If you don’t believe in the future value of Bitcoin, that’s perfectly fine. Not believing in Bitcoin does not automatically discount its potential as a reward to incentivize healthy behaviors. Despite the ups and downs of the crypto market, Bitcoin adoption is steadily growing, which indicates the number of people who can be motivated by a Bitcoin reward is also growing. In this post, I share details on how to create financially sustainable Bitcoin rewards in healthcare. What is not discussed in this article are crypto projects that currently offer token rewards to incentivize healthy behaviors. These projects are not offering Bitcoin rewards but are instead pushing a newly created token that is pretty much worthless (colloquially known as shitcoins).
Healthy behaviors can have a huge impact on health outcomes. Studies show that behaviors and other social and environment factors account for 80% of the variation in health outcomes. The problem is that designing incentives for healthy behaviors is tough. There are plenty of examples where health incentives simply don’t work. The difficulty is that you can easily end up rewarding people who are already engaging in healthy behaviors or will start healthy behaviors without intervention. Converting the ones who otherwise would not take up healthy behaviors is the real task, which unfortunately has a low likelihood of success. This difficulty is the premise for companies that specialize in behavior modification (Noom is a good example).
Nonetheless, behavior modification for improving population health is noble work and should be pursued. Imagine if people with poorly managed diabetes began taking their medication regularly, getting light exercise consistently, and adhering to dietary restrictions? Their use of expensive healthcare services should quickly decline. This kind of outcome is good news for communities, health insurers and for healthcare providers operating under risk-sharing contracts with insurers (these providers are financially accountable for poor health outcomes for their patients – listen to episode #1 for more details on risk-sharing in healthcare).
As a general rule, incentivizing behavior change is a journey. It takes time. There will be ups and downs and we need to plan for a positive trend. The best way to proceed is to test a number of wildly different incentives to see what works. And the healthcare community must share experiences. Always be ready to share what works AND what does not work.
Last but not least – we should be open-minded to novel care delivery interventions and incentives. If I can say anything to the healthcare community it’s that healthcare spending continues to rise and nobody is living longer (not really). So we should not dismiss new ideas without full consideration.
And that brings us to crypto. Bitcoin is the first widely adopted cryptocurrency and the most reliable crypto-based store of value. Accumulating Bitcoin can serve as an incentive for behavior change and as a safeguard for future financial health. If you don’t believe in the future value of Bitcoin, I would direct you read some articles from Dror Poleg. He’s an excellent writer and makes a compelling case for the future adoption of crypto. If you still don’t believe in Bitcoin after reading Dror’s posts, then you’re a confirmed non-believer (perfectly ok).
Where does this Bitcoin reward come from? When it comes to healthcare interventions, I believe the only real path forward must be financially sustainable and does not depend on charity or nonstop government support. That brings us to staking. Staking crypto is the equivalent of receiving interest from your savings account at a retail bank. Instead of earning the US dollar, you earn crypto by locking up your crypto. And the rates of return are considerable. You can easily fetch 5% annual return on a top proof-of-stake blockchain (I capture 8-11% annual returns on my staked crypto). At time of writing, STX yields a Bitcoin reward around 9-10% for locking up tokens to secure the Stacks network. You can check out the Xverse wallet and pool for details.
A healthcare incentive fund can be financed by employers, health insurers, or other entities that benefit from a healthy population such as an ACO. The fund will consist of staked crypto that generates token rewards (read “interest”) that are converted to Bitcoin and distributed periodically to a targeted group of plan members.
Importantly, the entities that create the fund will not necessarily forfeit their crypto holdings in order to provide rewards. Should they want to exit the incentive program they can: (1) convert their crypto to US dollar and immediately realize gains or losses; (2) wait until further token price appreciation and then convert to US dollar; or (3) hold the crypto plus staking rewards, indefinitely.
There is a risk that a particular staked token loses value quickly, or the broader crypto market turns bearish. Many types of staked tokens are locked up for a period of time and cannot be sold off immediately (that’s the staking risk). Liquid staking is one way to avoid the lockup. Another way is staking Cardano’s ADA. Cardano staking is unique in that you earn staking rewards from staked ADA based on a “snapshot” of that amount, instead of locking that amount for a period of time. Anyone can withdraw or sell off their ADA while staking – you simply lose out on future staking rewards.
There are also crypto lending services that can provide high yield on crypto deposits, but these services carry custodial risk. For example, Celsius is one of the biggest players in this space and recently halted withdrawals during a major crypto selloff.
However, in practice we’d hope that funders of healthcare innovations do not pull their support prematurely – the goal is to improve healthy behaviors and avoid unnecessary hospitalizations, which leads to healthcare savings down the road. If anyone is interested in standing up a Bitcoin-based incentive program, I’m more than happy to help out. Shoot me an email or find me on twitter.
Godspeed.
~ James
