The Establishment Is Spent: Securitized Loans For Healthcare

When the economy reaches peak debt, the public no longer wants to borrow and healthcare spending is possibly beyond its sustainable share of GDP, a great solution to keep the system running is debt for healthcare.
At a time when breakthrough therapies for certain cancers, hepatitis C, and rare diseases remain out of reach for many patients due to their prohibitive cost, new research by Dana-Farber Cancer Institute and MIT Sloan School researchers offers a potential remedy: securitized consumer healthcare loans (HCLs).

HCLs, the equivalent of mortgages for large healthcare expenses, spread the cost of curative therapies over many years, making them more affordable to the people who need them.
If you aren't laughing yet, hang on, the punchline is coming.
“This is an instance where financial engineering could benefit the entire ecosystem,” said Lo. “It helps patients by providing them with affordable access to therapeutic drugs and cures. It helps biopharmaceutical companies by enabling them to get paid back for the substantial investments in R&D they make to develop the therapies in the first place. And it helps insurance companies by linking payment to ongoing benefit.”
That wasn't it. Here it comes:
Securitized HCLs may also be profitable investments. Based on numerical simulations and statistical models, a large, diversified fund of HCLs generated hypothetical annual returns of 12%. For comparison, over the ten-year period from January 2006 to December 2015, the Standard & Poor’s 500 Index saw a compound annual return of only of 7.3%.
This fails on so many levels. It adds more debt, which the economy doesn't need. The models don't/won't work. Subprime was a major component of the speculative excess. Implied government backing also fueled the bubble. As it did with housing, the government will find a way to force lending to the poor. Does the model assume poor people will not be denied loans? People will buy assuming government is backing the loans. Increased funding always increases demand, which leads to higher prices, which will force more people into taking out loans to buy healthcare. This plan would either result in a spectacular collapse of the financial and healthcare system, or a purely government funded system. In either case, it would lead to runaway prices and give banks greater control of the economy. This is exactly the type of "solution" one would expect if the banks are running the country.

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