Verifiable.com is cool. And Healthcare spending is scary.

Neat site. Scary data.

I made this chart in 10 minutes after finding the data on the US Census site.

1980-82 is "100"



Here is the question: What happened in 1980 with healthcare? It was tracking with everything else. I think I understand the sudden drop in Apparel as part of the post 1989 opening up of trade and the drop in commodities. Did the health insurance system change?

Comments welcome.

Incentives - Part 1

OK, so this is Part 1 of 2 on different factors to consider on incentives.

A lot of healthcare plans are trying out incentive plans to encourage patients to take action to make themselves more healthy. A laudable goal, plus a healthy insured party is a cheaper insured party, so everyone wins except for the providers of chronic and acute care.

Here's the first wrinkle:

http://econ161.berkeley.edu/Economists/prisoners_dilemma.html

Quick summary: If you run the iterated prisoners dilemma where one party gains more in absolute terms than the other in all payout terms, the party that gets the short end of the stick occasionally defects just to increase the sense of "fairness" even though it reduces his own absolute payout.

So, if you are giving someone an incentive, either:

1. Split the gains from cooperation evenly

or

2. Keep your gains to yourself

Giving someone an "I took my insulin" pin while you take home an extra $1,000 is probably not an option.

Incentives - Part 2

OK, so this one is at least explicitly about medicine. It's also about our local tempest in a teapot - the fact that certain high-falutin' institutions of higher medicine in the area (BIMDC, par example) get a whopping 15-40%! larger reimbursement for procedures.

Now part of this is due to a big negotiating advantage given the size of their ownership company, but it's also because a very large fraction of the place's staff is from a certain school that starts with "H" and ends with "arvard". The PATIENTS want to associate with the elite staff, too.

Overcoming Bias: What is Medical Quality?

So, "incentives - part 1" talks about the "fairness" of incentives, where if you're making money out of me cooperating with you, you'd better share. Otherwise I'm going to stick it to you, even at the cost of my own optimal outcome.

And "Incentives - part 2" talks about people WANTING to spend money, to associate themselves with elite institutions. They are actually willing to pay more themselves, too.

I think both are social status things.

The first could be read as "Yes, you're always going to make more than I do, but I need to show you that I'm in control of how much you make. It's important enough that I'll pay to demonstrate that I am not helpless."

And the second is a little easier: "I want to be able to tell my friends that I went to the GOOD hospital. With the nice Harvard docs."

Any patient incentives need to take these into consideration, I think.