Finance and physiology cross-pollinate synergistically, producing a hybrid philosophy that proves quite, dare I say, 'fruitful' in understanding healthcare economics and our current state of medical business affairs.
At the University of California, Davis, as an undergraduate, I proposed my individual Bachelor of Science degree major as:
Physiological Economics for Healthcare
The interdisciplinary nature of my planned course of study (pre-MD/MBA dual-degree) resonated well and seemed 'logical', at least in my mind, with this title.
And we all blow up; we're sitting on dynamite: currently, manifesting as
bankruptcies due to our inabilities to pay medical bills, and, in time, if things don't change, emerging as widespread and deep bail outs for the health insurance industry, privatizing the many years of profits made by Aetna, Cigna, United, et al. while socializing their extravagant blowup losses (taxpayers will be on the hook to be sure). It's
the illusion of individual responsibility, a clear situation of '
too big to fail', and it concerns me greatly.
We can learn by grace or by hard knocks. Let's choose grace.
As Nassim Taleb argues in his testimony in Congress (above), our investment products and instruments, as a result of 'over-financializing' society, are far too complex for the wild uncertainty, stochastic randomness, and chaotic complexity that define and drive economic life--banking and investing lacked/lacks systemic robustness to negative Black Swan hits. Conceptually, as an important parallel, this lesson is not exclusive to banking.
In 'healthcare economic life',
we still have the opportunity to learn by 'grace', rather than by one big 'hard knock'. Health policy and administration leaders and practitioners must 'make a stand' and 'de-complexify' the financial instruments and mechanisms that we use to pay for medical care. Just (re)consider the vast (dis)array of co-pays, co-insurance plans, deductibles, coverage limits, '
doughnut holes', mandated benefits, network restrictions,
ICD-9 codes, DRGs, etc., and there is no need to remind you how confusing this bungled 'hoop-jumping' payment system really is. It's not science; it's a downright malaise; and, it's no way to pay for something like a routine hospital stay. Case and point: recently, upon learning that I hold a MHA degree from USC, my neighbor joked, "Great, now you can help us make sense out of our health insurance plan! We can't seem to figure the darn thing out." My neighbor is bright. Luckily, there is a guiding light to set things right: Higher-deductibles (scaled according to wealth/income/'ability to pay') would help tremendously with this fight. Simplify healthcare economic life: You, the Patient of One, empowered as
an agent with healthcare resources in your pockets (and not in the United, Aetna, et al. coffers) pay out-of-pocket with savings for everything 'healing' up to your (high) deductible; then, after that, an
integrated finance and delivery insurance system--I call it 'Catastrophic
Kaiser' (CK)--takes care of you when disaster (unfortunately, but hopefully never) strikes. Those with the highest deductibles (namely, the wealthiest and healthiest), where and when appropriate, can be our social experimental 'guinea pigs' and 'lab rats', serving as those choosy shopping 'consumers at the margin'--a principal in economics that I do find value in--who drive the entrepreneurial engine that 'turns iron into gold' for lower and lower prices. We all benefit in the end.
Much of medical practice has become unsustainable financially because the United, Aetna, et al. third-party payer parasitic engine has
disrupted the principal(patient)-agent(physician and care team) healing relationship. De-complexifying our healthcare finance landscape through 'high-deductible, medical savings account, Catastrophic Kaiser (CK)' flavored insurance instruments would go a long way towards, and is absolutely imperative to, increasing our health system's systemic robustness against negative Black Swan hits: In this spirit, what we now call 'insurance' would be restored to real insurance that would prevent bankruptcies and bail outs, at last (!),
rather than paying for non-insurable medical events through a complex claims and benefits maze.
Rule CK: The more complex our payment system gets, the more exposed we become to negative Black Swan hits.
Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the "Nobel" in economics, banning leveraged buy-outs, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.
Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks, and companies are born and die every day without making the news.
In other words, a place more resistant to black swans.
In other words, physiological economics for healthcare. Nassim Taleb has been delving deeply and reflectively into the history of medicine recently--look for many insightful gems in his next book, Tinkering: How to Live in a World that We Don't Understand--and his use of biology (physiology) analogies to inform his economic conceptions and frameworks reflects the exact same, kindred notion that I felt reverberate in my bones when I set out on this course of inquiry several years ago.
And, this is (some of) what physiological economics has to say:
Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient's symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking.
Third, poor nutrition produces compromised physiologies full of 'hidden negative Black Swan risks'--cancer, chronic illness, diabetes, heart attacks, etc. (metabolic syndrome) events that rear their heads in the future--and health insurers like United, Aetna, et al. are in no position to manage these risks; rather, their business model doesn't work, positioning them with systemic exposure to patients' negative Black Swan health hits; which, of course,
they try to outsource their fiduciary responsibility for unethically through recisions, claims denials, and 'cherry picking'.
So, how do we start converting this 'debt'--our unfunded healthcare liabilities to-be-paid due to our dire, worsening health states--into 'equity' (increasing our personal (health) market value, while reducing the (inflammation) claims against it)?
Ancestral Fitness nutrition. Remove the cancer-causing agent; and, don't let the cancer
metastasize. We must
free people from the 'protein cement' shackles of chronic inflammation. In our current state of health affairs, nutrition trumps everything and serves as the most deeply-rooted cause agent that must be addressed first and foremost.
We must 'remove the tools (debt & financial models) that (have) killed us', as Pablo Triana says, by excising the SAD (the Standard American Diet and it's theoretical foundation, the Food Pyramid), like
Nassim calls for the 'beheading' of VaR (Value-at-Risk), and by displacing the unhealthy narratives that we live by with
new mythologies that empower us to thrive.
The intricately interconnected nature of human behavior, on multiple levels, provides promise for this cultural revolution (epistemocratic) approach to bottom-up 'health reform' (thanks to Dave Lull).
Health insurance should be a lot more like Vibrams. Conceptually,
Vibram Five Finger shoes protect your feet from catastrophe--cuts, scrapes, lacerations--but they do not cushion your feet excessively. Vibrams help you establish a strong sensory feedback experience with the ground. We need more of this type of 'barefooting' in healthcare. The CK health insurance product could act like the simple rubber sole and barebones structural support on Vibram shoes; it's there when you need it (cancer, trauma, etc.), yet it does not interfere when you don't (sinus infection, physical, etc.). If health insurance were more like Vibrams, patients would start 'moving' differently; patients would traverse the healthcare spectrum much more cautiously, I suspect. Right now, most healthcare consumers are wearing 'Army boots with Nike Air Shox soles and Dr. Scholl's inserts', blunted and shunted from experiencing the true costs of medical care (which include
iatrogenesis). It's the problem of 'nobody knows the price nor cost of anything in healthcare'. When patients swap these concrete foot covers out for the 'barefooting alternative' in Vibrams, they quickly realize the expensive medical costs associated with their unhealthy lifestyle choices: a more direct feedback system emerges, providing a more realistic, 'grounded' choice architecture for decision making.
Conclusion: My physiological economics hope is clear: As we de-complexify our healthcare finance industry and move more patients into 'high-deductible CK' plans (risk-adjusted, wealth-considered, universal coverage), we will reawaken those 'sensory neurons in our feet', propelling us to respond to this newfound feedback ecology by choosing, with our feet, as empowered healthcare 'shoppers' (the Patient of One triaging away), how to spend the majority of our 'healing' dollars. Wearing Vibrams helps people move in ancestral, healthier, and more stable and cautious ways, so 'wearing' this type of insurance plan could help folks navigate the healthcare system more ancestrally. Namely, by facing the true high-costs of medical care, the Patient of One would quickly experience 'sticker shock' and would respond by searching for ways to prevent disease in the first place. In turn, this exploration process in physiological economics would lead more and more people 'back to square one', and
'n=1' clinical trials in nutrition would rise to the surface as the best way to achieve health in the face of modern day opacity.
Sure, it's a hope, but it's a stand I am willing to make.