I finally think I understand the healthcare debate.

It took a while, but my epiphany came courtesy of none other than Wendell Potter. The former public relations head for CIGNA, going rogue has appeared numerous times on television in the last year to incriminate his old line of work. It’s often like watching “Macbeth”: the insurers have no hope of being good because they are influence to do bad by others, namely Wall Street.

And what do you know, the health care debate makes perfect sense from the standing outside 70 Pine Street in New York. Or 3555 Farnham Street in Omaha for that matter.

The former is the world headquarter of AIG, the later Berkshire Hathaway. Both are giants in the world of insurance for decidedly different reasons. And both are crucial to the overall explanation.

It’s no secret that big insurance companies (and by extension Warren Buffett and his firm Berkshire Hathaway) use insurance premiums as capital for investments. Then by the times those investments mature, the companies have not just enough money to pay claims, but also a healthy profit as well. This also means that insurance companies are reliable institutional investors, even more so than banks. Well brick-and-mortar banks at least.

Therefore, a government mandate to buy insurance is always attractive to both Wall Street and insurance companies because it ensures a steady stream of income. But it’s also true that some type of insurance is more profitable than other, and even now, medical policies are not exactly money-makers. To compensate, you might expect, the insurers have to think of ways to be profitable including such methods as “rescission”.

Moreover, it’s been pointed out repeatedly that most the uninsured in the US (who aren’t illegal aliens) are young people. Young people are a boon to healthcare companies (you’d think) because they don’t get sick very often. (Then again, this ignores the fact that today’s young people aren’t particularly healthy because of the lack of open space and our progressively deteriorating diet…but don’t tell CIGNA that…)

The public option, as its been described, causes problems for this system because the government could offer at cost insurance (like Medicare) and take away much of the profits from the industry. But wait you say, the government issues other types of insurance for things like floods and there’s Medicare and Medicaid. Well this is no coincidence. You can’t make much money insuring against floods because the “100 year floodplains” can be hit more frequently than once every hundred years and because it’s really hard to say that something isn’t flood damage when it is. Plus, Medicare and Medicaid conveniently cover the part of the population who are the sickest, and therefore least profitable.

But it is probably true much as the insurers fear the public option, it’s probably more destructive to Wall Street. Why you ask? Because most other big institutional investors like pension funds and university endowments are in decline. This is because both large companies and universities have passed on much of the cost to their operations to their employees and students over the last 60 years. Now, there’s precious left to privatize other than health care and ….Social Security….(awkward pause).

The reason, however, I haven’t said much about “Obamacare” previously is that it won’t have that much of an impact. Premiums are going to rise regardless. And no matter what the “mandate” allow the insurers to charge, the money is not there. Most the wealth in this country is in the hands of people much older than the target demographic of the mandate. And the gap continues to grow. But don’t tell Wall Street that. They continue to think they cannot be victims of their own economic success, that there has to be billions of dollars still ripe for the taking. You know, just like during the housing boom when everyone became a millionaire…. How is that going again? I forgot.