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TechnoratiWall Street Flops Cannot Become Patient 'Swaps'
There are a few good things about being broke. Not many, mind you. But at least during this past two weeks, I have no big savings accounts to worry about losing, no large sums in 401Ks or equity in a home, and no real estate holdings losing value. All of those things went a very long time ago around the time I learned I had cancer - even though I had health insurance, disability insurance and a healthcare savings account.
The health insurance industry has left millions of us open to disaster for a long time. So, I can watch and learn from this period of financial turmoil along with millions of other Americans who care a great deal, and I can apply much of what I am learning to the healthcare reform I so desperately want.
It seems like the ultimate fraud to pay for something called "insurance" when it fails to protect against financial crisis. When I look a bit deeper into large companies that are not manufacturing something tangible, I see what looks a lot like the financial market "swaps" we hear about that were to "insure and secure " junk mortgages and credit deals of recent years and that are now collapsing and being blamed for triggering the demise of several firms, including AIG and Lehman Brothers. Hence, the need for a bail-out by the taxpayers.
What's a swap? Well, I found this definition, "A swap is an agreement between two parties to exchange future cash flows according to a prearranged formula. They can be regarded as portfolios of forward contracts." So if those forward contracts (with future cash flow projections) are suddenly not going to materialize - like mortgages falling into foreclosure instead of adding to the positive side of balance sheets - then those future earning projections mean nothing. What once had great value and was counted as an asset is gone. Forever gone. Funny money that never was real and never will be.
Let's switch to another one of our economy's major areas of activity for a moment: healthcare. Does anyone seriously think the profits claimed by the healthcare insurance industry have been done without the excesses we are just know learning about in U.S. financial markets? Come on folks. The big boys and girls all play for the same greedy team that has learned how to borrow and bend from the same coaches.
So, what does that say about our personal financing of healthcare through private, for-profit health insurance companies? What swaps have been made on our behalf? And what happens to those future projections if we get sick and become health insurance liabilities instead of future earnings upon which our insurance companies have based their business dealings and their investments and their shareholder earnings projections?
The underwriters who tally up what each of us looks like on the balance sheet don't like it when the swaps flop. Getting sick and using our insurance more than projected changes the whole income and expense calculation done on our behalf by health insurance companies. Earnings look less healthy. Shareholders get nervous. Belts must be tightened. And within the health insurance industry, just as is the case in every other private industry, tightening the belt means lowering expenses until the storm passes or finding new revenue. There is no other way.
And I am afraid that if we stripped away all the veils of secrecy covering up how our insurance companies really rate us and project income and expenses, we'd find much to give great pause about the health of that industry as well - not to mention what it would say about the very nature of what we now allow to be termed health "insurance."
Notice I haven't even mentioned the losses our major health companies have sustained recently on their own stocks - how will they absorb those losses? On the backs of their own potential swap losses (I mean medical claims), I promise you. No CEO will lose more pay or investment income. No CEO will tell shareholders that policyholder protections will come first. No, no... that's not how we do things in free markets.
Before a new administration and a new Congress launch into efforts to reform healthcare that might include expansion in any way of the system now ballooning as a percentage of the gross domestic product, I would hope the lessons of the past two weeks would give them pause.
Let's find out what the financial underpinnings of this business really are and are not. And if, as I suspect, those underpinnings are as dirty and as flimsy and as dangerous to the health of our nation as the financial giants' underbellies have been, well then any expansion of the for-profit health insurance industry wouldn't be just bad for individuals and families - it would be bad for this nation.
Rather than setting ourselves up for a future bail-out of the healthcare system on the backs of taxpayers who already pay premiums and taxes to pay elected officials' premiums, let's just cut out the waste and corruption and potential disaster now and move to a system that will be transparent and sound - single payer offers that simplicity and that beauty and that protection in publicly funded, privately delivered healthcare for all.
And since we are getting a bit of a crash course in failed systems right now, I know not one member of the new Congress or the new administration will want to be party to creating or expanding a healthcare system that threatens not just personal financial security but that of the nation as well. For this part of the economic disaster, I am grateful. We can now look forward to sound planning for healthcare, can't we? Because the cover is blown. We'll never again be able to say we didn't know better.
12 Comments so far
Show AllGood article. I thought I knew something about the health insurance industry, but obviously I was a babe in the woods. It is more devious than one could imagine.
Joe
I've been remembering "the good old days" when my four kids were little, and constantly getting sick. We had medical insurance through the government as my husband was a gov employee. We thought the insurance was meant to pay for any hospital expenses we might have, and so kept making those payments to our doctor every month.
We'd been doing this for several years when our kids doctor finally asked if we had insurance because he knew we were struggling to make those payments. When we said we did, he explained that this insurance would pay for all those visits to him. So we turned in a claim, and was reimbursed back a couple of years.
I've often felt it might be better to have just insurance for hospital and major illnesses, and the routine checkups and doctor visits like we had for the kids, were paid by us. Of course I realize that over time those costs have gone far beyond what the ordinary struggling family could pay.
&YYY&
Public health systems in Australia suffer from both cost increases, and a reduction in effective financial support from government, a trend over many years. Payments for wages and services lag behind invoices by several months. Capital expenditure and infrastructure maintenance is a luxury. This is but one example of inability of the state governments to support the increasing population needs of social necessities of jobs, public transport and services.
The flow of cash, from income, is insufficient to meet current and future planning needs. The costs include general rise in costs of living, energy, food, and the inbuilt costs of large size of cities from travel and dispersal of resources, and large distances between population centres. Put it simply, we are all living beyond our means. It shows up in the increasing amounts in household bills. Working wages, for those hanging onto jobs, have hardly increased in comparison. Of course the salaries for CEO end of town, still go up by power laws, as the workers get whittled down by the same.
There is no net saving, more credit card debt, and fewer people can afford to take up the option of private health insurance. The credit card debt implosion on the financial system could be a second wave of monetary collapse. Most people are already straining the home accounting. Cost of living increases are going to hit the credit card ceiling. In such a system, public health continuance depends upon agreement of governments to pay for widespread availability of essential basic services in a manner that escapes the cost crisis.
A concentration of dollars on the most expensive medical care, brings the least increase in wellness for all society for given expenditure. A health system just for the rat race climbers of the wealth power scale, who collectively are a bunch of failures, is a tragic waste.
Anothe4r example of why we need single payer.
Had enough yet?
C'mon, people Capitalism kills.
Donna--You are not alone.
I heard Obama this morning trashing McCain's insurance plan as costly and unworkable.
He then went on to sing this praises of his complicated, insurance-inclusive scheme.
The crowd went wild.
Later in the speech he stated that his administration will not be run by corporations.
The crowd went wild again.
Not realizing the obvious inconsistency.
Single-payer Obama.
You were for it before you were against it.
Single-payer WILL be the country's healthcare model, it's just a matter of time.
So why delay our destiny and prolong the suffering of so many?
A little over a year ago I had a heart attack and had to have a quadruple bypass. I was pretty much broke already, having quit my regular corporate job a few years back, to pursue a career as a starving artist, and I had no health insurance either. I did pay health insurance premiums for about 40+ years, while working, and never had to use it. MediCal ended up paying for EVERYTHING. The private corporations made all the money, and taxpayers paid the bill. Doesn't seem quite fair. Thank you anyway, my fellow Americans, and Californians. I'm still poor (like many of you are today after watching the "market"), and changing careers in order to become a successful starving musician. Life is strange.
It would be true to form that a substantial portion of the "bail out" will cover the mid-level management particularly in the media industry including law practices, advertising and market research agencies that spin the fishing line. This the first line of defense and it would be stunning if this worldwide network were not substantially cushioned. They manufacture the consent.
We need incisive critique of the day to day operations of these industries applying the pancake makeup.
Just a side note:
"What once had great value and was counted as an asset is gone."
Which is just a variation of Arthur Anderson "creative" accounting. Remember them? Remember Cheney did a promo video for them touting their greatness?
"Halliburton announced that the SEC had begun a probe into the company's booking of cost overruns on energy-related construction jobs. This practice accounted for the overruns as revenue, even if customers had not yet approved the charges, and inflated Halliburton profits by almost $100 million in 1998." And another $400+ million through 2001.
Projected, unpaid overruns as revenue = forward futures contract. Get it?
Cheney was CEO at the time and walked with $5 million/year plus a $20 million retirement package.
And just where is he in recent weeks? I think if we'd all see more of him, we'd remember just how cruel we have allowed the nation to become. OK, I just answered my own question...
Donna Smith, American SiCKO
In the eyes of Wall Street, medical patients are potential money makers. Lots of money. That's the heart of the problem. But that's why swaps happen. Our Capitalistic quest for that one more new market is finally swallowing up the middle class who make up the vast majority of those profitable patients. Those sick Americans make a lot of money for a lot of people and actually finance a large part of our economy. The government is taking care of them all right, as long as they can continue to generate money from their health problems. Can't pay? Games over. Go home. Oh, that's right we already got your home.
We’ve been killing our young for centuries. Now we're going for the adults. It's inevitable in a dying empire.
Hoa binh
Yes, that's why it's so amazing to listen to the for-profit insurance folks use the anti-government healthcare argument. They all benefit and profit wildly from Medicare patients -- and the insurance companies are making a killing from the Medicare Advantage patients. But then they turn around and blame lack of funding in those programs as the reason a publicaly funded system won't work -- "Medicare is going broke, isn't it?" Oh, wait, it's the same people who are benefiting from all of this.
It's no wonder that patients and their families become overwhelmed and confused -- that's part of the ball game too.
Donna Smith, American SiCKO
This is absolutely true. These insurance companies are the exact same people we just bailed out. As a matter of fact the Glass-Steagal Act was implemented in 1932 after the 1929 crash because they realized banks were in conflict of interest by speculating and manipulating stock markets. This bill kept banks from merging with brokerages or insurance companies until it was weakened in 1998 and Travelers merged with Citicorp, becoming Citigroup (for just one example of how these companies became so large they had to be saved.)
Here is an excellent description of this deregulation, notice both parties were involved in killing the act. Conservatives however drove the bus...
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
Single payer health coverage is the only fair system there is, anything else is just more bailout for these criminals. We need some trust busters in congress and the treasury, not industry cronies...