Merchants of death

Wall Street's latest bad idea. Plus, where the health debate will likely go.
By EDITORIAL  |  September 9, 2009


Wall Street has found a new way to make a buck: buy up the life-insurance policies of the sick and the aged at a fraction of their cost, bundle them into bonds that will be sold to investors, and profit from them when the policy holders die sooner rather than later.

The financial industry apparently is not content with having sparked the worst international economic crisis since the 1930s by bundling together bad mortgages. Now, it wants to take a second shot at economic ruin by monetizing the inadequacies of the health-care system.

No wonder Washington Republicans and conservative Democrats are so opposed to health-care reform. Longer, healthier lives would deny Wall Street an opportunity to find new profits.

It is Wall Street's demand for higher gains that led the insurance industry to deny people with pre-existing medical conditions coverage, and — even more heartlessly — to purge from its roster those who get too sick. If financial markets are allowed to invest in the death rate (meaning, a given insurer suffers an inevitable bulge of deaths sooner than its actuaries reckoned), that will likely result in higher life-insurance costs, too.

The financial community has given this ploy an innocuous and antiseptic name: life settlements, as in settling money on the living. The perversity of it all if that those most likely to sell off their life insurance will be doing so in order to afford a more comfortable living and better health care in their dying days.

If ever there was additional evidence needed that Wall Street has gotten too smart for it own good, this is it. The nation can no longer afford this sort of heartless genius.

One year after what Wall Street calls the "9/15 meltdown" destabilized the economy, there is no sign that Washington is willing to meaningfully regulate the derivative markets. Tomorrow's financial crisis is obviously in the works today.

Obama speaks
For President Barack Obama, this has been a week of speechifying.

First, Obama delivered a morally uplifting sermon to the nation's school children, urging them to study hard, take responsibility for their actions, and to trust in themselves and in America. Not exactly the stuff of subversion.

That so many Republicans were worried about what the president would say testifies not only to the deeply rooted paranoia of the right wing, but also to the bad case of the jitters that afflicts the nation.

As if to reassure us that conservatives are not really crazy, the flagship of the right, the National Review, hailed the president's speech as the best of his career. Joining in the applause were former first lady Laura Bush, former House Speaker Newt Gingrich, and un-indicted political thug Karl Rove. So much for sedition.

Reaction to Obama's health-care speech, scheduled to be delivered hours after the Phoenix goes to press, is sure to be more contentious — if not bitter.

This newspaper is optimistic about health-care reform. But legitimate concerns about the costs of Obama's desired reforms must be specifically addressed. While touting revenue neutrality made possible by savings within the current system, his silence on such issues as the costs of medical malpractice insurance and the price of doctors needing to practice "defensive medicine" to protect themselves from lawsuits is deafening.

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