A Modest Proposal: Securitizing Loans for Large Health Care Expenses

By Lambert Strether of Corrente.

I saw this headline in Kaiser Health News — “Mortgages For Expensive Health Care? Some Experts Think It Can Work” — so I said, “Nah,” and ignored it for a couple days, but then I clicked through to the academic paper Kaiser linked to — if “academic” has any meaning, the times being what they are — and I couldn’t find any tells that it was a parody or some kind of sick joke, so yeah. It’s for real! The paper is called “Buying cures versus renting health: Financing health care with consumer loans,” by Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo, and it was published in Science Translational Medicine (STM), February 24, 2016. First, I’ll present the author’s scheme, and after briefly showing how it conforms to the simple rules of neoliberalism, I’ll look at potential scope creep if the proposal is implemented, debt-cropping, and the possibility of predatory servicing. I’ll conclude with a 30,000-foot view of the scheme’s implications. (I’m afraid I’m thinking of this post in terms of somebody who’s take out one of these loans — a consumer patient — rather from the finance perspective that Yves would offer. That said, readers with more nuts-and-bolts knowledge of securization than I have — like most of you — please feel free to chime in; that’s why I’m describing the scheme first.)

The Scheme

First, let’s talk about the scheme. STM summarizes it in one line:

Health care loans [HCLs]—the equivalent of mortgages for large health care expenses—are a practical way to increase patient access to costly transformative therapies

(I’ll discuss “costly transformative therapies” under Scope Creep.) Here is the long-form version from the authors themselves:

We propose two frameworks that would each grant additional access to transformative drugs, but under very different constraints.

The first is a short-term approach that is immediately implementable: establishment of a special purpose entity (SPE) to fund expensive drug purchases. In this setting, the patient borrows from the SPE to make their co-payment, and the loan is amortized over a repayment period as with other consumer loans such as mortgages, credit card debt, and auto and student loans. … The SPE would be financed by a pool of investors who purchase various securities—bonds and stock—issued by the SPE. These securities have different risk-return characteristics that appeal to a wide spectrum of investors, and the value of each security is derived from the underlying collection of consumer loans that generate cash flows during the periods when the loans are outstanding (fig. S1). This structure is known collectively as securitization and is actively used in all consumer finance products.

The second framework is a longer-run solution in which private payers and government agencies assume the debt. Such an approach will likely require new regulation or legislation to address disincentives for insurers to cover transformative therapies as well as potential unintended consequences on lower-income patients (Table 1); however, policy-makers have dealt with similar issues in other contexts [Like ObamaCare! Oh, wait….].

When the authors say “immediately implementable,” they’re not kidding; in fact, they’re holding a conference on the topic this winter. Kaiser again:

[Author] Lo said the MIT Laboratory for Financial Engineering and the Dana-Farber Cancer Institute will host a conference this winter to bring together drug manufacturers, insurers, patient advocates, financial engineers and others to discuss strategies to make expensive drug therapies more affordable. Health care loans will be on the agenda, he said.

I’d be mighty interested to see who the “patient advocates” might be; somehow I doubt that PNHP, let alone ACT-UP, will be invited.

Neoliberalism

Readers will remember Rule #1 of neoliberalism: “Because markets.” (That’s a complete sentence, and is in itself sufficient justification for any market-based program, like HCLs.) The authors, as one might expect, conform to the rule:

A natural method for expanding access to curative therapies is to offer “health care loans” (HCLs) that spread or amortize the cost of cures over many years and thereby overcome the limitation in financial liquidity that currently reduces the affordability of curative therapies.

“Natural.” Really? What’s natural about it? As Roger Albin, Professor of Neurology at the University of Michigan, remarks in the only letter (so far) responding to the article:

An alternative would be for Congress to appropriate a substantial sum – many billions of dollars seems appropriate – and purchase the rights of these drugs. The intellectual property would be assigned to a non-profit entity that would manufacture and distribute these drugs at cost. This concept is no more utopian than the authors’ proposal, which would require constant and costly regulation to ensure efficacy.

At this point, some institutional notes: The authors are affiliated with the MIT Laboratory for Financial Engineering, the MIT Department of Electrical Engineering and Computer Science, the Department of Medical Oncology, the Dana-Farber Cancer Institute and Harvard Medical School, the Broad Institute of Harvard and MIT, the MIT Computer Science and Artificial Intelligence Laboratory, and AlphaSimplex Group LLC. They exemplify, in other words, “Boston, Massachusetts, the spiritual homeland of the professional class,” which is described very well by Thomas Frank in Salon:

To think about it slightly more critically, Boston is the headquarters for two industries that are steadily bankrupting middle America: big learning and big medicine, both of them imposing costs that everyone else is basically required to pay and which increase at a far more rapid pace than wages or inflation. A thousand dollars a pill, 30 grand a semester: the debts that are gradually choking the life out of people where you live are what has made this city so very rich.

Does that sound relevant to the topic of this article? And:

Perhaps it makes sense, then, that another category in which Massachusetts ranks highly is inequality. Once the visitor leaves the brainy bustle of Boston, he discovers that this state is filled with wreckage — with former manufacturing towns in which workers watch their way of life draining away, and with cities that are little more than warehouses for people on Medicare.

Which proposal would help the people of those wrecked towns more? HCLs? Or drugs at cost? At this point, we might remember Context #1 of neoliberalism, where Rule #1 does not apply: “The world of the neo-liberal practitioners themselves; the academic guilds, media outlets[1], and think tanks”, like Harvard, MIT, Dana Farber, In other words, and sadly, Montazerhodjat, Weinstock, and Lo — and their conference attendees, except just possibly some of the patient advocates — are far less likely ever to need to go out on the market for an HCL then the workers in wrecked towns like Fall River, and far more likely to be able to get an HCL at a good rate and pay it back, if they ever do.

Scope Creep

Now let’s talk about the HCL and scope creep. KHN said the scheme was limited to “prohibitively expensive drugs,” and:

The health care installment loans [HCLs] that Lo, Weinstock and [Montazerhodjat] propose would be aimed at helping people afford “transformative” therapies that cure potentially lethal conditions such as cancer or hepatitis C. They’re not designed to pay for maintenance drugs that help people deal with chronic illness. It’s easier for insurers to cover maintenance drugs because they’re purchased over an extended period of time, they said.

But what’s “expensive”? “Prohibitively” for whom? And why only drugs? And the authors define the scope of their scheme this way:

Our more modest goal is to explore the feasibility of a private-sector approach to making expensive and highly efficacious [including curative] therapies more affordable right now.

But is there any real reason to think that limiting scope to either expensive drugs, or drugs at all, is realistic? The authors continually reference existing consumer loan schemes to show the effiicacy of their scheme. But all such schemes prove that scope creep is inevitable, and that the HCL financial infrastructure, once in place, will be available to any FIRE sector operator, including the bottom ers. We have auto loans. And we also have loans for hubcaps. We have personal loans at banks. And we also have payday lenders. Is there a reason to think that HCLs won’t start with expensive drugs, and quickly morph into, say, high-interest loans for expensive surgeries? (The high deductibles under ObamaCare would seem tailor made to create such “market opportunities.”) Perhaps issues like these are why the Roger Albin writes, in his letter:

The authors’ proposal exhibits a considerable degree of naiveté. Their proposed approach is precisely the type of well-intentioned expedient that tends to become a permanent and ultimately unsatisfactory permanent solution.

Well, “unsatisfactory” for whom?

Debtcropping

There’s a name for the sort of financial dystopia — “Surely you don’t plan to take the kidney back?” — I just described: “Debtcropping.” Matt Stoller in 2010:

Debt is not just a credit instrument, it is an instrument of political and economic control.

It’s actually baked into our culture. The phrase ‘the man’, as in ‘fight the man’, referred originally to creditors. ‘The man’ in the 19th century stood for ‘furnishing man’, the merchant that sold 19th century sharecroppers and Southern farmers their supplies for the year, usually on credit. Farmers, often illiterate and certainly unable to understand the arrangements into which they were entering, were charged interest rates of 80-100 percent a year, with a lien placed on their crops. When approaching a furnishing agent, who could grant them credit for seeds, equipment, even food itself, a farmer would meekly look down nervously as his debts were marked down in a notebook. At the end of a year, due to deflation and usury, farmers usually owed more than they started the year owing. Their land was often forfeit, and eventually most of them became tenant farmers.

They were in hock to the man, and eventually became slaves to him. This structure, of sharecropping and usury, held together by political violence, continued into the 1960s in some areas of the South. As late as the 1960s, Kennedy would see rural poverty in Arkansas and pronounce it ‘shocking’. These were the fruits of usury, a society built on unsustainable debt peonage.

Today, we are in the midst of creating a second sharecropper society.

If you want to see how debtcropping will play out with HCLs, take a look at how the authors discuss default (in the context of problems their “second” framework would have to solve:

Limitations on default. Since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, consumers with student loans are prevented from defaulting by excluding them from bankruptcy proceedings except in cases of “undue hardship.” This feature of the student loan market has received mixed reviews from various stakeholders. Some argue that it is essential protection for consumers who are unable to afford the legal expense of bankruptcy proceedings. Others counter that it is tantamount to indentured servitude and subsidizes lenders by reducing default risk at the expense of borrowers and taxpayers. Almost by definition, many patients face “undue hardship”; hence, preventing those with HCLs from declaring bankruptcy is unlikely to be either practical or socially acceptable.

And:

In alignment with the move toward value-based reimbursement (11), we propose that payment of the HCL continues until the debt is repaid, the patient or payer defaults, or the benefit from the drug ends, whichever occurs first.

Well, it’s definitely good that HCLs, unlike student loans, would be dischargeable in bankruptcy. That said, the incentives seem a little weird. If the HCL is for a “curative” drug, isn’t the incentive for the consumer patient to get cured and default? (And, if so, surely that’s a fundamental problem with a market-based solution.) Or are we saying that a consumer patient only enters the (health care) program after a credit check? And what will the terms of the HCL be? For example, as NC readers know, your Medicaid payments get clawed back from your estate if you’re over 55. Would HCLs permit terms like that? Suppose the collateral for your life the HCL is your house, and you get in trouble on the payments. In a sane world, you’d go to your HCL servicer for a workout. However, as we know from the mortgage crisis, servicers were incentivized against workouts — they’re bespoke — and so (or because) it was simpler just to seize people’s homes. Will HCL servicers be any better? Dubious, since existing servicers will probably move into this new market. Finally, as far as “the benefit from the drug ends,” who decides in case of conflict? And will side effects be included as net “benefit”? Suppose (say) the drug cures my heart condition, but I go blind as a result and can’t work. Must I then default?

To be fair, the authors are aware of the fallout from the mortage crisis. They write:

Last, it is appropriate to raise concerns about any application of financial engineering techniques to health care, especially because securitization was chief among the techniques involved in the most recent financial crisis. Although this powerful tool is actively used in many markets today and plays a critical role in financing mortgages, student loans, consumer credit, and other major business expenditures, securitization can still be abused if the proper protections are not present. Thus, regulatory oversight—including risk-retention requirements for HCL securitization issuers and risk transparency for HCL investors—is essential for the creation of robust and sustainable HCL funding markets. To argue that securitization is simply too risky without a feasible alternative is to relegate patients who could otherwise benefit from HCLs right now to the status quo.

I think the authors need to get out more. Mortages and student loans are debtcropping, pure and simple. We don’t need more of that. Well, “Boston” might, but Fall River doesn’t. (And as far as “no feasible alternative,” I bet if the authors would put their personal networks at the disposal of single payer, we’d have a real solution tout suite. Further, one might also add that financial burderns are stressors in themselves, and so the medical benefits accruing to individual consumers patients don’t net out to the degree the authors believe they do. Finally, our system of profit-based health care is lethal, but the author’s putatively short term plan reinforces it, and might indeed, via scope creep, become permanent. If the authors want to talk about “relegating patients,” they need to consider all patients, not simply those who would benefit from the treatments they consider.)

Securitization

Finally, here’s what the authors have to say about securitization. They ran simulations for their therapy of choice:

We simulated the performance of a hypothetical HCL fund for financing HCV therapy co-payments in a context that assumes payment by the insurance company of $44,000 for each of 12,500 patients toward the cost for HCV therapy; the remaining $40,000 is borne by the patient as a co-payment.

I’ve gotta say, they lost me at the $40,000 co-pay (!!). If course, if I were cynical and paranoid, I’d imagine that my friendly HCL loan officer would offer me a second loan, at more onerous terms, for the co-pay. To resume:

On the basis of anecdotal evidence, it is likely that the actual charge for curative therapy is substantially lower than $84,000. However, we intend to show that even if patients were required to pay such high co-pays, the therapy could still be affordable under the appropriate financing structure. In addition, a $40,000 co-pay is much lower than the current alternative for patients with early-stage HCV; for such patients, coverage is typically denied, so the cost is the full list price.

Patients would obtain HCLs from funds raised by the SPE [Special Purpose Entity] through various tiers of bonds and equity that total $500 million (Fig. 1A). Default rates were calibrated to typical values for consumer loans by borrower-income levels. We considered three scenarios—pessimistic, baseline, and optimistic—that cover a range of probabilities for HCL default based on the borrower’s income (Fig. 2, A and B, and fig. S2). These default models were derived by using student loan data (Supplementary materials, table S1 and figs. S3 and S4). Studies on interferon and ribavirin treatment for chronic HCV infection have reported that all-cause mortality rates for patients with a sustained virological response—which equates to cure in nearly all cases—are not statistically different from those of an age-matched general population (12–14). Therefore, we used general-population mortality rates as a proxy for patients who receive new HCV-directed therapies (15, 16). More than 75% of the HCV-infected population in the United States are baby-boomers (that is, born between 1945 and 1965), so we used U.S. Census Bureau projections for the baby-boomer cohort (fig. S5) (17). The estimated survival curve and annual death probabilities are depicted in Fig. 2, C and D. Our estimated 10-year survival rate (89.3%) is close to the rates reported elsewhere (12, 16, 18).

We used 10 million Monte Carlo simulation paths per each scenario of HCL default probability to evaluate the performance of the HCL fund, assuming that individual HCLs have 9-year terms with a 9.1% annual interest rate.

If I wasn’t lost at the $40,000 co-pay, I’m certainly lost at the 9.1% interest rate.

The term and interest rate of the HCLs were selected to be close to those of private student loans and to avoid too high a payment burden on borrowers—based on the patient population income distribution—without jeopardizing investment performance. In practice, the interest rate on HCLs could be determined specifically for each borrower. However, for simplicity and transparency, we used a single interest rate across the HCLs in the portfolio to represent an average over the population. The SPE is financed by senior and junior debt yielding current market rates (2.1 and 2.5%, respectively) and by equity that receives any remaining cash flows after the senior and junior debt payments are made (Fig. 1B) (details of the simulation parameters and risk-return computations are provided in the supplementary materials).

Overall, the risk-reward profiles across all three scenarios are within an acceptable range to attract investors.

Two questions: 1) Readers who are also investors, would you invest in this? Why or why not? 2) What happens when HCLs are repackaged and resold as Collateralized Debt Obligations? Suppose the pharma company making the HCV drug takes a tranche in the funds raised by the SPE. Are their interests really aligned with the patient’s?

Conclusion

Again, I’m taking the viewpoint of the poor schlub who has to put up his house to save his life. Or the poor schlub who — after scope creep — takes out an HCL at the Walmart Clinic to fix his back pain, and then finds out when the treatment is done that he still can’t lift, or work. Of course, the authors say you don’t have to pay if there’s no benefit, but the authors didn’t reckon on the arbitration clause in the HCL, or that the arbitration process is rigged in favor of Walmart. And so on.

The scheme is so well-worked out on an academic level that it practically glitters, and I’m sure the authors would have a talking point in response to each point I make here. Nevertheless, I feel that the authors, as very proper Bostonians, are at the very best naive at what will happen when their plan collides with real patients, real originators, real serviceres, real investors, and real traders. Readers?

Print Friendly, PDF & Email
This entry was posted in Health care, Privatization, Risk and risk management, Student loans, The destruction of the middle class, Water Cooler on by .

About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

48 comments

  1. polecat

    “What could go wrong?”……every and anything…..

    …….but for moar crapification !! …of ‘deathcare’

  2. Jonathan L

    Well, considering a lot of the expensive meds are available for significantly lower cost in other places (like India), this may be a private sector way to pay for medical tourism.

    1. FluffytheObeseCat

      “a private sector way to pay for medical tourism”.

      Yeah, it’s a sick solution………… but it has the potential to be a solution. Which is more than I’m seeing from anyone else right now. There are a lot of knees and hips that could be replaced in Belgium, a lot of Hep C cures that could be taken in Kerala that aren’t being done now.

      The problem of course, given how neoliberal grifters rule our world, is that if you encourage the growth of this solution for the greater good now, it will become the only route for addressing a much larger suite of ills 25 years on……….. at much higher expense than any of its proponents ever imagined possible. Capture by 3rd party intermediaries is the rule, not the exception, once you (ethically) validate intermediation in the provision of health and welfare services.

  3. mk

    cut to the chase: let’s securitize newborn babies, so that the babies will be indebted to investors for all things needed for the baby to survive.

    1. art guerrilla

      pretty sure the matrix is the endgame the puppetmasters have in mind…
      only there won’t be any red/blue pill horseshit…

    1. Lambert Strether Post author

      I think once this model is in place, it could be extended to a lot else. Baron Harkonnen in Frank Herbert’s Dune:

      “Hawat will be given both food and drink,” the Baron said. “…In his water you will administer the residual poison… And you will see that the antidote becomes a regular part of Hawat’s diet from this point on . . . unless I say otherwise. … And we will hold in reserve . . . the withdrawal of the antidote for the poison.”

      “The absence of a thing,” the Baron said, “this can be as deadly as the presence. The absence of air, eh? The absence of water? The absence of anything else we’re addicted to.” The Baron nodded.

      So, securitize the antidote!

      1. polecat

        Is there someone to speak for the common Fremen ??……..anyone…….Gurney…Jessica…………Muad’Dib??

  4. mdh

    In medicine, a good rule of thumb (with many important exceptions) is that the patient is always wrong–for the obvious reason that they lack the abstract knowledge and the empirical experience and what I can only call wisdom, in some physicians at least, to assess the likely value of a hyper-expensive agent in reliably improving longevity and quality of life in sick human beings. In medicine, as in everything else, we are drowning in bullshit. Wading through current research literature and gleaning the truth is becoming almost impossible. Untrained people don’t have a prayer. They are becoming an industrial input for a faceless juggernaut of money extraction. Papers like this one would’t have seen the light of day thirty years ago for fear of derision and ethical revulsion.

    1. PQS

      And how long before people just say, “EFF it, I’ll just die instead” rather than, oh, say, leave their kids with this debt….

      1. TomD

        That’s already happening from the other side. My grandpa has talked to me about how he doesn’t want to squander my mom’s, aunts’ and uncles’ inheritance on ever more expensive medical care.

  5. reslez

    Charging 9% interest for a life-saving cure. To put it mildly — the people proposing this belong in hell. They perceive no value to human life beyond dollar signs. I propose a 9% guillotine for anyone who puts into motion or profits from this scheme. I’ll even let them flip a coin to determine which end of their body the guillotine will snip. Heads or tails, people? This scheme will not be fair until they operate under the same rules they force on the sick.

    Back of the envelope says at 9% a debt doubles in 8 years. Which means these patients, who have life-threatening illnesses and/or major disabilities, will end up paying more in interest over the 9 year term of the loan than they do for the cure. I guess we need to remind them that these patients have the least ability to work and to pay back loans. Charging such so much for a treatment… at such a high rate of interest… to the sick… in a ZIRP environment… tsk, tsk, monsieurs!

    Paging @MadameDefarge…

  6. craazyboy

    As long as S&P gives a AAA rating on NINJA sick people, I can’t see a problem with it.

      1. craazyboy

        I imagine Paulson & Co and Goldman are discussing the shorting possibilities at this very moment.

    1. Lambert Strether Post author

      “Nice little circulatory system you’ve got there. Shame if something happened to it.”

      To be fair to the authors, that’s not what they’re envisioning HCLs for; but I think scope creep is inevitable.

      1. Knute Rife

        Just because they aren’t mentioning it here doesn’t mean they haven’t envisioned it. Beware the camel’s nose under the tent.

    2. TomD

      Seriously, do these neo-libs watch dystopian scifi movies and write their policy papers on what a great idea they are?

      What’s next, we don’t need police as it forces a community to come together to solve their own problems ala Mad Max?

      1. polecat

        You bring up an important aspect …….. I think they must moonlight as script writers !! What next…’Divergent Humans’ subtitle ‘The Unwilling Organ Donor-Parts !, 2,…& well……everything else’ ??

      2. jgordon

        That’s not a bad idea actually. There are plenty of neighborhoods, ie Ferguson, where they are more of a pest than they are helpful.

    3. Knute Rife

      The “Live Organ Transplant” scene from Monty Python’s “The Meaning of Life.”

  7. PQS

    Good. Grief.

    I can just hear the impact of this proposal on actual, American ears:
    You want me to go into debt for my house, my car, my kid’s college education, and now for my health? Hold on a minute while I sharpen my pitchfork. Hell, my GED educated Depression-era MIL could tell you this is a TERRIBLE idea all the way around.

    I propose that any sort of “paper” like this have it’s precis run past someone who lives in the Real World prior to any complicated research taking place. It would save time.

    On another note, is there some kind of pill that neoliberal types take that makes Profit sacrosanct? Is there a ritual where they sell their souls or something? Because it would seem to me that the simplest solution isn’t a complicated rent-seeking BS scheme, but rather price controls on lifesaving/life prolonging medicines/treatments. Yet such an answer is always, always off the table.

  8. Matthew Saroff

    It appears that there is nothing which financial “Innovations” won’t make even worse.

  9. shinola

    MIT “Laboratory for Financial Engineering”(!).
    I initially thought this was a snark phrase but apparently it’s for real!

    If there was any discussion at all about the corporate “right” to infinite profits, I missed it.

    Again, I am reminded of an Econ. prof. I had (who was also my student counselor) who was a self-avowed plutocrat. His advice for near-guaranteed financial success was to go into the Medical “Bidness” (he actually called it “bidness”)
    “…after all,you can charge people anything you want for their health or their lives.”

    1. shinola

      I forgot to mention that these Ivy League types must certainly consider Jonas Salk a total chump.

  10. Anand Shah

    I think people should think twice before buying the Tesla….

    People will need funds to buy themselves :-)

  11. Cry Shop

    I hocked my sinuses to HSBC
    I hocked my liver to Morgan Stanley
    I hocked my lungs and my kidneys
    for a security listed in Sidney
    but I’m loaning my heart to you.

    Sung to the tune by George Carlin (original lyrics below)

    I sent my sinuses to Arizona
    I sent my liver to Peru
    I sent my lungs and my kidneys
    For the summer in Sydney
    But I’m sending my heart to you

    Didn’t the Bada Bing have a back room for this kind of business?

  12. Norb

    We are rapidly approaching the day when citizens wishing to live a life free of debt bondage must choose to remove themselves from the overall society in order to survive. It will entail forgoing the convenience of modern society and choosing to reject the neoliberal order.

    When debt is used in a predatory manner, a free society is not possible. Hollywood has promoted the gangster lifestyle for decades, conditioning people to the notion of the noble thief. Predatory behavior and knee-breaking are the norm. We are deluding ourselves if we do not admit our major social institutions have become criminal organizations. We are entering a phase of government sponsored usury. The only way to protect yourself is not to participate. Even the language used by those in government- we are here for your protection and security reeks of an old time protection racket. Security from whom?

    In my town, energy companies have installed smart electrical meters under the guise of efficiency and cost savings. Little is mentioned that power can effortlessly be cut off from my home. Will smart water meters be next? How free are you if water and power can be cut off at will? Don’t worry, as long as you pay everything is OK. If every life-critical enterprise- Energy, food, water, insurance, healthcare, housing, durable goods, and banking is hell bent on extracting every last penny form you- sooner or later you are broke and kicked out of the rotten system anyway.

    The elite can afford proposing these oppressive policies because they have successfully insulated themselves from the fallout of these destructive policies. I am reminded of Thomas Hutchinson having his house burned down by an angry mob before the Revolutionary war in some dispute over unjust taxes. By some pavlovian conditioning, the citizenry at large have been trained to tolerate the excesses of the elite. Why there is not more outrage and outright dismissal of these dismal social constructs is a failure of our time.

    1. Crank3y Frank3y

      Hutchinson and the Tory elite throughout Massachusetts holed up in Boston until the Revolutionaries placed cannon high on Dorchester Heights and forced the evacuation on March 17th, 1776.

      I can attest to the inequality in Massachusetts. Seems the colonial era was a simpler time. Any chance the Boston elite would be persuaded by a fusillade of moral ethics and compassion?

  13. S M Tenneshaw

    Nice way to make a bundle – stripping the useless eaters of all earthly possessions as they slowly die.

    Money for nothing, that’s the way ya do it.

  14. Wade Riddick

    Just as they did with securitization in residential real estate, conmen will use it to inflate the value of the “asset” being purchased. In medicine, this will lead to rampant inflation in a market where doctors are already jacking up prices because they get a kickback on surgical implants (never get spinal screws installed by a doctor paid on a per screw basis). In chronic care, Pharma is already jacking up prices through cartels and by the kickback system of Pharmacy Benefit Managers/PMOs. This will add fuel to these fires.

    If the fraudsters can’t inflate (i.e., counterfeit) the face value of the asset, they can’t sell it to the mark at a good profit. Just like the CDS creates an incentive to cram bankruptcy down somebody’s throat, this securitization will also create an incentive to attack preventative medicine, since you need a constant supply of sick people to keep the securitization pipeline full. It will also create perverse incentives to block cheap cures wherever possible.

    Of course, in medicine the patient can die – especially as the quality of the service falls relative to its price. As you extort people for their lives across an entire market, some of them will die. This will mean we’ll have to find a way to transfer medical debts onto surviving relatives. (It’s a new risk, so we can sell a bet — er, I mean — derivative on that too.

    What are the forged foreclosure documents going to look like? Is JP Morgan coming for your kidneys?

    If only we had actual property rights and equal treatment before the law, then maybe patients could get the people who give us diseases to owe us money instead of the other way around…

  15. RepubAnon

    These folks don’t seem to understand the economics of insurance: it’s a form of gambling as a hedge against otherwise unaffordable losses. You bet that you’ll get very sick and incur catastrophic expenses, the insurer bets that you will stay healthy. It only works if a large pool of people put money into the fund, and only a few people pull money out.

    The point here is that aside from plastic surgery, medical services aren’t something that you want to incur. It’s more like accident insurance for your car – you really don’t want to ever make a claim.

    Besides, what about chronic, expensive illnesses? Once you’ve spent all you’ve ever earned and mortgaged the rest, are you thrown into the street to die?

    “A patient’s family is challenging a Texas hospital’s decision to withdraw his life support, saying a state law that allows providers to halt such care is unconstitutional.” Modern Healthcare, http://www.modernhealthcare.com/article/20151129/NEWS/151129929

    1. LifelongLib

      Yes. An insurance agent was speaking to the employee organization I belong to, explaining that his company wouldn’t be offering a certain coverage because only people who knew they would need the coverage would buy it. Some in the audience laughed. He looked puzzled for a moment, then said “Insurance is paid for by the people who don’t use it, that’s the nature of insurance”. Indeed. It works best when who will need it is unpredictable, and anyone may but chances are most won’t. Health care doesn’t fit this model. Too many healthy people (i.e. the ones who pay for it) would opt out. That’s why Obamacare has the mandate.

      1. jgordon

        Yeah–it has a mandate and it’s still failing anyway. Obviously there’s something wrong with that idea.

  16. Pespi

    In Nepal, you can sell yourself into slavery to pay for medical care for a relative. We need to adopt this practice.

    http://www.freetheslaves.net/where-we-work/nepal/

  17. ke

    “Transformative” should be good for a Wyle Eile pipeline of IPOd, to pay for that medical monstrosity in San Fran; gotta keep the Zuch clan in bling so the hamsters will keep turning those wheels of aspiration progress.

    1. John Zelnicker

      @P fitzsimon – Highly unlikely. The only kinds of deductible interest are mortgage interest and student loan interest, and both are limited. The mortgage interest deduction is limited by the size of the loan and the purposes for which it was used. The deductibility of student loan interest phases out at higher levels of income, somewhere around $160-180k.

  18. Marcie

    The incentives on this are so perverted words escape me.

    When I finally figured out what was wrong with me after multiple doctors, willfully ignorant, refused to acknowledge my injury, I sought treatment. I knew I could be treated with chelation therapy so I promptly made an appointment to start, chelation is a difficult process that removes toxic metals from the body. I was poisoned by gadolinium-based contrast agents and gadolinium is a toxic metal, specifically GE’s product Omniscan and Bayer’s product, Magnevist.

    The practitioner required payment upfront of ~ $9,000 but that was only six months of treatment. While discussing how I would finance it he presented me with a brochure for CareCredit. CareCredit is a sleazy company that would profit from the sick and the dying but what was deplorable to me was the company offering to finance my treatments was the very company that poisoned me, that is GE.

    Back to the wicked financing of these “financial security killing” products. After these financial products are approved and they will be approved, there will be a ing frenzy by investors, everyone will want a piece of the action and the only ones that will be able to afford these ‘purportedly curative drugs’ are those with an income. Because in this country we chase the cure they will have many takers and this will create a bubble that will eventually burst and/or become deflated. The drugs they paid for that will purportedly cure will have caused injury if history is to be believed. Now the finance gods will bet against the securitized loans knowing that the drugs they pushed were defective from the get-go. They again will make huge profits.

    This financing will not be available for those of us injured. But even for those that will buy into this sleazy financing know that they are rigging the market to favor pharmaceutical companies. They will invest in the stock of the pharmaceutical companies that have a patent on these new inventions that purportedly “cure” and secure their profits rather than force the pharmaceutical companies to come down in price.
    But will patients be fooled again? Will all of us come together and warn our brothers and sisters that this is not a good plan? Will we take the time to explain to potential targets (the ill) that if they refuse to buy the drugs will come down to a more reasonable price? Will we explain to our brothers and sisters that they cannot trust ANY products approved by the FDA and they should do their own research to determine if the drugs or devices will even work at the least or do grave harm which is extremely likely?

  19. Synoia

    You have described the next generation of Obamacare, Hillarycare.

    Brought to you by a corporation loving Democrat (which should be a null set, buy is not),

Comments are closed.