Profitting off injured contract workers in Iraq

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Henry Waxman, the U.S. Congressman representing California’s 30th District, which includes West Hollywood and Beverley Hills, is spittin’ mad at private contractors in Iraq.

According to CNN, Waxman raged yesterday that the Pentagon allows private contractors to negotiate worker’s compensation without any major concern for competition between insurance providers to make sure taxpayers get a good deal. See, we bankroll workers’ comp for such companies, but the state department, the corps of engineers and other federal bodies that aren't the Pentagon make carriers compete to offer the federal government their coverage.

Meanwhile, insurance providers that sell the insurance to contractors for the defense department, like KBR and Blackwater, who then send us the bill, make huge profits of nearly 40 percent, according to Waxman. CNN quoted Waxman saying that during the last half decade, the four largest private insurers have made almost $600 million in profits through this system.

Waxman made the comments at a Committee on Oversight and Government Reform hearing to discuss procurement waste in the Pentagon where he said audits have shown the defense department model for workers’ comp is dysfunctional. In one case, Waxman says, KBR paid the AIG insurance company $284 million for workers’ comp, but according to the congressman via CNN:

“Since KBR's contract is a cost-plus contract, this $284 million premium, plus a mark-up for KBR of up to $8 million, gets billed to the taxpayer, bringing the total costs to the taxpayer to $292 million. Out of this amount, just $73 million actually goes to injured contractors, and AIG and KBR pocket over $100 million as profit.... What makes the situation even worse is the people this program is supposed to benefit -- the injured employees working for contractors -- have to fight the insurance companies to get their benefits. Delays and denials in paying claims are the rule.”

The last good piece we saw on workplace injuries among contract workers in Iraq and Afghanistan appeared in the Texas Observer not long ago and described the rising rate of PTSD among them. The New York Times says that more than 900 contractors have been killed in Iraq and 12,000 more injured since the start of the war.

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