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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