HOWTO Pay for America's health insurance

Fromn Barry Ritholtz, a funny and surprisingly plausible way to pay for national health coverage in the US:
1. Set up a large, well capitalized hedge fund. About $5B should do it.

2. The prospectus of the fund should note its purpose is to “Seek out profit opportunities via arbitraging inefficiencies in the markets and health care system of the United States.” Include standard “Socially Conscious” fund language in clauses such as Do well by doing good.

3. Launch the fund – and promptly max out your leverage. Today’s environment makes it difficult to go 50 to 1, but getting 10 or 20 to 1 should not be much problem.

4. Use the money to write Credit Default Swaps with a notational value of $3 trillion dollars. The premia on these CDS should be about 10-15% or so.

5. Rollover the cash premiums – about $350 billion dollars worth – into a national fund. Use it to buy health care insurance for all US citizens.

6. Declare that due to current credit conditions, your unfortunately must announce to your counter-parties that you will be defaulting on these CDS. Note that significant amounts of this paper are held by JP Morgan and Citi. Another trillion is held by China and Japan, with Sovereign Wealth Funds owning the rest.

7. Send out a press release announcing “systemic risk.” Tell the Treasury Secretary and the Federal Reserve Chief that your imminent collapse will wreak global havoc. Apply for bailout.

How to Pay for National Health Insurance


  1. This post makes baby Jesus cry.

    And it obviously won’t work because of the fact that the government’s efficiency can’t approach the private sector.

  2. s;health care insurance;ponies;g

    Mutatis Mutandis.

    Very good — using CDS’s notional value as a gun to our collective heads.

  3. I may be mistaken but I believe this is how Birmingham (Alabama) paid for its sewer system and tried to fund a canal to the Gulf of Mexico.

  4. Reminds me of SNL skit – How to become a millionaire doing what you like.

    1 – Find something you like to do.
    2 – Do what you like to do.
    3 – Become a millionaire doing what you like to do.

  5. What sticks in my craw are the overwhelming assumptions by most people in the United States that healthcare is somehow inherently prohibitively expensive for 99% of people.

    Everyone’s so preoccupied talking about insurance coverage (private or public), that they’ve neglected to derive the economic questions from the bottom up: Why can’t you buy medical advice directly from a doctor? Why can’t you afford the drugs you need? Why does surgery and dentistry cost so much less in developing nations (e.g. India, Mexico, respectively) that medical tourism is actually less expensive than having it done locally?

    Before asking how we’re going to pay for these high costs, let’s first uncover why the costs are so high to begin with.

    (Guess what, this probably means making pharmaceutical research, medical imaging research, and medical practice by doctors, nurses, and technicians radically more competitive and low-cost — for the benefit of health consumers.)

  6. The hedge fund would be emptied by malpractice lawsuits in the first year.

    On the plus side with the gov paying millions of barely qualified doctors would flock to the field for a simple payday.

  7. #5 – On the plus side with the gov paying millions of barely qualified doctors would flock to the field for a simple payday.

    I hate to break it to you, but that’s exactly what they’re doing now in the United States. Plus: they’re flocking to America from other countries for the big fat payouts for little actual work.

  8. The solution to expensive healthcare is simple.

    1. Legalize pot and give amnesty for all non-violent drug criminals. This will abolish the need for half of doctors visits, and halve the prison population.

    2. Don’t award damages for malpractice, but lock up the doctor instead.

    3. Convert the now empty prisons into hospital-prisons to house these doctors, and have them do hip replacements for a packet of cigarettes each. Successful heart-lung transplants will earn them a packet of razorblades.

    Let the prison-industrial complex work for you for a change.

    If this works out as fine as I hope it will for you guys in the US, it’s time to export the model to the civilized world.

  9. The plot is very similar to “The Mouse That Roared” wherein a small country sets out to lose a war with the United States and live off their aide.
    The scheme as outlined worked for AIG.
    I’d rather drum up support for single payer. That would reduce costs by 10 to 30% right now.
    After that I’d put teams of researchers into hospitals to figure out how that most dysfunctional of institutions could be fixed.
    There was a recent article in the New Yorker about a doctor who created a check list to be used during operations. Did we adopt it? A pathetic few hospitals did. The payoff for patients was great.
    I’d also prohibit drug companies from filing patent applications for mirror image drugs just to extend their franchise after a patent expires.

  10. I’d rather drum up support for single payer. That would reduce costs by 10 to 30% right now.

    Just as giving Pan-Am a monopoly was supposed to reduce the cost of air travel, right?

  11. every other modern nation in the world has nationalized health care, the problem is not that people are afraid of the government running something, they run the military and police forces and no complains about that, the problem is that extremely wealthy people stand to loose a great deal of profit if we move to a nationalized system with price controls.

  12. #4 is right. and the reason is, ultimately, greed

    That asside, the US could pay for universal health care by reducing their military budget. Honestly, the US military can afford a small budget cut. It’s only the best-funded military on the planet – by something like a factor of 10 or 20, last time I saw statistics.

  13. This modest proposal highlights just how kap00t the monetary system is. And the bailoutapalooza going on is definitely part of the problem, not part of the solution. Soo weet. Somebody should buy my shitpile.

    Maybe it would make sense to fly in some smart people from abroad to figure out how come health care in America is so brokeded. Some people who can think outside the box because they aren’t inside of the box to begin with.

    One clue: Follow The Money.

  14. #12, consider this. There are 33 aircraft carriers in the world today. 22 of those are American – 11 supercarriers that are four times larger than anything else, and 11 amphibious assault ships that are twice as large.

    Seven more carriers are owned by NATO members Italy, Spain, France and England.

    Of the four non-NATO carriers, three are old 1950s vintage British carriers sold to India, Brazil and Thailand. Brazil’s seems to be used just for show and I think Thailand’s is basically used for beer runs. India’s seems to be functional.

    That leaves one, an old Russian model that’s barely even been seen out of port at all in the last 20 years – it’s marginally functional, at best. So:

    Number of functional, potentially adversarial carriers in the world: 1 (India, 1950s vintage)

    Number of modern American carriers again: 22

    Think the US could afford to cut its military budget? How could it afford NOT to? I bet we could cut 80% out and still be perfectly safe. In the case of carriers, an 80% cut would still leave 4 or 5, which is still, by tonnage and aircraft, far, far more than anything anybody else has. I don’t know why Americans don’t realize: 22 is an absolutely insane number, especially for a ship that is so ridiculously expensive and (arguably) obsolete.

    I don’t understand why we couldn’t use that money to provide health care and higher education like other civilized nations. I bet there’d still be enough to spend on building mass transit and investing in infrastructure and energy projects.

    1. There are 33 aircraft carriers in the world today. 22 of those are American – 11 supercarriers that are four times larger than anything else, and 11 amphibious assault ships that are twice as large.

      I was sure that your comment was going to end with 666.

  15. Pantography @7 – “Successful heart-lung transplants will earn them a packet of razorblades.”

    Why a packet? Surely one would suffice.

  16. @1 busterjonez, keep telling yourself that.

    Those of us who have personal experience and the experience of friends and relatives, along with solid statistics, of the vast benefits of a single-payer system will just beg to differ.

    Yeah, just keep telling yourself that…

  17. How to woo a nation into making the rich richer and the middle class complacent about insurance:
    1) Provide ‘for profit’ insurance and make it appear ‘available’ for all.
    2) Working class take employer insurance plans, self employed and unemployed go largely unnoticed and under insured.
    3) People that actually need ‘large’ coverage medical, are denied under cover of ‘experimental’ (doesnt ALWAYS work), ‘pre-existing’ (person was born ill), or not covered due to fine print exclusions.
    4) Untested, most people actually think they have good insurance and do nothing to change the system leaving millions uninsured and under insured.
    5) Insurance companies make profit while millions think they are protected, and think the system actually works.

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