04 April 2016

Is there Nothing Which Financial "Innovations" Cannot Crapify?

It appears that the latest innovation proposed is, "Securitizing Loans for Large Health Care Expenses."

I did not think that we could make healthcare delivery worse in the United States.

To quote Rick Blaine, "I was misinformed."
I saw this headline in Kaiser Health News — “Mortgages For Expensive Health Care? Some Experts Think It Can Work” — so I said, “Nah,” and ignored it for a couple days, but then I clicked through to the academic paper Kaiser linked to — if “academic” has any meaning, the times being what they are — and I couldn’t find any tells that it was a parody or some kind of sick joke, so yeah. It’s for real! The paper is called “Buying cures versus renting health: Financing health care with consumer loans,” by Vahid Montazerhodjat, David M. Weinstock, and Andrew W. Lo, and it was published in Science Translational Medicine (STM), February 24, 2016. First, I’ll present the author’s scheme, and after briefly showing how it conforms to the simple rules of neoliberalism, I’ll look at potential scope creep if the proposal is implemented, debt-cropping, and the possibility of predatory servicing. I’ll conclude with a 30,000-foot view of the scheme’s implications. (I’m afraid I’m thinking of this post in terms of somebody who’s take out one of these loans — a consumer patient — rather from the finance perspective that Yves would offer. That said, readers with more nuts-and-bolts knowledge of securization than I have — like most of you — please feel free to chime in; that’s why I’m describing the scheme first.)
The article goes further into the details, and each detail is more and more horrifying.

Really horrifying:  Repossessing your kidney horrifying.

It is a descent into what Matt Stoller calls, "Debtcropping," which is, as he notes, "An instrument of political and economic control."


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