City of San Bernardino declares Chapter 9 bankruptcy - healthcare impact of california's foreclosure bed of nails

The healthcare financing that is going on is a nebulous process that lacks rational.

In watching Michael Burry's comments during his UCLA commencement address, I've come to realize that the healthcare financing system itself is tied to the TBTF big banks. The linkages between large for-profit and non-profit healthcare institutions (i.e. insurers and hospitals) with either (a) state funded Medicare budgets or (b) state funded "health facility bonds" is clear. The common factor is the debt financing backed by state tax payers and leveraged via TBTF banks.

https://www.bloomberg.com/news/2012-07-11/san-bernardino-third-california...

This story in Bloomberg is right along side Meredith Whitney's comments from late 2010 and early 2011. Whitney was roundly criticized for her analysis and comments, but she is bearing out correct.

Now, I'd like to point to the same problems trickling into healthcare financing. Since county and state governments employ so many people in these areas, the health insurance buys are substantial.

For many years the California healthcare ponzi scheme has been operating with financials that would make the CIO at Citi, BAC, JPM, WF cringe. It's as if the entire boomer generation's "business" acumen went up in smoke.

City governments that are Chapter 9 can not buy insurance until the judge says so. Therefore, in August, does Blue Cross of California, Blue Shield of

If Bloomberg's story is correct, San Bernardino city is going Chapter 9 due to being unable to meet payroll. The County of San Bernardino is one of the largest counties by geographical size. Although city and county budgets and accounts are different, the trickle up effect could be in play. If the city goes Chapter 9, can the county of San Bernardino be far behind?

This is a financial bed of nails where each foreclosure is a nail and the tip becomes a short sale. With each short sale, the muni and/or county loses tax revenue. There is not one lick of a chance that the Inland Empire can turn around and this financial cliff has arrived.

https://www.ci.san-bernardino.ca.us/civica/filebank/blobdload.asp?BlobID=...

quoting: "the city shall contribute a flat rate of $571.66 for employee only and $992.56 for employee +1 / family per month for each employee to be used to purchase city medical, dental, vision, and life insurance. The City contribution amount is based on the employee's medical selection."

https://www.ci.san-bernardino.ca.us/civica/filebank/blobdload.asp?BlobID=...

Google pulls an old file which is the health benefit brochure for a San Bernardino water district employee in 2007. Note that this was the height of the real estate bubble for San Bernardino. They offer 2 HMO plans (Kaiser and Pacificare) and one PPO option (Pacificare). Note that Pacificare would eventually be bought out by United Healthcare.

The reason this is interesting is that if Pacificare and Kaiser ended up being the contracted health plans for the City of San Bernardino also, then both insurers would be hurting financially.

This has to be playing out across the system and would likely be causing people to lose insurance coverage in the thousands across the region. This also means that Arrowhead Medical Center (a county run system) will end up with emergency healthcare impact and that the San Bernardino County healthcare budgets will be slammed.

In evidence of this fact, check out this photo essay (look out for the idiot survey's on slide 5 and 10 (change the URL to skip the pop up by inserting a different number after the click. The main and best photo is the first one)

https://photos.sbsun.com/2012/06/2360-people-come-to-free-health-clinic-i...

The "Affordable Care Act" is coming too late.

The hole is already in the hull and ship of state is already listing badly.