Wall 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.