Defense Base Act Compensation Blog

The Modern Day DBA Casualty

Cummings Introduces Legislation to Reform Defense Base Act Insurance Program

Posted by defensebaseactcomp on June 6, 2012

In addition to cost concerns, the current system has failed to ensure that all injured workers obtain health care services, disability payments, or death benefits they and their families deserve

“There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies,” said Cummings.

“This bill would save billions of dollars while improving the ability of contractor employees who risk their lives in war zones to obtain the medical care and support they deserve.”

Committee on Government and Oversight Reform  June 6, 2012

Washington, DC (June 6, 2012) —Rep. Elijah E. Cummings, Ranking Member of the House Oversight and Government Reform Committee, introduced legislation today that would save taxpayers huge sums of money by transitioning the existing workers’ compensation insurance system for overseas government contractors away from private sector insurance companies to a federal self-insurance program.

“There is absolutely no reason American taxpayers should be lining the pockets of private insurance companies,” said Cummings. “This bill would save billions of dollars while improving the ability of contractor employees who risk their lives in war zones to obtain the medical care and support they deserve.”

According to a 2009 Pentagon study, Congress could save as much as $250 million a year by transitioning the existing Defense Base Act (DBA) insurance program to a government self-insurance program. The study found: “In the long run, the self-insurance alternative may have the greatest potential for minimizing DBA insurance costs, and it has several administrative and compliance advantages as well.”

Cummings’s legislation, H.R. 5891, The Defense Base Act Insurance Improvement Act of 2012, would direct the Departments of Defense and Labor to establish a self-insurance program in which the government would pay directly for medical benefits and disability benefits rather than utilizing private insurance companies.

The existing system has been a boondoggle for private insurance companies, who have reaped enormous profits under the program. According to an Oversight Committee investigation, insurance companies providing DBA insurance in Iraq and Afghanistan have made enormous underwriting profits that are significantly higher than those of traditional workers’ compensation insurers.

The current DBA system requires contractors to purchase workers’ compensation insurance for employees working overseas from private insurance carriers, and the contractors and insurance companies negotiate their own rates. Since the costs of the insurance premiums are often built into the price of the contract with the government, there is little incentive for contractors to limit insurance costs.

Cummings’s bill would set a six month deadline for the Departments of Defense and Labor to develop an implementation strategy to transition to a self-insurance program, and it would require the strategy to be executed within a year after the bill is enacted.

The legislation would also require the Departments of Defense and Labor to issue a report one year after the program is implemented to assess its effectiveness in terms of cost-savings and the delivery of benefits.

In addition to cost concerns, the current system has failed to ensure that all injured workers obtain health care services, disability payments, or death benefits they and their families deserve. An analysis by ProPublica found that private insurance companies had denied about 44% of serious injury claims and about 60% of claims by employees suffering psychological damage such as post-traumatic stress disorder.

At the request of Congressman Cummings, the Domestic Policy Subcommittee held a hearing in 2009 to evaluate these findings, which confirmed that the Defense Base Act is in desperate need of reform.

6 Responses to “Cummings Introduces Legislation to Reform Defense Base Act Insurance Program”

  1. [...] Crossposted from The Defense Base Act Compensation Blog [...]

  2. walleye said

    Too little ….too late, the damage has been done. I would like to know how going back to iraq can disqualify you from a ptsd claim, when a psych exam and test says you had it before the second trip over?? AIG does what they want because they are BIG and the government is scared of them because they insure enough of the economy, they can influence politicians decisions. Let alone the campaign contributions

    • defensebaseactcomp said

      Agree, the damage done to injured war zone contractors and their families, the families of those who died, is unfathomable. That our lawmakers have knowingly allowed this happen for so long is a travesty. This committee listened far more to those in the industry than it did to injured contractors and their families.
      Do though appreciate Mr Cummings effort and sentiment

  3. [...] Read more… [...]

  4. dulce bellum inexpertis said

    Staggering that it has only taken 10 years for an elected official to work this one out.

    I wonder how many votes it will get from those politicians who whore themselves out to the insurers.

    I bet the insurance companies will not be happy having their gravy train pulled from under them for what are in effect no risk policies.

    THAT IS CORRECT

    A NO RISK POLICY

    They charge a higher premium for the policy because the contractor is working in a war zone. Then if the contractor gets injured they can claim their money back from the US government under the WHCA.

    Why have so few cases been forwarded to the WHCA because the longer the insurer holds onto the case the more money they make.

    If the cost of your medial care is $100,000 they get $15,000 just for administering the claim.

    So as you can see it makes sense for them to carry on with the case for as long as possible.

    All they have to do is show that they tried to minimize the cost hence the delays and denials.

    So when they go the WHCA they can say they followed the protocols as to insure they get their money back plus their 15%.

    In the long term in does not matter to them win or lose they get their money and if they lose they get more money.

    Not a bad scam really I mean scheme

    What a way to put our tax dollars to work

  5. [...] Cummings Introduces Legislation to Reform Defense Base Act Insurance Program [...]

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