Month: January 2019

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Will hospital costs go the way of CEO pay?

Clearly legislators have been reading my blog and were touched by the story of my healthcare emergency this past 4th of July. My experience embodied the every-man and moved our government to action. The result? Mandated price transparency for hospital services. Yes, hospitals nationwide are now required by federal law to reveal their once-secret master price lists. However, while I know our Senators were trying to help a millennial out with out-of-pocket costs, there’s a real risk of unintended consequences. In fact, prices might just go up.

As a parallel, let’s take the case study of CEO pay in the 1990s. In 1993, the Democratic Congress under Bill Clinton passed a change to tax law that capped companies’ tax deductions for executives’ compensation to $1 million per executive per year. Concurrently, starting in 1992, The SEC began requiring standardized disclosure of compensation in proxy statements in hopes of making it more difficult to disguise pay that didn’t incentivize managers, or was excessive. Yet this move to transparency and incentives alignment backfired; by 2000, the average CEO pay had nearly quintupled to $19 million.

What explains this massive increase? In short, the practice of benchmarking CEO pay. CEO base pay was never cut, because CEO pay became increasingly based on benchmarked lists limited to top-paid CEOs in that field. This selection bias in comparison sets resulted in a rising tide for all CEO packages. At the same time, because the tax amendment did not penalize performance-based pay, compensation committees started offering a growing number of stock options as an incentive to CEOs. Options could only become valuable as the companies performed well. And in the late 90s, as the stock market rose and pushed all options “in the money”, total compensation rose in lockstep.

Will a similar comparison bias happen for medical costs? Or will payors temper rising costs with their buying power? Only time will tell.

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Taking control of your privacy: 3 resources to make yourself more cyber secure

2018 was an epic year for security hacks, from Marriott to Facebook. Following on the tails of the 2017 Equifax hack that exposed half of American social security numbers, now hackers can pair that up with passport numbers and birthdates with a quick purchase on the ever-growing dark web.

While most Americans don’t trust institutions to protect their data, they also don’t seem to care. For me, it was easy enough to take basic password precautions, using 1password or the like to keep passwords varied and random. But now, after listening to Reply All’s interviews with hackers — boasting about destroying people’s credit and lives with ease — I’ve been scared straight into taking responsibility for my cyber-safety. There are three resources that are free, low hanging fruit to reduce your presence on the internet and deter hackers.

1. Google Voice

You may have noticed that two factor authentication these days often involves a text message. Unfortunately hackers know this too, and are now in the habit of targeting phone companies to get targeted numbers transferred to them to enable their cyber hacks. (Details in The Snapchat Thief episode of Reply All). This is where Google Voice comes in handy! You can either port your number over to Google Voice, or start using a Google Voice number as your two-factor authentication number. As a bonus, you can get a Google Voice number for free with a Google account.

If you don’t like fiddling with your phone every time you need a second factor authentication, you could also pay $36 a year for 1password. 1password both securely stores passwords and provides the second factor authentication by automatically pasting the temporary code to your clipboard – Crtl-V and you’re done.

2. Hidden from the Internet workbook

The aforementioned Reply All episode included many helpful security links in the show notes, including this handy workbook. This excerpt from Hidden from the Internet walks through how to freeze your credit (remember that Equifax breach?) and remove your personal information from public databases. There are an eye-popping number of such databases, but the author highlights the top 10 that will have the biggest trickle-down effect of wiping your info from the internet.

3. DuckDuckGo

DuckDuckGo’s Chrome plugin and search engine offer three fantastic benefits. First, they force sites to use encrypted connections when available. Second, they automatically block tracker networks from spying on you across the internet. Lastly, they tell you how private each site you visit is with a grade, based on how they treat your data — a grade which is boosted by the first two measures. Thus, a privacy rating could move from a D to a B with some automatic protections enabled by DuckDuckGo. I previously used Ghostery for this, which has similar functionality, but it had more manual design, the search was less accurate, and the mobile app was super slow.

Picking the low hanging fruit

Of course I know these measures wouldn’t protect me from a committed hacker, but at least it’s a deterrent for the lazy ones. Not taking these steps is like leaving your front door unlocked. Taking them is simply adding a button lock that could be picked. At the very least, with less of my info on the internet, I’ll get less spam and marketing!