The Department of Labor and Congress are grappling with a rapidly growing and hidden cost of the Bush-era Defense Department’s outsourcing binge: Health insurance for the tens of thousands of civilian contractors fighting America’s wars.
The stereotype of a military contractor is of a Blackwater-type mercenary. But the contracting craze is one of the largest outsourcing projects ever undertaken by the U.S. government: Contractors now do a variety of tasks in war zones that used to be done by soldiers. They are truck drivers, clerks, technicians and instructors. They are the logistical backbone of two wars. Their image is unfairly tarnished by the likes of Blackwater.
Their needs are pressing. Civilian contractors currently outnumber U.S. troops in Afghanistan, according to a report by the Congressional Research Service. There are 68,197 contractors in the theater, or 67% of the total U.S. force — more than any other war in U.S. history.
About half the U.S. personnel in Iraq are contractors. The official line is that contractors serve in non-combat positions, but in a war with no front line, combat can erupt anywhere. Over a thousand contractors have been killed in Iraq and Afghanistan so far, and tens of thousands have been wounded.
As with corporate outsourcing, the Pentagon sought to save money by replacing secure, well-paid jobs with more casual labor. As Secretary of Defense, Donald Rumsfeld sought to replicate the management strategies of CEOs by contracting out as many jobs as he could.
The change was billed as a money-saver. If you assign a U.S. soldier to peel potatoes, the true cost to the taxpayer includes her training and a lifetime of medical benefits. On paper, KBR can run your kitchen cheaper by hiring low-skill workers with no benefits.
But what happens if a KBR potato peeler gets hit by a roadside bomb?
“It’s like we’re disposable soldiers,” one 44-year-old contractor told the LA Times.
Currently, defense contracting firms working for the U.S. government in war zones must buy health insurance for their workers under the Defense Base Act. DBA is supposed to be workers compensation for contractors who are injured fighting America’s wars.
In 2002, the Department of Labor’s share of DBA premiums was $18 million a year. Today, it’s $400 million. This twenty-fold increase is due to the unprecedented surge in the number of military contractors — and the Pentagon manages to shift the costs from its own budget onto DOL’s books.
The U.S. taxpayer has already forked out $1.6 billion in premium subsidies to private insurers. AIG dominates the market. It makes up to 40% profit on contractor insurance. Investigations by the LA Times and ProPublica revealed that private insurers still routinely delay and deny benefits to contractors.
To learn more about the hidden costs of Bush-era military contracting, see T. Christian Miller’s masterful investigative series, The Disposable Army, at ProPublica.
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