We discussed the future of medicine last night at the Boulder Future Salon. Some fascinating thoughts from the various participants, including the idea that health insurance is really just a gambling scheme. Every time we pay a premium, we're betting that we'll get sick. If we stay healthy, we lose the bet. If we get sick, we win. One of the members of the group is a woman who recently underwent a heart transplant operation -- a big "winner" in the system by that accounting.

The parallel is even closer than most of us might realize. She explained that she is now essentially uninsurable. Think of the guy who figures out the winning blackjack scheme and then gets barred from all the casinos after taking too much of their money. Same basic idea.

Like health insurance, life insurance is a bet we place that pays out when something bad happens to us. With health insurance, we bet that we'll get sick. With life insurance, we bet that we'll die. Term life insurance is the most insidious. I've got a 20-year term policy that's going to expire here in a few years. If I kick it at age 49, I'm way up. If I live to be 50, I lose.

Then this morning, I came across this (via GeekPress):

Death bond is shorthand for a gentler term the industry prefers: life settlement-backed security. Whatever the name, it's as macabre an investing concept as Wall Street has ever cooked up. Some 90 million Americans own life insurance, but many of them find the premiums too expensive; others would simply prefer to cash in early. "Life settlements" are arrangements that offer people the chance to sell their policies to investors, who keep paying the premiums until the sellers die and then collect the payout. For the investors it's a ghoulish actuarial gamble: The quicker the death, the more profit is reaped. Most of the transactions are done by small local firms called life settlement providers, which in the past have typically sold the policies to hedge funds. Now, Wall Street sees huge profits in buying policies, throwing them into a pool, dividing the pool into bonds, and selling the bonds to pension funds, college endowments, and other professional investors. If the market develops as Wall Street expects, ordinary mutual funds will soon be able to get in on the action, too.

I'm of two minds about this particular investment instrument. On the one hand, it seems that the people who get "invested in" this way have actually found a way to come out ahead on life insurance -- they get to collect some of the money and be alive at the same time. On the other hand, I can't muster a lot of good will towards those doing the investing -- hoping that their fellow human beings will die sooner so that they see a better return.

Frankly, I hope many of them lose their shirts because the people they paid off end up living a lot longer than anybody anticipated.