Friday, October 23, 2009

More Health Care Corporafornication

Huge pension fund CALPERS has a captive investment vehicle targeting health care reform. Bloomberg reported:

Calpers is the sole investor in Health Evolution Partners, a two-year-old private-equity firm in San Francisco run by David Brailer, a first-time money manager and former aide to President George W. Bush. Brailer, 50, coordinated Bush’s planning for an electronic health-records network; Calpers is counting on him to earn its members 20 to 30 percent returns. “What Brailer and Calpers are doing is unique and possibly revolutionary,” said Robert Galvin, chief medical officer of General Electric Co., which buys health care for 152,000 U.S. employees. “We hadn’t seen capital going into opportunities to both provide new treatments and also promote efficiency and quality.”

Guess who will pony up another $1 billion for medical innovation? You, the taxpayer. How many of David Brailer's firms end up with tax credits or Treasury loans as a result of health reform?

Brailer’s White House work was one reason the California pension system bet on someone who had never run a fund, said Calpers portfolio manager Mike Dutton, who helps oversee $42.3 billion in private-equity commitments.

“We wanted deep medical and policy expertise, working with our existing private equity but positioned a little different,” Dutton said.

Obama loves incentives and is a big fan of private equity.

Calpers officials expect Health Evolution Partners to return 20 percent to 30 percent a year, said a person familiar with the system’s decision making.
That's one big sweet spot. How much of those grand returns will come on the taxpayer's back? Union pensions acting like private equity underwriters (PEU's)? Reform is clearly deform.

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