Obama says the existing system poses hardship for many vets and that the new program would cut red tape and reduce mistakes. The stimulus plan includes $19 billion for such technology. It's unclear whether the private sector would help design the system.

    Washington - President Barack Obama on Thursday said the government would create a national electronic medical records system for the military that will serve as a model for broad reform of U.S. healthcare administration.

    The system, organized by the Department of Defense and the Department of Veterans Affairs, would follow military personnel from active duty through retirement, keeping records organized and complete.

    Obama said the agencies were moving to create a system for military members "that will contain their administrative and medical information - from the day they first enlist to the day that they are laid to rest."

    "Currently, there is no comprehensive system in place that allows for a streamlined transition of health records between DOD and the VA," he said.

    "That results in extraordinary hardship for an awful lot of veterans, who end up finding their records lost, unable to get their benefits processed in a timely fashion."

    Obama has stressed the use of electronic medical records and e-prescribing - which lets doctors send prescriptions directly to pharmacists via computer - as part of his plan to transform the U.S. healthcare system and cut costs.

    He said the new system would transform veteran care.

    "This would represent a huge step towards modernizing the way healthcare is delivered and benefits are administered for our nation's veterans," he said. "It would cut through red tape and reduce the number of administrative mistakes."

    Dearth of Electronic Records

    The economic stimulus bill signed by Obama in February includes $19 billion for healthcare information technology.

    Fewer than 2 percent of U.S. hospitals have adopted fully functional electronic medical records, according to a study published last month in the New England Journal of Medicine, and just 17 percent of American doctors have switched from paper records to electronic health records.

    This compares to 98 percent of doctors in the Netherlands and 89 percent in Britain.

    The White House said in a statement the military program would serve as a template for the rest of the country.

    "The creation of this Joint Virtual Lifetime Record by the two organizations would take the next leap to delivering seamless, high-quality care, and serve as a model for the nation," it said.

    The White House did not say whether a commercial company would help design the electronic medical record system.

    Experts say any national system would have to connect easily to other systems while protecting privacy.

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    (Additional reporting by Maggie Fox and David Alexander; editing by Xavier Briand.)