In the past decade, the Pentagon tried to tame its massive health care costs by pushing medical care, especially for family members, into the private sector.
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A Defense Department internal memo obtained by NPR found that outsourcing didn’t actually save money but did hurt readiness. The memo directs the Pentagon to reverse course to bring more medical care back to its hospitals on base and increase medical staff.
I hate this basic assumption that privatization will lead to cost reduction unless proven otherwise. Cost reduction is a question of optimization of process combined with requirements for quality. You can either make what you’re doing more efficient or reduce the quality. The military can be extremely efficient when it wants to, so I’m not surprised at all that when outsourced to the private sector, costs didn’t go down. There was probably just no room to optimize given the existing requirements, and then private companies had to make a profit, so quality had to go down.
