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Healthcare - Too Big to Fail

Here's a chart from the Congressional Budget Office that should scare you more than a bank faliure:

In short, the CBO projects that if we continue on the current course, Healthcare will become 50% of the US economy. Yes, half of all economic activity would be healthcare related! It's currently about 17% of GDP, and it may increase to 18% soon just by virtue of the rest of the economy shrinking.

Now we all know that 50% is an untenable number that no economy could tolerate. That's the whole point. We have to change healthcare, whether we like it or not.

Once upon a time, long long ago, in a fairy tale place we all remember fondly, there were companies like Bear Stearns, Lehman Brothers, and AIG - great big powerful companies that were too big to fail. Here's another fairy tale. Once upon a time, there were companies like United Healthcare, Aetna, Humana, and a few large hospital chains ...

Here's the scenario - one large insurer fails, hospitals depend on that one company for 5,10, maybe 15% of their revenue and can't pay their salaries or their bills. Credit markets seize (remember credit markets?) Physicians don't get paid that same 10-15% of their revenue, which is that last percentage from which the doctor gets her salary from her practice. And so the house of cards comes stumbling down. But this time it's lives, not bank accounts, that are at stake.

But this is just a fairy tale. The great institutions of healthcare are simply "too big to fail."

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