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     Jan 29, 2008
If it's broke, fix it - with stock tips
By Julian Delasantellis

Well, there I was, riding my bike through the streets of my small little Pacific Northwest town, trying to think of ways to explain the mortgage-insurance crisis to you, when, all of a sudden, like two commodity traders jostling for position in the pit to get the best bid, my bike and another attempted to occupy the same space on a street corner.

Down we both go, me a lot worse than him. In the ambulance, I look down, see that the alignment of my foot now bears absolutely no relationship to that of my leg. At the emergency room, the X-ray reveals that the bones of my left foot have, like an



IPO, been spun off with a five for three split declared.

And that's why I have not been around to comment on last week's juicy world markets. But what kind of writer and educator would I be if I could not turn this event into, as they say at those cushy teacher conferences, a "learning moment?"

Specifically, how fortunate am I that my experience has made obvious to me what the solution is to the 47 million Americans lacking health insurance. You won't hear this from any of the current crop of US presidential candidates, and it hasn't been run by any focus groups in Iowa or think-tanks in Virginia, so any candidate that says he or she is the true icon of change should definitely read this.

I argued last year (The terror of state health care Asia Times Online, July 24, 2007) that the conservative opposition to universal healthcare coverage in America was just a smokescreen to shield the highly profitable health insurance industry. Not being in a hospital for almost two decades, I really had no idea just how cogent this argument really is.

Without being its bound (literally and figuratively) concubine for a week (as I continue to be, to a minimally lesser extent, now here at home), you cannot begin to imagine the central role of the insurance companies in the day-by-day, minute-by-minute delivery of healthcare in America. Nothing, absolutely nothing, gets done without their approval first.

More accurately, nothing gets done without the specialized well-paid bureaucratic apparatus - many of its members with their freshly minted master's in social work degrees, once wanting to save the downtrodden of the world but now acting as prostitutes working the streets of this insane system to repay the student loans - dealing with their counterparts in the insurance companies, trying to gain funding approval for a specific procedure or treatment. If that approval is granted, then it's up to these people to inform the actual medical staff, the doctors and nurses, that treatment can be given.

Sometimes the doctors and nurses are informed of this approval. Sometimes not.

I waited with breathless anticipation (once literally, when I needed oxygen) for the fabled efficiency of the American private sector, the prime argument against nationalized health care, to wave its mighty fist.

I imagined if this system had been grafted onto the brokerage and financial services industry. You'd call in an order, then it would be sent to a committee of fresh brokerage MBAs. Should they approve the order, it would then be sent (or faxed! Remember them? They sure do at my hospital) to the financial exchange; if their committee approved it, the order would be executed - assuming it wasn't lunch by then.

Then, a few hours later, or maybe the next day, you'd get a trade confirmation. Day trading would be possible only if you don't expect to do it on the same day.

Where is the fabled efficiency of the US private sector? Long ago companies such as Wal-Mart and Costco squeezed and bled such inefficiencies out of their supply chains, passing on the savings to their consumers. Somehow, this private sector cost discipline has never really been applied to this slice of the health care sector.

For a while it seemed that the Health Maintenance Organization (HMO) revolution of the 1990s would provide the cost discipline the system needed, but, although the HMOs did at first reduce some costs, little or none of these savings found their way to the consumer. The savings turned into HMO profits, leaving the system as a whole little better off.

Many free-marketers advocate something called Health Savings Accounts, tax advantaged personal funds that would allow healthcare consumers to bargain and dicker for the most value for their healthcare dollar. For minor healthcare needs such as colds and sprains, there may be some utility in this concept (as illustrated by the rise of storefront health "clinics" staffed not by doctors, but by lesser educated and qualified physicians' assistants and nurse practitioners) but even the supporters of HSAs concede that there probably will still be a need for a government subsidy for catastrophic healthcare expenses.

After all, nobody in the ambulance gave me a cellphone and a phonebook so I could shop around for the best surgeon at a good price as we sped towards the emergency room.

To the limited extent that any current public policy issue is dealt with in a serious manner by the US political process, healthcare has become a critical issue in this year's presidential campaign.

The Republicans are divided between the free-market corporatists who believe that the solution to America's healthcare crisis is to have companies cut healthcare from employees' benefit packages, and the social conservatives who seem to believe that Jesus should be both their spiritual and healthcare gatekeeper.

The two Democratic Party frontrunners, Senators Hillary Clinton and Barack Obama, have advanced detailed policy prescriptions for covering the uninsured in America.

Put simply, the Clinton plan builds on her failed healthcare initiative from 1993-94, in that the emphasis will be on poking and prodding the insurance companies to extend health insurance affordability and availability. The Obama plan in healthcare is, like most of his platform, somewhat less detailed than Clinton's, but it does seem to imply a greater role for the Federal Government as a direct insurer and provider of healthcare services.

Without my recent experience, I might have leaned more towards advocacy of the Clinton initiative. As a former government policy wonk, I respect those who put in the effort, who "do the math" to provide serious and specific policy initiatives; just about the only thing I remember from my college political science classes is that reform is a lot harder than revolution.

I now think differently. From my current perspective, reforming the private insurance centered healthcare system, as most other advanced industrial countries seem to have learned, is roughly comparable to sending a parasite to a health club. In my July 24 article I talked about what is most likely the core of the US healthcare crisis, the hugely disproportionate share of private healthcare spending that goes to administrative costs, called the Administrative Cost Ratio ( ACR).

US private sector ACRs are, depending on the national system which it the US is being compared, at least three times greater than those of other systems, including the US government-run Medicare program for the elderly. Hospitals report that the insurance companies put them under intense pressure to cut costs, of everything from gauze bandages to floor mops, but America's worship of all things related to private enterprise means that never is there any real attempt to slice away the system's real inefficiencies, the costs required for the maintenance and the prosperity of insurance company centered healthcare itself.

I witnessed no service, no value added, that health insurance companies provided that even closely justified this added expense. Government bureaucracies can be inefficient and bloated, but, grading on a curve, I can't believe it could be worse than what I just saw.

But instead of advocating for Obama's, or any other candidate's healthcare plan, I will now propose my plan for the candidates to adopt as their own.

The Gotterdammerung of my hospital stay was having an orthopedic surgeon that I barely even saw previous to my operation shove so much metal, both inside and out, of my foot that construction on the new, mammoth US Embassy in Baghdad will undoubtedly be delayed. (Again?)

My wife started her professional career in the medical profession, and from her I had heard plenty of stories about what arrogant, preening, self-centered, God-complex-saturated bastards surgeons could be.

In this manner, my surgeon seemed to have come right out of central casting. He gave every indication that he held me in the lowest possible category of contempt, that my questions to him regarding my foot and its future were the most insulting possible example of my bald-faced effrontery regarding his skills, his judgment, just his overall higher placement on the human evolutionary scale than I.

Until that morning, last Tuesday, the day of the worldwide SocGen-inspired equity market selloffs, that he walked into my room and saw that I was watching US business cable station CNBC.

Only then did he seem to take an interest in me as more than just a sack of bones, some of which were broken. He asked my connection to the markets, and I told him, along with as much informed market commentary I could push through the morphine haze.

Suddenly, we were best friends. He told me that there was a lot of worry that morning in the doctors' lounge regarding the markets (glad my surgery wasn't that day), and that a lot of his colleagues were looking to him for guidance. He told me that he, of course, had sold out of all his stock positions in early October, at the market top, just like the couple of million other guys who told me that they had sold out of the markets at the top in August, 1987, prior to the crash the following October.

In that, I saw my health plan's outline emerge. Instead of having the government force the system to care for the uninsured, why doesn't America just make the uninsured so appealing to the system that it will fall over itself in its eagerness to treat them?

I propose that the government provide mandatory training in the entire panoply of finance and investments, starting with daily readings of Asia Times Online, to all the nation's 47 million uninsured.

This system will allow the free market to operate with maximum efficiency. Let's say a patient's investment specialty is Northern California Real Estate Investment Trusts (REITs), but his doctor is only interested in South Asian equities. This doctor could trade off this patient to another doctor whose investment interests better match the patient's specialties, as part of an explicit quid pro quo that the system will assign the next Mumbai Sensex Index specialist his way.

Certain finance specialties might be valued higher than others, but that could become an important investment analysis metric as well. Using classic contrarian analysis, if no doctors are interested in the stocks of the South American oil and gas sector, it might be the time to buy.

The market will sort it all out. That's what the market fetishists always say.

In the meantime, it looks like the markets are following a pattern very similar to that of mid-August, when wild excesses of financial system solvency pessimism produced a panic low, as on August 16 and last Tuesday, which the markets bounced off (with the generous assistance of US Federal Reserve interest rate easings), only to sell off once more as it was once again realized just how bad the economic and financial conditions really were.

If you want to trade on this information, you have until Wednesday to do so - that's when my next appointment with my surgeon is.

Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis@yahoo.com.


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Rogue and the pogue (Jan 26, '08)


1. Going bankrupt: The US's greatest threat

2. Xposed! Norman Podhoretz's boobs

3. Iran sanctions hit the wrong target

4. A salvo at the White House

5. Envoy's belly dancer bares all

6. Troops felled by a 'trust gap'

7. Lies, lies and more lies

8. Crying (Iranian) wolf in Argentina

9. Taliban wield the ax ahead of new battle

10. China: Partner or predator
in Africa?


11. A $4.4bn drop in the bucket

(24 hours to 11:59 pm ET, Jan 24, 2008)

 
 


 

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