Congress is debating healthcare reform. I’m the last person who is ever going to understand healthcare in any country, let alone how this country with all its added mess, mayhem, constant change, and so on. So I’ll keep these post very short. Not sweet, but short. I’ll depart from what may seem like a usual format and just say the following:
I spent 3.5 years at two hedge funds. These people are horrible. There are some people, and they are very notable and extremely good for our country, that are good, but the vast majority are horrendous, and redistribution of wealth should start with them.
Anyway, I don’t want to get too emotional about this. I just want to make a prediction. With my time, I’ve seen a few things. Unfortunately, I used to work in financial services and I have degrees in related fields. Economics, MBA, etc. I’ve recovered from this, and now I am obviously a writer, and I also speak 2.5 languages (2.5? Yes, because my Spanish sucks, but my Mandarin is great!), and now I have a great life, thank you very much.
From what I’ve learned, I can say this:
I see high-risk pools as something oddly similar to investments in which there are tranches with different ratings (AAA, AA, A, BBB+….D). Formally, those were just for bonds. You might remember The Big Short, and if not, you obviously remember the housing crisis and economic meltdown and homelessness this country felt and still feels to some extent after almost a decade. At that time, there was default protection for those bonds, which allowed crazy speculation on mortgage-backed securities because you could buy protection for pennies because, for some reason, everyone thought housing prices never go down and everyone pays their mortgages.
So, they were stupid. Well, now I think they want to do this with our healthcare.
Remember, it doesn’t matter when they want to make a box of mortgage payments or medical bill payments and sell that box for pennies on the dollar to a large investment bank. A hospital might not want the risk of writing off so many medical bill receivables three years from now when they could get $0.50 per dollar for low-risk pools of patients who owe money and $0.20 per dollar for high-risk pools of patients that are never going to pay anyway. For the high-risk patients, the hospital might as well collect their money now while there’s a buyer.
Basically, instead of CDO’s or credit default swaps that offer protection for banks or the investors to whom the banks sell these swaps against people not paying their mortgages or for even prepaying, now they want to replace those mortgages with real people! NOW, WE’RE THE BONDS!
See, the hospitals are run by corporations now, which means they need to get their earnings per share as high as possible. That means they can’t have a loss on their income statement. Those write-offs of medical bills unpaid will go on their income statement. The accounting rule is you have to take unpaid receivables off your books–the rule further states this must be entered as an expense–after a certain period of time. Therefore, the hospitals now, not the banks anymore, will be selling these receivables to investors.
This is where is gets interesting. We’re playing with people’s lives. Before, they could be kicked out of their homes, but if homelessness made them sick, they could go to the hospital. Now, we’re playing with their lives, and that means anyone interested in killing someone can play with this market to ensure that a healthcare bubble occurs and then bursts, killing people. Many people have their homes back so they’ll die at home or die in some home they moved to after losing the home they shouldn’t have had to lose in the first place, but those who want to do harm to us will be able to use these investment markets to more directly kill people. Of course, if they die, they can’t pay their mortgage, and then the house gets sold to someone who can pay for it, like perhaps an overseas investor from one of the countries–one of the few, but those bad actors are definitely out there–that wants to do us harm.
Let’s say a Chinese investor, working for the Chinese government, invests in these markets and then tries to tank the markets. George Soros tanked a market. Why can’t an army of people do the same thing, especially when they’re given the order to do so by their superiors in a country that is known for being able to control everyone’s every move? Of course they can do that. That’s the mean. They, of course, have the motive. They don’t like us. And with these investments, there’s the opportunity. The bridge over the Pacific to come invade the West is suddenly just a few lines of computer code.
The Chinese investor, or an investor from another country, can pay a huge premium for even the high-risk pools of patients that will never pay so that they can encourage all the hospitals to get into these investments, selling all their receivables to the investors. Not all of them will be Chinese or otherwise foreign. Wall Street and hedge funds and others will be doing this, as well. However, at this point, everyone will be involved.
Then, we go to the ratings agencies.
The ratings agencies are going to paid to give high ratings to tranches of patients that are considered high-risk instead of ratings those investments appropriately, just like they did with the mortgage-backed securities that destroyed the housing market.
What’s going to happen is politicians and every single person will be saying how great healthcare is and how it’s so cheap because everyone will get healthcare because hospitals don’t need to worry that the patients won’t pay because they can just sell the receivables to Wall Street or some other investor who’s big enough to handle the risk or whose goal is worth spending that money.
Everyone will be getting healthcare, and a few people will notice that high-risk people are getting low deductibles and hospitals are booming and everything seems a little confusing because we don’t know how it’s happening. Most people will enjoy it, but a few people will notice, just like with the housing bubble. There will be a healthcare bubble, as well.
Here’s the final step. When the investors who want to hurt our country, whether the Chinese or those from another country, decide its time for the bubble to burst, THEN they’ll pull their money. Any bets made on the backs of these ridiculous tranches of ridiculous risk pools will fail, except those with protection, and many people, even those considered low-risk will be kicked off their health insurance plans just like they were kicked out of their homes.
They’re likely already packaging investments that include medical bill receivables that wealthy investors can buy, taking bets on people’s ability to pay bills, bets on whether they choose to seek care at all, and bets on other data that factor into these payments. There could be a healthcare bubble coming, and those who don’t like us are going to influence the timing of the bursting of that bubble as much as they can.
My tip to all of us, the people who aren’t hospital CEO’s or investors but who are just patients, is to take care of yourself. Of course, enjoy whatever you get but understand that it’s designed to break so that you’ll be suffering when it does. Make sure you have enough money to get through that.
My message to Congress, well, you’re not gonna listen.
I’m the last person to understand healthcare, but I’m one of the first to know a sinister investment when I see it.