the local supply of civilian dentists is not adequate to provide for their

care.

While care in military facilities is commonly and generally thought of as being free for these beneficiary categories, with one exception there is at least a nominal charge for all types of care that are provided. The notable exception has to do with outpatient care. There is no charge for outpatient care for either the active duty or the retired member or their dependents. There is a charge for outpatient care for the "others" category.

As far as the active-duty is concerned, for inpatient care an activeduty officer is required to pay a small amount for each day of hospitalization. It is tied to his subsistence allowance. It varies from time to time. At the present time it is $2.65 per day. Also, the retired officer has to pay that charge. For the active-duty enlistment member and the retired enlisted member, there is no charge for inpatient care. Mr. TREEN. This, of course, is in a military hospital?

Mr. MCKENZIE. Yes. I will get to the CHAMPUS charges, which are fairly complex, later.

Mr. WHITE. Pardon me, sir. You said that active-duty and retired members must pay $2.65 for hospitalization.

Mr. MCKENZIE. Only active-duty and retired officers. The retired and active-duty enlisted pay nothing.

Mr. WHITE. Thank you.

Mr. MCKENZIE. For the dependents, both of the active-duty member and the retired member and their survivors, again there is no charge for outpatient care in our facilities, but there is a daily charge for inpatient care, that is, each day they are hospitalized. For about 20 years that amount was fixed. It did not change and it was $1.75 per day. But a few years ago at the suggestion of the full committee we began adjusting that rate each year based upon the amount of the military pay increase for that year, adjusting it upward by the same percentage.

The result is that within the last few years the $1.75 a day charge has now gone up to $4.10 per day. For the "other" categories, they pay in a sense the full amount for the care that they receive, although