Nationalize Healthcare, Asset-Strip Hospitals

As you may know, Bernie Sanders likes to talk about the fact that the medical industry makes about **$100 billion** in profit every year. That’s just the *medical industry*: the AMA estimates that overall, the *medical system* makes **$4 trillion** annually.<br><br>But what you may not know is that the largest hospitals make significantly higher profit margins than your average firm. For example:<br><br>* \*\*Cleveland Clinic\*\*: 12% profit margin<br>* \*\*Mayo Clinic\*\*: 11% profit margin<br>* \*\*Catholic Health Initiatives\*\*: 11% profit margin<br>* \*\*MedStar\*\*: 10% profit margin<br><br>There are probably many more hospitals with profit margins ranging from 5-20%, but 10% is a good figure to use for estimation purposes.<br><br>If we assume a 10% profit margin overall for the entire healthcare system, that’s a $400 billion in profit (10% of $4 trillion).<br><br>If we nationalize healthcare, we can<br><br>* Seize the $400 billion in profits, and redistribute them to the public in the form of a UBI, tax cuts, etc. Essentially, all Americans will receive free healthcare **and** a $1,200 check every year.<br>* Use the existing hospitals, clinics, and equipment to continue to provide healthcare to the public, albeit under the control of the federal government now.<br><br>In exchange for this, we’ll have to compensate shareholders of the seized assets. Assuming an average P/E ratio of 20 across the entire healthcare industry, $400 billion in profit would correspond to about **$8 trillion** in valuation.<br><br>Assuming an average share price of $50 (which I think is lower than most medical asset stocks), there would be about **160 billion outstanding shares** if we assume the entire medical industry is made up of hospitals and is valued at $8 trillion.<br><br>Assuming an average share price of $100 (which I think is a generous estimate in light of, e.g., the recent troubles with biotech), we’d be looking at about **80 billion outstanding shares**.<br><br>The total market capitalization of the US stock market is about **$100 trillion**. Typically, corporations will have a percentage of ownership called the "float" that is actually on the market, with the remaining percentage being owned internally by the corporation, i.e. not being on the market. The float is about **15%** for the average S\&P 500 company.<br><br>Thus, the total market cap of the healthcare industry would be about 1.6% of the overall US stock market if we have 160 billion outstanding, and 0.8% of the overall US stock market if we have 80 billion outstanding respectively.<br><br>Thus, the total market cap of the healthcare industry would be about 0.24% (1.6% \* 0.15) to 0.12% (0.8% \* 0.15) of the overall US stock market if current shareholders are compensated with **vouchers** that can be exchanged for **US Treasuries** (i.e. we give them out as an "IOU").<br><br>That’s chump change. You could finance that with a mild **1-2% tax** on capital gains for a few years.