Perverse incentives and health

 The Economist writes about organ transplants in the US:

[I]f the recipient dies soon after the transplant, hospitals suffer—a key measure used to evaluate them is the survival rate of recipients a year after transplant. According to Robert Cannon, a liver-transplant surgeon ..., hospitals succeed by being excessively cautious and keeping patients with worse prospects off waiting lists. In America, lots of usable organs go unrecovered or get binned, the Economist, 16 September

It's just one example of a narrow, poorly thought-through goal that's in conflict with social well-being. In this instance, improving the financial status of hospitals worsens the health of patients. A more usual comment, though in a bizarre setting is:

An anonymous nurse involved in the case suggested that the deceased patient might not have needed the [heart] procedure in the first place. Woman propped up to look alive for family after already being declared dead at Adena Hospital, Derek Myers, Scioto Valley Guardian, 20 September

There are other examples, some of which I write about in my long piece on using the Social Policy Bond concept to improve broad, societal health outcomes. (For a shorter treatment, see here.) 

In our complex societies, we rely on numerical data to give us an idea of where we, where we are going and where we want to be going. For private sector entities, narrow, short-term financial goals are good enough, but for a country, or the world, we need broad, long-term goals whose achievement is inextricably linked to the well-being of people and the environment. Social Policy Bonds were conceived as a way of injecting the market's incentives and efficiencies into the solution of social problems, but perhaps their greater contribution would be to encourage policymakers to think more carefully about society's over-arching, long-term goals. I believe there would be more consensus over such goals than there is over the alleged means of achieving them and, further, that targeting broad goals that are meaningful to ordinary people would close the gap between policymakers and the people they are supposed to represent. There would be other advantages to the bond concept, but those are the crucial ones. Meantime, it looks very much as though the sort of Mickey Mouse micro-objectives that bedevil healthcare - and not only in the US - are worse for society than the old-fashioned way of relying on people's integrity and willingness to do the right thing.

Social Policy Bonds: current state of play

I don't think any Social Policy Bonds have yet been issued, despite their having been in the public arena for about 35 years. That said, more national and local entities continue to issue Social Impact Bonds, the non-tradable variant of Social Policy Bonds. This wikipedia page summarises the history and current deployment of SIBs, currrently issued in about 25 countries. These include the UK, Australia, the US, and they are also being considered in Brazil, Israel and New Zealand. Dan Corry of NPC (formerly New Philanthropy Capital) in London summarises the state of play in 2022 with SIBs in the UK here:

There was a time when social impact bonds (SIBs) were all the rage, the shiny new policy wonk instrument. This instrument is a contract where payment is hard-wired into specified outcomes being achieved. Independent investors put up the working and risk capital and only get paid back if it all works, it was said these instruments would help us all deliver better services, would encourage innovation, guide government and philanthropists to a better way of commissioning, and would mean we only paid for the things we wanted. But then they sort of faded away from the front-line of interesting ideas: I’ve not seen a think tank or politician talk about them in a long time, even though some keep going in the background. ...

So far, [SIBs] have yet to really taken off despite the pleas of their fans. Are they the future or the last dregs of the New Public Management and the marketisation of everything?  ... Only time will tell. What is the future for Social Impact Bonds?, Dan Corry, NPC, 5 October 2022

I do have reservations about SIBs, which I have expressed here, here, and in several blog posts (search this blog site for Social Impact Bonds). They are necessarily narrow in scope and, in my view, will be prone to manipulation and gaming, especially if they become so commonplace that they escape public scrutiny. Because of their limitations they are also, as I expected and as mentioned by Mr Corry, costly to administer. I haven't been consulted about, and have no involvement in, anything to do with SIBs. As regards Social Policy Bonds, there are occasional mentions in esoteric discussion of innovative finance (see here, for example, or this X thread), but I have to be realistic and I don't think it's likely that any will be issued in the near future. This saddens me, as I do think they could do much to narrow the gap between policymakers and the people they are supposed to represent, and stimulate the diverse, adaptive approaches that humanity needs to solve its big, urgent social and environmental problems. It is, though possible that SIBs, because of their focus on meaningful outcomes will advance, rather than discredit, the Social Policy Bond concept: either scenario is possible.

Climate policy has failed

John Michael Greer writes: 

If the point of the last three decades of climate change activism was to slow the rate at which greenhouse gases enter the atmosphere, the results are in and the activists have failed. Nor is there any reason to think that doing more of the same will yield anything else... Riding the Climate Toboggan, John Michael Greer, 6 September

'Climate activism became a big public cause about halfway along this graph. Notice any effect?'

 

Some might argue that, without climate activism, the trend line would have become steeper in recent years, but it doesn't really matter. What does matter is that a great deal of policymakers' thinking and public resources have gone into trying to reduce greenhouse gas emissions, none of it has had the slightest discernible effect. This was foreseeable.

I suggest that we clarify what it is we actually want to achieve. Do we want to change the climate, or should we instead aim to reduce the impact of adverse climatic events on human, animal and plant life? Most likely, we should target a wide array of approaches that would fit into either category. The next step is to issue Climate Stability Bonds, which would reward the achievement of our impact-reduction goals regardless of whether bondholders do so by trying to influence the climate or by more direct means, such as, for example, reinforcing levees, building new homes for people currently living in flood-prone areas etc.

Climate Stability Bonds would have the long-term focus that current policymaking eschews; the issuers could stipulate that the bonds shall not be redeemed until all targeted indicators fall into an approved range for a sustained period, which could be three decades; bondholders would still profit by doing whatever they can to achieve the targeted goals, seeing the value of their holding rise, then selling their bonds to whoever is best placed to continue with achieving the goals. I have written many treatments of the Climate Stability Bond concept; all of which are freely available here, and there are also numerous posts on this blog (see here, here and here, for instance).