Welfare Billionaire

By Fitch, Robert | The Nation, June 15, 1992 | Go to article overview

Welfare Billionaire


Fitch, Robert, The Nation


Twenty years ago, while I was working at Berkeley-based Ramparts magazine, reports began to surface about H. Ross Perot's Electronic Data Systems Company. Having just taken over the processing of California's Medicaid and Medicare cliams, E.D.S. was charged with carrying out a racial purge, firing or demoting anyone who was black. As I investigated the accusations, not only did they turn out to be substantially true but Perot's whole elaborately confected story of free enterprise wizardry began to disintegrate into Oz-like deception.

Artful misrepresentations to the contrary, E.D.S.'s intercourse with American's private sector was fleeting and insubstantial. The subcontract with California Blue Shield for processing health care claims provided one-third of Perot's total revenues. Similar Medicare and Medicaid subcontracts in ten other states provided the rest. From his first Texas welfare contract to the time Perot's E.D.S. stock hit $1 billion took only five years. How could a handful of social service contracts with state government agencies add up to a billion-dollar fortune? What kind of terms was Perot getting? Who was giving them to him? What did they get back?

Now that the entire country may soon live under the rule of Ross, the baying hounds of the corporate press have been loosed to sniff out his origins. Potted summaries of "H. Ross Perot: American's First Welfare Billionaire," the Ramparts piece I wrote in 1971, have now appeared in Newsweek, The Washington Post and, most extensively (albeit without attribution), in Newsday and in a front-page New York Times story. The Wall Street Journal predicts that the Republican Party's attack strategy will focus on Perot's Medicare and Medicaid contracts.

But if Bush's operatives pursue their investigations very far, they will discover it was the administration of California Governor Ronald Reagan that placed the biggest and tastiest enchilada of all on Perot's plate. In 1969 the head of the California Department of Health Care Services, Carel Mulder, approved giving the Blue Shield subcontract to E.D.S. Then, a year later, he signed on as an E.D.S. consultant. E.D.S. got an eight-year deal whose terms enabled the company to charge Medi-Cal 70 cents a claim for data processing that cost E.D.S. only 28 cents. Federal investigators descended on Sacramento. But in what may have been simply a coincidence, the investigations were dropped after Perot's contributions to the Nixon Library.

It may be to avoid precisely this sort of contretemps, in which the hired detective discovers that it's the client who's guilty, that Texas Governor Ann Richards advised Arkansas Governor Bill Clinton to lay off Perot. Well she might. Any thorough exposure of Perot's operation in Texas could hardly fail to illuminate the doings of the state Democratic Party--the interwining of multibillion-dollar welfare contracts and equally gigantic influence-peddling. …

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