Goldman Sachs and Credit Suisse and Why Health Care Cannot be a Commodity

I woke up this morning to this article at the New York Times and several things hit me at once.  I'll get to those, but what pounded me over my head the hardest is what is at the root of this new investment tool that Wall Street investment banks (Credit Suisse, Goldman Sachs to name two from the article) are poised to use: Health Care.

But an explanation first of what this new investment tool is.  From the New York Times:

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

All investing is a gamble, but when you are counting on people dieing sooner than later, it gets rather morally ambiguous, now doesn't it?

Credit Suisse has already bought their own life settlement company so they can have an assembly line, so to speak. What is a life settlement company?  They purchase your life insurance policy for more than the life insurance company would if you surrender your policy and in turn, you make them the beneficiary of your policy.

I wonder if they are going to purchase a credit rating company as well--several big insurance companies tried that one until they got caught.  Probably some rules against that, right?

But even with a math whiz calculating every possibility, some risks may not be apparent until after the fact. How can a computer accurately predict what would happen if health reform passed, for example, and better care for a large number of Americans meant that people generally started living longer? Or if a magic-bullet cure for all types of cancer was developed?

What indeed, would happen if Health Care Reform did pass?

Here's what I think--it's the other thing that hit me this morning:  This is why there are so many very wealthy people funding the crusade against Health Care Reform.  They don't want reform because it could have the potential to go against them buying into what seems like a hugely profitable investment tool.  How profitable?

But even if a small fraction of policy holders do sell them, some in the industry predict the market could reach $500 billion.

and

Despite the mortgage debacle, investors like Andrew Terrell are intrigued.
Mr. Terrell was the co-head of Bear Stearns’s longevity and mortality desk — which traded unrated portfolios of life settlements — and later worked at Goldman Sachs’s Institutional Life Companies, a venture that was introducing a trading platform for life settlements. He thinks securitized life policies have big potential, explaining that investors who want to spread their risks are constantly looking for new investments that do not move in tandem with their other investments.
“It’s an interesting asset class because it’s less correlated to the rest of the market than other asset classes,” Mr. Terrell said.

Who are the crusaders against Health Care Reform? And how much money do they have?  A short list:

Koch Family Foundation headed up the the Koch brothers.
Scaife Foundation headed up by Richard Mellon Scaife.
Castle Rock Foundation funded by the Coors family of the beer brewing fame.

You can dig around some more at SourceWatch.org.

My fellow Americans Against Health Care Reform, what you are really doing when you go out there and shout, boo, hiss, bring guns to rallies and speak out against your president who wants you to have affordable and accessible health care is you are helping put more money into the pockets of the very people who would profit from your death.  They don't want to see you living a longer life.  Access to Health Care for you would be ruinous to their investments.

On the flip side, though, is the big money that is made from medical research and innovations into new procedures, medical apparatuses and drugs.  It will be interesting to see how the pharmaceutical companies and insurance companies react to all this.

But do count on your life insurance premiums going up since they will be paying out a lot more death claims than they ever counted on before.

You can follow the money trail yourself.  Here's an example: The Heritage Foundation's Board of Trustees include and have included (Ms. Coors is deceased): Holland H. Coors, Richard M. Scaife and William J. Hume, among a list of others.

Who funds The Heritage Foundation?  Castle Rock Foundation, Charles G. Koch Foundation and the Scaife Foundation, to name a few.  What is The Heritage Foundation's stance on Health Care Reform?  You guessed it, they're dead against it.  You can see that here.

We already know that the Koch brothers fund Anti-Health Care Reform through their various givings to other foundations, but let's look at William J. Hume, mentioned above, and what he does.  He is the Chairman of the Board, Foundation for Teaching Economics. The foundation's mission (from their website) is "introducing young individuals to an economic way of thinking."

Who is a proud partner with the Foundation for Teaching Economics?  The Heartland Foundation.  Guess what they think of Health Care Reform? Who contributes to the Foundation for Teaching Economics?  Here's the list.  And for purposes of proof I am going to cut and paste part of the list here.

Please note that Goldman Sachs gives to a group that supports ANTI-HEALTH CARE REFORM as they are poised to be in the business of, as one NY Times reader from Texas put it, Death Derivatives. Exactly.

2008 Contributors

$50,000 +
Anonymous
Castle Rock Foundation
Citigroup Foundation
The Goldman Sachs Foundation
HSBC-North America
The Robert and Helen Odell Fund
 
$10,000 +
The Anschutz Foundation
Contran Corporation
Earhart Foundation
Carl and Judy Ferenbach
The Fluor Foundation
John and Mary Franklin Foundation
Pierre F. and Enid Goodrich Foundation
The Calvin K. Kazanjian Economics Foundation, Inc.
A. P. Kirby, Jr. Foundation, Inc.
Walter Lantz Foundation
Manloy Heritage Foundation
The Ambrose Monell Foundation
The Burton D. Morgan Foundation
M. J. Murdock Charitable Trust
Dan Murphy Foundation
PACCAR Inc.
Howard and Andrea Rich
The Rising Phoenix Foundation
Chris J. Rufer
Sarah Scaife Foundation
Raleigh L. Shaklee
Jack B. St. Clair
John Templeton Foundation