Guest Post: Economist Says Health Care Bill “Is Just Another Bailout Of The Financial System”

It is obvious that many republicans oppose the proposed health care bill. But many liberals and progressives oppose it as well.

For example, economist L. Randall Wray writes:

Here’s the opportunity, Wall Street’s newest and bestest gamble: there is a huge untapped market of some 50 million people who are not paying insurance premiums—and the number grows every year because employers drop coverage and people can’t afford premiums. Solution? Health insurance “reform” that requires everyone to turn over their pay to Wall Street. Can’t afford the premiums? That is OK—Uncle Sam will kick in a few hundred billion to help out the insurers. Of course, do not expect more health care or better health outcomes because that has nothing to do with “reform” … Wall Street’s insurers… see a missed opportunity. They’ll collect the extra premiums and deny the claims. This is just another bailout of the financial system, because the tens of trillions of dollars already committed are not nearly enough.

Wray points out that – with the repeal of Glass Steagall – the financial sector and the insurance businesses (the “f” and “i” in the “fire” sector) are somewhat merged.

Wray is no conservative. He is Ph.D. is Professor of Economics at the University of Missouri-Kansas City, Research Director with the Center for Full Employment and Price Stability and Senior Research Scholar at The Levy Economics Institute – which focuses on inequality in the distribution of earnings, income, and wealth.

Dr. Andrew Coates describes the bill as “a guarantee of insurance industry dominance and the continued privatization of health care in every arena.”

Dr. Coates is no conservative. He is a medical doctor, a member of the Public Employees Federation, AFL-CIO, secretary of the Capital District chapter of Physicians for a National Health Program, and teaches at Albany Medical College.

And – as I have previously pointed out – progressives such as law school professor Sheldon Laskin, anti-war activist David Swanson, and Miles Mogulescu are calling the bill authoritarian and unconstitutional because the government cannot legally force people to buy private health insurance.

Indeed, given Wray’s point that this is just another bailout in disguise, the bill should more properly be called a “wealth reform” bill than health reform legislation.

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  1. Stocks on Wall Street

    Health Care bill is a joke, its just another huge financial mistake and the only goal of it is to help with unemployment as for example in England the largest employer is the United Health service. Smart idea Obama but it will be an awful idea long-term.

    1. Graveltongue

      National Health Service. Where do you get your numbers from? One of the largest, not the largest, public sector employers.

    2. aher

      I’m middle class. I have a job, a good one. I feel for the people that have been laid off. But I’m tired of paying for the people that don’t want to help them selves. The ones that have 6 kids with no daddy or mommy around and just keep having kids, just to get help from others. The ones that had no job when jobs where around.
      Help those that companies have been run into the ground by idiots. The ones that have supported themselves and the economy.
      Not the ones that only want a free hand out were every they can get it. Because they are to lazy to get a job even when they were out there.Get a job at Mcdonalds, then ask for a hand out. At least then you’ll have a job.
      Sorry, I have 2 kids of my own and my husband and I bust our butts everyday to make sure they are taken care of. The married middle class are gonna take the hit. Who’s gonna bail us out, I feel like I’m throwing my money away having a good job and being responsible about my bills. I know others feel the same way. The health care bill stinks. But who am I to say.I’m just a middle class American staying afloat.

  2. S Brennan

    File the “Insurance Welfare Act of 2009” bill under “Jumping out of the frying pan and into the fire”.

  3. Advocatus Diaboli

    Can a modern functional nation which has transformed into on a parasite ridden system, and produces very little added value, exist for long?

    We will find out soon… not that we want to.

    1. Michael

      Indeed we will. As I said to a few mates over beers recently, it’d be an interesting movie – if we weren’t in it.

  4. Cynthia

    None for this should come as a surprise to us given that bankers and insurers are kissing cousins.

    And there’s no doubt that our masters of the universe are crooked as a dog’s hind leg, but they certainly aren’t stupid. Anyone who can create a market bubble and profit from it as it’s inflating as well as after it bursts and then gets off scot-free for doing this is pretty smart. The stupid people in all of this are: 1) the ones who failed to stop them from creating the fraud which led to the credit meltdown, and 2) the ones who failed to prosecute them for creating this fraud.

    Several people were prosecuted for creating the fraud behind the S&L crisis. And several people were prosecuted for creating the fraud behind the dot-com blowup. But it looks like no one is gonna be prosecuted for creating the fraud behind the credit meltdown.

    As for why this is so, I think it’s because Wall Street has gotten so deep in bed with Washington that our financial fraudsters will be forever immune from prosecution. So I think that about the only way we are ever gonna restore rule of law within the financial markets is to bust up this very cozy relationship between Washington and Wall Street. And about the only way we can do this is to create a revolution at the grassroots level. But I’m afraid that this is gonna create a lot of blood in the streets, in more ways than one.

    1. alex black

      If this revolution was to take place, the blood on the streets would be that of the revolutionaries – as they start talking and realize that half of them are right-wing Tea Party folks, and the other half are left-wing Daily Kos folks. Once they start debating “How Things Will Be Different Once We Win”, the bloodletting will begin, amongst themselves. The Powers That Be will simply watch the show – from the White House, and the Capitol, and all of the lobbyists’ headquarter buildings – and be quite entertained by the spectacle.

      1. Glen

        Actually having the left and the right coming together has to be causing fits with the powers that be, and indeed some of the blogs have been inflamed about this. The game’s always been to keep the lower class divided and at each other’s throats while the upper class robbed them blind.

      2. Cynthia

        What you are saying, George Carlin has said even better:

        Let me also mention as I’ve mentioned before that Barack Obama seems to be one among many of our public servants who is using his political power only to enrich himself and his already rich campaign donors. It seems pretty obvious to me that he has no interest in helping make America a richer and more rewarding place for ordinary Americans. I find this particularly disturbing given that the Democratic Party has traditionally been the party that stands up for ordinary Americans. Now it is playing second fiddle to the Republican Party as the party for our moneyed elites. In fact, Obama comes across to me as being so elitist in his thinking that I wouldn’t be too surprised to learn that he is looking forward to the day when America becomes a land of haves and have-nots with absolutely nothing in between!

        So I’ve pretty much come to the conclusion that there’s only one of two things that we can do to keep Barack Obama and other public servants like him from using Washington as a place for them to strike it rich: 1) get rid of all private campaign contributions or 2) elect only people to public office who are so damn rich that they don’t need to raise a dime to win elections. I’m sure that there are a few wealthy people out there who’d seek public office in order to represent the interest of ordinary Americans, even if it means having to lose a few of their multimillionaire friends. It is just a matter of us finding them and having them work for us, instead of them.

      3. larry criddle

        there doesn’t have to be a revolution .. we just need to vote ALL of them out of office .. give the new ones we vote in , TERM LIMITS .. THEN WE WILL SEE WHO IS CRYING …

  5. mmckinl

    L. Randall Wray & Dr Coates are exactly correct …

    And it gets worse … The Bill does not take away anti-trust exemptions and does absolutely nothing to curb cost increases …

    The Bill is a farce …

    and thanks Yves for the Ten Reasons to Kill the Health Care Bill …

  6. Advocatus Diaboli

    This concept has some interesting potential (rubs hands with evil smile).

    “Thomson Reuters, the world’s largest news agency, has started moving down this path, courtesy of an intriguing product with the nondescript name NewsScope, a machine-readable news service designed for financial institutions that make their money from automated, event-driven trading. The latest iteration of NewsScope ’scans and automatically extracts critical pieces of information’ from US corporate press releases, eliminating the ‘manual processes’ that have traditionally kept so many financial journalists in gainful employment.”

    1. Graveltongue

      Just heard from a friend about some ‘journalist’ software that can report live from sporting events autonomously.

  7. crash

    Remember back when everybody when everybody was ripping Ira Magaziner’s guts out? One of the things he was trying to do was expand the scope of groups. It’s groups, he thought, that give consumers some market power; that’s why a big employer’s coverage is less predatory than an individual policy. Our corporate tapeworms must remember those days, because the whole thrust of this bill is to isolate the consumer. Basically every new customer’s government-coerced payment buys an individual policy subject only to lax swiss-cheese rules. With no need to bargain for blocs of consumers, the industry is shielded from any vestige of oligopsony power. Obama is not trying to put something over on consumers, he’s trying to bend them over for Cigna and Blue Cross, make them helpless. This is unlike Bush’s malign neglect of predatory commerce. This is government complicity in corporate predation. Obama is going to pay for this.

    1. Doug Terpstra

      This is why Obama is such an abysmal, infuriating disppointment. His election has morphed into a stealth fascist coup. I do hope you are right about his paying for this, he and the “Democratic” Party. Sarah Palin and Glenn Beck may be their best insurance, because there is no visible, viable third party leadership.

      WTF does Wall Street want from consumers already exsanguinated by usury and predatory gotcha loans, and how do they imagine any of it is sustainable? When do they get their bloody claws on the carrion carcass of Social Security?

      See you all at the barricades.

      1. Sam in NY

        Obama’s bosses would have made him pay for it if he had done differently. He might have ended up with cement boots, or something. Accidents do happen.

        I don’t know how he could be made to pay for this now, having followed instructions he’ll probably be well protected. But he’s just an employee anyway, don’t confuse the job with its incumbent. If it weren’t him, it would be someone else, doing about the same thing.

        That’s the way our system of government works.

        1. Robin

          Amazing read, that link! Thanks!

          One must wonder if Barack Obama, a constitutional law professor, ever happened upon that essay?

          It would be very interesitng to hear his thoughts on it.

  8. crash

    First guy to mobilize the debtors wins. Who cares if he’s right or left, as long as he knows how to drop a wrench in the works. Legal support for ruthless default, collective negotiation for haircuts, wildcat jubilees, it’s all good if it breaks the corporate paymasters. This is not a hard economy to wreck.

    1. Sam in NY

      “Ruthless default” is already legally supported. It’s fully legal, especially for non-recourse loans, which purchase money mortgages in most states are. Maybe that’s an easy path for a politician to take. He can mobilize the people to default ruthlessly, “empowering” them to do something they already had the power to do, and getting credit for it.

      It’s not a “jubilee” because you don’t then get to keep the house. What’s needed is a real jubilee. Leave the assets in place with existing owners who need them, and wipe out the debts that are strangling them. How to make it happen? I would really credit someone who took up that cause.

  9. crash

    Sign debtors up; counsel the ones who can benefit by default; compile the debts of the rest to identify target firms most exposed to your group’s debts. Then go to the weakest and most exposed creditor and make them a public offer they can’t refuse, under threat of collective default. Lather, rinse, repeat with the next most vulnerable lenders. Keep your membership info close to your vest and you can take lenders down at will as the membership grows. Why the Greens haven’t done it I can’t imagine, Nader and the PIRGs could do it with their eyes closed. So could the GOP, if they had the stones.

  10. Paul Tioxon

    The health care reform act needs to pass, understanding that over the next 10 years, it will be revisited by Congress. But more importantly, after the minutia has been dissected on the final bill, it is the Global perspective that needs to be addressed to see that our society has to restructure itself, with the deliberation of the political process or face the cascading unintended consequences of maintaining a vestige of our Cold War/Industrial past. The fall of the Berlin Wall caught the CIA and The White House by surprise. Some events are too large to measure by the generally accepted means at our disposal. Gorbachev finally relinquished 500,000 soldiers of the standing Red Army because he was the first Soviet Premier to view a valid economic picture of the USSR and he acted accordingly. Fortunately we do not have as bad a situation due to the vast amount of university level research about our society. We have the capacity to make policy decisions for our Republic as a whole and that is what this bill is, more than anything that has been taken under consideration since the New Deal. We can not expect to partially integrate our economy into a global economy. Furthermore, we can not expect parts of it to be maintained with the unsustainable costs commensurate with our current health care industry. No one in the world has the system that we have where employers are stuck with a legacy to provide health care insurance to workers for the vast majority of the population. Among the major developed countries of the world, we spend the smallest proportion of health care from the public till. A comparison with Japan, the economy closest in size to ours, shows the US spends 2 times as much as a percentage of the GNP. The private sector shoulders the majority of the cost burden and accordingly absorbed the costs, into their business models to maintain this benefit. This alone is a single cost that make them uncompetitive with enterprises around the world who have their governments or some other more rational system that does not add to the cost of goods and services. Lee Iaccoca and the auto industry have known this truth for decades and the price they paid when Pres Clinton failed to get a different system to replace it. As a major contributing factor to the auto industry’s demise, I do not think there is much argument. Since most people get their health insurance as a benefit, they are insulated from the costs and use the benefit as an unlimited resource, as much as their plan allows. Cost containment has been ineffective with co pays, deductibles, etc. The self regulating mechanism of thrift plays a small role in health care via employers. Multiply this industry after industry, and it is part of a system, that functioned when communism was being contained, when the US economy did not interact to any significant extent with the entire Soviet bloc, China and its satellites. The global economy has opened up new markets to us and we have opened up to them, with attendant systemic reactions. At 20% of economy, there is no avoiding the consequences to the health care sector. It will fall like the Berlin Wall, because as it is currently constituted, it is unsustainable. The questions of individual rights, oppressive government interference are words that fail to describe the changed world that the US economy now finds itself integrated with. If we do not make a rational response, and take the first steps to get our arms around a problem that is too large to measure by what people are accustomed to use to process the events in the world, the news media, pensive books by well meaning journalists, crap from phony fronts for special interests etc. we will have change anyway, through the process of chaos, not deliberative legislative politics. And in chaos, our voice will not be heard nearly as well as through voting and pressing our elected reps.

    1. DownSouth


      I always enjoy your thoughtful and well considered comments. And you give an excellent and unassailable summary of the problems that plague our current healthcare delivery in the United States.

      That said, however, I question your conclusions. “The health care reform act needs to pass,” you assert. “If we do not make a rational response, and take the first steps to get our arms around a problem that is too large to measure by what people are accustomed to use to process the events in the world…we will have change anyway, through the process of chaos, not deliberative legislative politics. And in chaos, our voice will not be heard nearly as well as through voting and pressing our elected reps.”

      To begin with, I’m not convinced the healthcare reform bill that emerged from the senate is a “rational response.” Quite the opposite, I believe it to be more like the Medicare drug benefit bill that was passed in 2003, which delivered huge benefits to the drug industry at great cost to the public. Maybe some seniors received drug benefits, but at what cost?

      Secondly, I believe you way overestimate the capabilities of “deliberative legislative politics.” While I certainly have a more nuanced view than that set out by Jerry Fresia in the link provided by jeff65 above, and Fresia may go overboard in one direction, you certainly go overboard in the other direction. Gandhi, Martin Luther King, Reinhold Niebuhr and Hannah Arendt all made compelling arguments that something more than mere “deliberative legislative politics” is necessary to bring about substantive change.
      Historically speaking, some level of chaos (either violent or “nonviolent”), or at least the threat of chaos, has always been necessary to advance social justice. I don’t know whether it was your intention or not, but you come across more as a defender of the status quo than as a reformer.

      1. Jeff65

        Despite the title of Fresia’s book linked above, I find the tone scholarly rather than militant or strident. It never struck me as overboard.

        It is well worth reading as an opposing view (well documented with facts) of the current myth that the framers were sensitive populists.

  11. Doug Terpstra

    “No one in the world has the system that we have where employers are stuck with a legacy to provide health care insurance to workers for the vast majority of the population … The private sector shoulders the majority of the cost burden and accordingly absorbed the costs, into their business models to maintain this benefit… that make them uncompetitive with enterprises around the world”

    Obvious enough to prompt a burning question. Why hasn’t the larger business community effectively lobbied for universal single payer, overwhelming the narrower insurance, drug, and medical lobby?

    “If we do not make a rational response, and take the first steps to get our arms around a problem that is too large to measure …. we will have change anyway, through the process of chaos, not deliberative legislative politics. And in chaos, our voice will not be heard nearly as well as through voting and pressing our elected reps.”

    “Through voting and pressing our elected reps” has been futile has it not? Witness wars, bailouts, campaign finance, financial reform, etc. That leaves chaos(?)

    “Those who make peaceful revolution impossible will make violent revolution inevitable.” —John F. Kennedy, 1962

  12. moneta

    It’s just another step toward inflation.

    That’s how you get money flowing into the economy without getting deleveraging.

  13. Deb

    Doug–I’ve often wondered that same question…why don’t BUSINESSES revolt and tell the government they are damn tired of shouldering the cost of health insurance? I guess because they have been successful enough in just continuing to cut benefits and shift cost burdens onto their employees.

    I was married to a Dutch guy whose name also ends in -stra like many people from the province Friesland. I lived in Holland for six years, had my two babies there, and thoroughly enjoyed the healthcare system. My babies cost me 100 guilders each (about $25 at the time!) and that was for all the prenatal, labor and delivery, ten days in the hospital for my son who was born with pneumonia, and eight days of a fulltime nurse in my home to help me!

  14. moneta

    why don’t BUSINESSES revolt and tell the government they are damn tired of shouldering the cost of health insurance?
    Because they don’t truly shoulder the costs. The employees (lower salaries) and government do. These benefits are a damn good stick they can shake in an employee’s face to scare them into conformity.

    Big Corporate America is joined at the hip with government. This health care situation gives big Corporate America a huge advantage vs. small cos whe it comes to finding talent.

    Of course big Corporate America complains about the cost because, put yourself in their shoes, they’d prefer not to have to give employees anything at all.

    1. Mannwich

      As a former HR “professional” (and I use that term very loosely), I can attest that’s exactly right. You hit it square on the head.

  15. Vinny G.

    The American health care system (if you can call it that) has been a criminal operation for many years now, and it will get even worse after this bill. I saw it for years in my job.

    This country cannot do anything right anymore. Just compromises, lies, greed, violence against others, and just blatant crime.

    Another contributor refers to America as “scamerica”, a term I really like. For originality, I think might start referring to it as “crimerica”.


  16. Paul Tioxn

    In my experience with food coops, Social System Science research, being a land lord, an employee, a father and husband, I have not experienced the kind of chaos I am referring to in the collapse of a social order. I sincerely hope that I and no one in my family get to see it. What goes by insufferable, intolerable and beyond belief for us in America, is hardly the case. When hospitals disappear like Circuit City’s and women die in child birth by the thousands every month, for example, that is what we would be facing. If you want to see the future of not dealing with health reform care look up the greatest non for profit bankruptcy, the Allegheny Health Foundation. Before Enron, before Wall Street. It was HQ in Pittsburgh, but destroyed 2 medical schools in Philadelphia, not mention hospitals and the careers of hundreds of doctors, and other health professionals. The mess was salvaged by millions in government bailouts, paid to Drexel University to repair the damage. It looks like they did.

  17. Dean Stockman

    If people could only figure out a great way to invest and grown their money in the stock market, then they would not be so worried about having to pay high prices for premium health care plans.

    Many stock investors could use an inspirational website and I have found that inspiration for myself, and hopefully for other traders at

    It is a great website with free stock trading signals, which has already earned me a few thousand dollars. Make sure you check it out!

  18. Donlast

    For your information, Britain’s NHS is the biggest employer, not just in the UK, but in the whole of Europe. The head count is over 1.5m and still steadily rising because more public sector jobs are being added during the current recession, especially in the NHS. The private sector takes the brunt of rising unemployment.

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