What you should know about behavior contagion.

I started reading Under the Influence which links our behaviors to the economic impact and policies.

One example of how the theory plays out in healthcare is the out-of-network billing strategy. The topic surfaced again this weekend when a physician in my network shared an article called Keep Attacking Doctors: What the New York Times gets wrong about surprise medical billing.

So let’s start with that example and then get onto the other reasons this book is so relevant now.

Out-of-Network Billing

Out-of-network billing is done when healthcare providers are not contracted with the commercial payers. It is often done when a new facility is opening and not fully credentialed or new technologies/products are launched or contracts terminate because the two parties can’t agree on rates and/or terms. It’s not ideal but both parties are usually willing to agree to interim terms to avoid financially penalizing patients.

The problem starts when the word “strategy” is added. Some healthcare providers realized that they could make more money out-of-network and decided not to contract with commercial payers. Instead they relied on the patient’s out-of-network benefits and the patient for payment in full. As insurers close the loop holes in the out-of-network benefits, many patients are now left with really big bills and often have no means to pay.

The headline should have read, “two wrongs don’t make a right”. From my experience, the out-of-network strategy gained traction because physicians felt undervalued and lacked the ability or leverage to negotiate better rates. Knowledge of the out of network strategy spread through their peer networks and more started doing it. Fear of missing out [aka: FOMO] is an example of behavior contagion.

The second wrong was the payer’s reaction to the strategy. The healthcare providers participating in the out-of-network strategy were sent warning letters but few put much creed in them. Many of the strategy diehards were eventually economic credentialed out of the new narrow networks. Now they have few options for getting paid. It’s a big problem.

One way or another, the wrongs need to be righted so that this issue is put to rest and we all move forward.

Green New Deal

There is a good chance some of you are going to scroll to the bottom and hit the unsubscribe button with this topic. Try to resist the temptation. Under the Influence only explains the economic behavior and economics of the Green New Deal.

If you’re not familiar with the Green New Deal, it is a bipartisan plan to address climate change and economic inequality. However, it’s largely associated with the “socialist movement” in the US and more specifically, Bernie Sanders and Alexandria Ocasio Cortez [AOC].

Moral Arguments

First, let’s talk about why it’s hard to get alignment on big policy changes. There are five [5] moral arguments:

1/ Care

2/ Fairness

3/ Loyalty

4/ Authority

5/ Purity + Sanctity

Ideally, our political leaders should have alignment on at least some of the moral arguments similarly to how corporate leaders use values to align their workforce. Unfortunately, there is more of a disconnect.

Democrats subscribe to the first two arguments whereas, Republicans subscribe to the bottom three arguments. Reportedly, facts don’t sway them.

With that said, there are two facts that are really interesting and pertinent to this discussion.

Income Tax

Universally, people cringe when they hear about a tax increase. Everyone automatically thinks they are going to have less discretionary income to spend and consequently, their lifestyle will suffer.

However, unlike a business loss or some other economic event, increasing taxes on really wealthy people has little if any impact on their purchasing power because it’s relative to others in the same class. 

It’s likely why many billionaires such as Bill Gates and Warren Buffet have pledged to give away the majority of their money. They simply don’t need it to live really well. 

The highest marginal tax rate in 1970 was 70%. It has steadily decreased and is now only 37%. Even at that, most wealthy people pay at a lower rate. As a result, the US has unnecessarily racked up a huge deficit.

The loss of tax revenue means that the country hasn’t made the needed investments in education, healthcare, innovation and infrastructure to remain competitive and doesn’t have the funds to do it now.

It might be time to listen to the billionaires and tax them rather than vilify them.

Sales Taxes

The bar for new regulation and taxes is usually harm to others not harm to self. It might be time to rethink the bar if we want to bend the healthcare cost curve.

Cigarettes are taxed and smoking is banded from public places because second hand smoke effects the health of others too. The prevalence of smoking has decreased 60% since the taxes and policy changes were made. When one person quits, another person quits and the overall smoking rate declines.

Despite the clear link between sugar and diabetes, the US has not been able to pass a sugar tax on sodas or more broadly, a tax on refined sugar as other countries have done.

Mexico has implemented a sugar tax and the results are impressive. In the first year, consumption dropped by 5% and in the second year, consumption dropped by 10%. Again, evidence that changing the behavior of one person, usually changes the behavior of others.

With these types of results, it’s hard to deny the fact that taxes are effective at curbing unhealthy behaviors and improving population health.