So, for your "compensation" argument, you are for socialized medicine, as long as it is for compensation for services to a job. Same for families; they get gov't run healthcare because of compensation? As for ensuring your pilot isn't distracted by worries about healthcare for his family, what about your airline pilot, bus driver, police officer, and others? And so what if someone made a decision to enter in the military for less than he earned on the outside...that was his/her choice.
Why do you hate free market principles of competition so much?
Still not seeing how compensation for services rendered is socialist - when we pay Lockheed for a new C-130 is that a government handout? As for the airline pilots, etc, if United, AA, GE, Greyhound, et al decided to build their own hospitals instead of giving their employees health insurance, that would not be socialist either - just a decision by the employer. Socialism is giving government resources to those who have not earned them:
USG deposits 2K/month in Joe Trailerpark's bank account: socialist - handout for no work
USG pays Blue Cross/Aetna/etc insurance premiums for Joe Trailerpark: socialist - handout for no work
USG funds hospitals to give free treatment to Joe Trailerpark: socialist - handout for no work
USG deposits 2K/month in PFC Snuffy's bank account: compensation for services rendered
USG pays Blue Cross/Aetna/etc insurance premiums for PFC Snuffy: compensation for services rendered
USG funds hospitals to give free treatment to PFC Snuffy instead of paying premiums: compensation for services rendered
As for the training value of mil hospitals, stories occasionally come up about the free cosmetic procedures the military offers to keep the plastic surgeon's skills up between deployments. Certainly, civilians could provide services more efficiently (and do in areas such as dental care for dependents), but if you fire all the military medical personnel it'll be hard to find civilian docs willing to leave their practice at a moments notice to sit in a tent in the middle of the desert or on a boat for 6 months.
Good point on the socialist military, though - we could probably save money by hiring the surplus regional airline pilots for 20K/year to take over CONUS rescues - the only place where we really need military personnel in the USCG would be overseas. No need for stateside training/proficiency.