Scapegoating and Cost Savings in the Health Care Debate: Obama’s Welfare Queens?

Arun Swamy
Broad, ‘populist’ political appeals often require identifying some scapegoats who are robbing the people and whose machinations, if defeated, will painlessly provide the people with what they want. To some extent, this is a necessary aspect of getting things done, as it helps to focus political energies. But there are times when claims about the malfeasance of the scapegoat group become so caricatured, or the scapegoats chosen are so politically powerless that the practice becomes truly toxic.

The nadir of this practice in the US in my adult life was Reagan's invented “welfare queen” anecdotes. The claim that there were women living on so many fraudulent welfare checks that they could drive up in Cadillacs to collect them had many consequences, not least speaking to white resentment of the apparently disproportionate gains reaped by blacks under Johnson’s Great Society program. Reagan’s main purpose in making the claim, though, was to demonstrate that it was possible to dramatically cut social spending without causing harm.
Scapegoat images like that of the “welfare queen” frequently accompany the argument that great savings are to be had from the elimination of "waste, fraud and abuse" in government spending. In view of the central role President Obama has assigned to cost savings in his effort to pay for health care reform, it is not surprising that he has resorted to a number of similar demons in his efforts to ensure that the public believes reform can be achieved at relatively low cost.

To Obama’s credit, his preferred demons, like the insurance industry, are relatively politically powerful.
However, increasingly, as different aspects of health care reform come under attack, Obama has resorted to a number of villains whose actions are held to increase medical costs astronomically in ways that are easily enough detectable that they can be eliminated. These include the doctor who removes tonsils needlessly just to make a buck; everyone who eats unhealthy food, exercises too little (and presumably smokes?); and slowly, people who don't buy health insurance. Each of these images makes a legitimate point but in ways that might backfire politically, by undermining public confidence in his cost-cutting measures, raising anxieties about their possible consequences and eroding support for subsidies.
It has become a centerpiece of Obama's proposals to insist that huge savings are possible in the health care system by promoting "best practices," eliminating “unnecessary tests” or replacing "fee for service" payment with "paying for outcomes." The claims are supported by the experiences of research institutes like the Mayo Clinic and several studies, of which the most popular is one which compared two communities in the Southwest with vastly different Medicare costs, concluding that the difference lay simply in the greed of the doctors in the high cost community. However, to focus on this last explanation, as the infamous “tonsil” example does, flies in the face of the experience of many patients and raises legitimate concerns over whether the cost savings will be attained or, if they are, whether they will come at the cost of legitimate diagnostic testing in an uncertain science.
Even more elusive is the idea of obtaining savings by promoting wellness. It is a truism bordering on a tautology to argue that, if a huge portion of health care costs is due to preventable diseases like lung cancer and diabetes, then lifestyle changes that prevent obesity or reduce smoking rates would bring down costs. That does not make this approach easy or even feasible. It would be perfectly sensible to tax sugar as well as tobacco, as one House Committee suggested. And it is certainly sensible to promote healthier lifestyles. But to make bringing down the cost curve dependent on actually getting people to stop smoking, eat less fattening foods and exercise more is simply not credible as the innumerable failed diets, exercise plans and smoking cessation programs attest.

So it is no wonder then that increasingly the weight of insurance reform is going to be put on the uninsured. This is a paradox. Surely uninsured people are the victims of the current situation and the intended beneficiaries of reform, one thought. Well they are, but they are also the scapegoats.

The most obvious way in which the uninsured have become scapegoats is through oft-repeated claim that we are all paying for them anyway through the cost of unreimbursed emergency room visits. I recognize that this is intended as a backhanded selling point for universal insurance -- like Earl Long's famous demand that white nurses should not have to attend to black patients, a demand intended to make it possible to hire black nurses. But it is an odd argument, as it opens the door to the counter-suggestion, "why not just repeal the law that requires emergency rooms to accept everyone."
But there is also the argument, embodied in the proposal to mandate individuals to buy insurance, that it is the fault of the uninsured that insurance premiums for the insured are going up. This argument is usually made in terms of requiring young people who “think they are invulnerable” to contribute to the cost of health insurance they will need later. But the more that young people are used as representative of the uninsured -- as Obama did in his recent Organizing for America forum -- the more easily individual mandates will come to be seen as a painless solution requiring little in the way of subsidies. This would put those older people and families of moderate income who have been forced out of the group health insurance market in jeopardy as more of the public accept the proposition, put forward by several Republicans that a "household" making $75,000 a year can easily afford health insurance even though at current GROUP rates a family of three or four at this income would pay nearly 20% of gross income for health insurance if they had to pay the full premium.

And why is this happening? As all the tough but simple smart options are avoided -- a broadbased tax, expanding Medicare, even taxing employer health benefits -- because they don't play well with those who still have employer based healthcare, the only politically viable health reform will be one that provides improved plans to those with health care, at the cost of not merely excluding, but driving up the costs of those without. So what better way to justify this than to have demonized them? I do not believe this is Obama’s intention, although it is what “moderates” in his party like Joe Lieberman suggest. But it may be where his strategy is, inadvertently, leading us.