How to Pay for National Health Insurance

Since the government has spent such an inordinate amount of taxpayer money cleaning up after the Wall Street ne’er-do-wells and the giant mess they made, there is not a whole lot of money left over for other projects.

Once such legislative work was National Health Insurance. Surveys have shown that a significant majority of Americans support this. It was one of the key planks that President-elect Barack Obama ran on.

Well, no worries over the lack of funding for health care. I have figured out a simple way to insure that every man woman and child int he US is covered by health care insurance. I took a page from the cleverest of the financial engineers on Wall Street, and all it took was a little of that street magic and derivative-based hocus pocus.

It goes something like this:

1. Set up a large, well capitalized hedge fund. About $5B should do it.

2. The prospectus of the fund should note its purpose is to “Seek out profit opportunities via arbitraging inefficiencies in the markets and health care system of the United States.”  Include standard “Socially Conscious” fund language in clauses such as Do well by doing good.

3. Launch the fund — and promptly max out your leverage. Today’s environment makes it difficult to go 50 to 1, but getting 10 or 20 to 1 should not be much problem.

4. Use the money to write Credit Default Swaps with a notational value of $3 trillion dollars. The premia on these CDS should be about 10-15% or so.

5. Rollover the cash premiums — about $350 billion dollars worth — into a national fund. Use it to buy health care insurance for all US citizens.

6. Declare that due to current credit conditions, your unfortunately must announce to your counter-parties that you will be defaulting on these CDS. Note that significant amounts of this paper are held by JP Morgan and Citi. Another trillion is held by China and Japan, with Sovereign Wealth Funds owning the rest.

7. Send out a press release announcing “systemic risk.” Tell the Treasury Secretary and the Federal Reserve Chief that your imminent collapse will wreak global havoc. Apply for bailout.

Congratulations! You have National Health Care!

Repeat for any major government program: Alternative energy, School Vouchers, Mars Mission, Global warming, Missile Defense Shild, etc.

Note: This is how all government spending programs will be funded in the future.