The Pending Health Insurance Implosion

“We are continually faced by great opportunities brilliantly disguised as insoluble problems.”

~ Lee Iacocca

The following link is to an Edge video stream of a panel discussion between Daniel Kahneman and Nassim Nicholas Taleb concerning the global financial crisis in general, and the US (and now world-wide) banking crisis, specifically. This is a rather long presentation, and not necessarily a health-related, TTP topic, per se. However, some of the ideas floated during this very interesting discussion, could, in my opinion be massaged so as to be useful in the healthcare arena. Again, I am first and foremost a free-market guy, and so is Taleb. But apart from that, I am more interested in what works in a given situation.  If that happens to be some creative mix of government and free-market economies, I’m all for it.  Ultimately, though, I’d like to see the private industry set up so as to include these proposed (see below) paradigm shifts. However, being the realist that I am, I do see a heavy amount of government influence in this arena in the very near future. That being the case, I’d at least like to have my voice heard on the issue.

How can the current healthcare provider/insurance complex benefit from creative (and, really, completely outside of the box) thinking within the world of finance? Specifically, one of Taleb’s recommendations is to create a two-tiered finance system whereby “lending banks” would be insured (i.e., government backed), and operate as do modern-day utilities (gas, water electric, etc.), and “investment houses” (for lack of a better term) would be uninsured, and responsible in and unto themselves. All risk would be assumed, then themselves as would potential profits. Those investing with the investing bank would be under no disillusion as to the status of their investment – namely, it would be uninsured, with any profits distributed as per contract agreement. This would effectively insulate the nuts-and-bolts, borrowing-lending machinery for mortgages, businesses, etc., from the speculative end of the financial spectrum. Note that this is a very much condensed and layman’s version of Taleb’s complex idea, and is only intended as a segue into the following question: could such a two-tier model be used in the health insurance market? And, more specifically, how would such a model be constructed and managed, as seen through the prism of the comprehensive healthcare provider?

I agree with Brent Pottenger, of the healthcare epistemocrat blog, in his contention that we need a parallel establishment for the health insurance industry. Check out Brent’s blog, he’s got some really good ideas when it comes to fixing the nation’s healthcare issues. As Brent says:

We need a parallel group for the health insurance industry. When/if the health insurance industry crumbles, we will see, I suspect, a parallel situation emerge (quoting Taleb) ‘in which it’s the worst of capitalism and socialism, a situation in which profits were privatized and losses were socialized. We taxpayers have the worst.’

(emphasis mine).

My sincere hope is that the healthcare system remains wholly within the realm of the free-market, as I feel that only the free-market is nimble enough to pull-off such a far-reaching change; I remain, though, open-minded as to what government can bring to the table. I’d also like to see healthcare insurance rates tied to blood work, leaving private insurance companies the flexibility to charge rates depending on what they deem to be “a good blood profile”. I think we all know what the best blood profile leans towards and how to go about achieving that kind of a profile. It will not take long for the private sector to come to the same conclusions, once profit incentive is given free reign. Then, maybe my neighbor would be “nudged” toward chasing better insurance rates by adopting my Paleo lifestyle. Maybe this could be considered part of the “second tier”, or speculative insurance. One thing is certain: the system will have to morph into something drastically different, and soon.

In Health,


One response to “The Pending Health Insurance Implosion

  1. Thanks, Keith.

    Brilliant, as always.

    Here is the key:

    We can learn by grace or hard knocks; banking is learning by hard knocks – I hope healthcare can learn by grace.

    To good health,


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