Today, we're exploring the parallels between the financial deregulation that led to the 2008 financial crisis and the current state of the U.S. healthcare system. We draw heavily on the bookKing of Capital: Sandy Weill and the Making of Citigroup⁠ by Amey Stone and Mike Brewster, which details the career of Sandy Weill and the passage of the Financial Services Modernization Act (FSMA) of 1999.

Here’s a breakdown of what the episode will cover:

• Introduction: The episode will begin by discussing the importance of financial deregulation and its long-term consequences, particularly how the FSMA, which repealed the Glass-Steagall Act, was a turning point in financial history. The Glass-Steagall Act, passed in 1933, separated commercial banking from investment banking to prevent conflicts of interest. The episode will connect this to the current transformation of healthcare.
• Sandy Weill's Role: A significant portion of the episode will focus on the biography of Sandy Weill, his leadership, acquisition strategies, and his role in shaping modern finance. The podcast will delve into how Weill built Citigroup and lobbied for the repeal of Glass-Steagall, which ultimately led to the passage of FSMA. Weill's vision was to create a "financial supermarket" where customers could get all financial services under one roof.
• The Financial Services Modernization Act (FSMA): The episode will explore the specifics of FSMA, explaining how its passage led to the rise of financial conglomerates, systemic risk, and the 2008 financial crisis. The FSMA allowed financial institutions to operate as universal banks, providing a full range of financial services. The episode will highlight the unintended consequences of deregulation and how they unfolded over time.
• Parallels between Financial Markets and Healthcare: The focus will then shift to the U.S. healthcare industry, identifying striking similarities between financial deregulation and current healthcare trends. The episode will discuss market consolidation, price opacity, government dependency, and private equity involvement, and how these conditions could lead to a potential healthcare crisis. The healthcare system, like the financial sector, has seen the rise of large conglomerates and increased complexity.
• Speculative Predictions for Healthcare: Drawing from the history of financial deregulation, the episode will outline possible future scenarios for healthcare. This will include potential industry failures, government bailouts, and the rise of new market disruptors like big tech and AI-driven healthcare. The episode will explore what could happen if healthcare continues on its current path.
• Case Studies: The episode will use case studies from finance, such as the collapse of Lehman Brothers and the Enron scandal, to highlight the risks of deregulation and apply these lessons to current trends in healthcare. The Enron case demonstrates the dangers of financialization, which is also a concern in healthcare.
• Policy Recommendations: The episode will propose specific regulatory measures to prevent a healthcare collapse. These recommendations will emphasize transparency, competition, and risk-based oversight. This part will address the need for stronger oversight of mergers and acquisitions and more transparency in healthcare pricing and contracts.
• Conclusion: The episode will conclude by posing a critical question: Will we learn from financial history, or will we repeat the mistakes that led to the financial crisis? The episode aims to draw attention to the hidden risks in today’s healthcare system, aiming to inform and challenge assumptions before a crisis forces intervention.

The episode will emphasize that the U.S. healthcare system is increasingly mirroring the financial sector pre-2008, with growing consolidation, profit-driven incentives, and increased systemic risk. It will explore whether the U.S. will learn from past mistakes or allow history to repeat itself, potentially forcing a crisis-driven intervention in healthcare.

Source:King of Capital: Sandy Weill and the Making of Citigroup by Amey Stone and Mike Brewster