Tuesday, May 16, 2017

The "Big Checkout" - How We Justify Disengagement

In modern American discourse, the word "Big" has become a pejorative.  "Big Pharma" "Big Banks" "Big Business" "Big Media" and let's not forget "Big Government".  America is the most affluent and powerful nation in human history; but is the down-side that everything is so bigly big that individuals feel hopelessly powerless?  And, if so, what do we do about it?

These big institutions are the culminations of decades of success, built brick by brick and year after year, on the principle that growth is always good and more is always better.  Bigness have given us more choice and more availability of practically anything we could want or need at any time, day or night.  And that's a good thing.  But...

"Bigness" creates a unique dynamic between the "big thing" and those under its influence, and it can be most easily observed in the world of cable TV providers.  Nobody really likes them.  Nobody's very satisfied with their costs, options, or service level.  Yet most of us remain customers, because there really is no comparable option or alternative.  Customers are trapped.  So, even though the cable companies continue to have huge customer bases (and profits), the relationship is not a cheerful one.  As a result, customers just hold their nose and disengage, always watching for some alternative.

Examples of this are literally everywhere around us.  In retail, the airlines, in media, and - yes - in politics.  And this ever-present passive-aggressive semi-surrender mindset of the average person in daily interactions, that are are needed but wholly unsatisfactory, is something that has polluted our attitudes toward political engagement in an extremely damaging way.

I view it as a cycle.  It's hard to figure out exactly where it starts, because it feeds on itself.
  • Politicians lie
  • People are cynical about politicians
  • People disregard what they are saying and doing
  • Politicians get to do things without the voters paying attention
  • Companies and interests get to influence politics without accountability
  • Things get worse for individuals, better for the interests
  • We don't have context to understand anymore, so we have to rely on the politicians to explain it
  • Politicians need to get re-elected
  • Repeat...
It's this cycle of dissatisfaction and codependency that repeats until we find ourselves completely detached from the process we actually own.  And just like the cable company, we hold our noses and disengage, always watching for some alternative.  We rant about it, but don't take any accountability.  We forget that governing doesn't just happen in an election year.  We've reduced our role in the democratic process to a single act on a single day.  And when we DO engage, we are either low information voters or we're just too disgusted to vote at all.  

There are only two ways to deal with an unspeakable mess: you can light it on fire and walk away (tempting), or put on a mask and grab a shovel (unpleasant and exhausting).  I get why a lot of people, frustrated by the unspeakable mess of "big government," would rather choose the first option. In fact, I think that really describes what this last election was about for many.  But, while it may have felt gratifying, it doesn't fix anything.  We've got to grab our shovels.  We've got to wade into the mess we helped create and clean it up.  And we've got to stick with it to keep it clean.  We can't merely leave it for once every four years.  

If you want to take on the "Bigs" of this world, you've got to start small.  Ask questions, talk to local officials, attend a city council meeting or a school board meeting, attend a party meeting in your local district.  Find out what the reality is on the ground right around you.  Then get your shovel.    If you're already engaged, then it's your job to show people that small things and small steps make a difference.  There are a lot more of us than there are of them.

Saturday, May 6, 2017

How Insurance Works

With the House's recent passage of the American Healthcare Act, drastically revising the provisions and protections of the Affordable Care Act, everybody, of all political persuasions is talking about health insurance.  The cost of it, subsidies, "high risk pools", and so on.  But what is insurance and how does it work?  How is health coverage different from other forms of insurance?  Let's take the politics out of it for a moment and just look at the mechanics.

On Risk:
Insurance - all insurance - is based on the principle of risk.  It is basically paying a smaller, known cost in exchange for the promise to offset the risk of an unexpected larger one.  Insurance companies employ specially trained math geeks, called Actuaries, to predict the level of risk their customers present and calculate the cost.  As long as a company correctly predicts that risk and prices accordingly, they can stay in business.

It's important to pause here.  If the risk of something is 100% certain (like a 100 year old man buying a life insurance policy), that doesn't work in an insurance model.  Insurance, above all, is basically betting that you won't need it for more than you pay in.  It's the peace of mind that a fixed predictable cost is better than getting hit with a big unexpected expense, but the company is betting that it won't come to that.

On Claims:
Insurance companies, using their actuaries, predict the likelihood and cost of people they insure filing claims under their policy.  Companies never expect to pay EVERYTHING on every policy for every policyholder all at once.  There's a fairly predictable volume.  Companies have to have the cash resources on hand to pay those claims as they come in.  But they also have to reserve cash in some form for a catastrophic event.  So, part of the money that comes in from premiums goes back out the door right away, and part of it goes to "loss reserving".  Think of 100-year storms or massive flu outbreaks.  You can't predict them specifically, but you know, eventually, you'll have to endure one.

On Pricing:
Here's where it gets interesting.  If you have a pretty good idea of the level of risk and the amount of claims you need to cover, then you've got the broad strokes of how much you need to charge.  If you wanted to, you could just take all of projected costs and divide them evenly across all customers.  But that would mean some people - the people with the lowest risk - would be paying more than their "fair share".

If you charge your best customers more than you have to, they're going to go somewhere else.  So, companies use "tiering" to break up rates into blocks, based on their risk profile.  For each individual person, the price is wrong, but as a group, the math works out.  The flip side is that there are some customers that will never pay enough in premium to cover their probable costs to the company, and tiered pricing has the double impact of keeping costs low to the "good" customers and financially encouraging "bad" customers to do business elsewhere.

This may sound a little heartless, but the quickest way for an insurance company to become financially unstable is to take on too many high-risk policies or to lose its low-risk customer base.  And a company that is financially unstable can't pay its claims anymore.  So, it's very important for companies to maintain a healthy and balanced total book of business.  If they don't, they can't keep their promises to the customers they have.  Each company  has to compete for those same precious low-risk customers, so price competitiveness is extremely important.

Cost-savings Tools:
Insurance companies have a few other means at their disposal to help balance the books.  The details are pretty complex, but they fit into three basic buckets:  controlling what's covered, controlling how much is coverable, and controlling who is covered.

  • What's covered:  most policies specify exactly the sorts of things they will pay out for.  We call these "named perils".  This makes it easier to predict the total likely claims.  Companies can also offer "cafeteria style" policies, where you just pick the coverages most important to you.
  • How much is covered:  There are two mechanisms here, caps and deductibles.  Caps limit the total amount paid out for a type of claim or over the life of the policy.  Deductibles, on the other hand, let policyholders take on some level of the risk in exchange for lower costs.  Deductibles are really useful for limiting the kinds of small claims that can nickel and dime a company to bankruptcy and are much harder to predict.
  • Who is covered:  Like I said earlier, selling a 100-year old man a life insurance policy is a sure loser.  The policyholder is never going to pay enough in premium to offset the benefit, and that means other policyholders will have to make up the difference.  
These tools are used carefully and continuously to ensure the health of the book of business is balanced and that there is enough coming in to cover the claims as promised.

On High Risk Pools:
High risk customers are nothing new to insurance and not unique to healthcare.  People who have been convicted of a DUI, but still have a license to drive are a special risk.  People who live in coastal Florida are a whole lot more likely to have their rooftop ripped off than people living in Arizona or even 50 miles inland.  These bands of extreme risk are things that insurance companies would rather not deal with, but states usually require companies who want to do business to take on at least a portion of these customers as a condition of their license.  They usually also have to pay into a central pool of money, managed by the state, called reinsurance, to cover the general cost of exposure to all companies taking on these special risks.  In the worst cases, state-run agencies can be the last resort for coverage, because private companies simply can't make responsible choices in these scenarios without jeopardizing their ability to pay their mainstream customers' claims.

On Gimmicks:
A lot of lip service has been given to a few shiny objects that will supposedly make things better.  Two of them are "selling across state lines" and tort reform.  These could get a whole post of their own, but here is a short version of why they won't actually help.

Most insurers already operate in multiple states, many nation-wide.  They already balance profit and loss across their whole portfolio.  There is nothing that says a company has to isolate each risk pool and balance the books at a state level.  And, even if that was the case, it would only make a difference if the "other" state was a lot healthier than "your" state.  That doesn't really happen.  And then, the people picking up your share of the costs would be very unhappy.  So that's not a thing.

A "tort" is a liability lawsuit.  Lawyers don't sue people, they sue companies, because companies have a lot more money.  A judge could award a million dollar fine against me and it would do the plaintiff no good, because I simply don't have the money to pay it.  Lawyers sue companies.  Tort reform is about limiting the amount a company can be sued for.  That sounds great for companies, but if you're the plaintiff suing for damages, you probably don't want that to happen.  But this is why insurance companies put limits on their policies.  Those limits don't protect you, they protect the insurance companies from tort lawyers.  So, again, tort reform isn't going to make a meaningful difference in the cost of insurance.

Health Insurance, Specifically:
If you take a moment to consider my previous points, it quickly becomes obvious that health care is a special animal.  First of all, healthcare, unlike a car accident or a house fire, is something you WANT to happen.  It's not just a matter of predicting whether or not you will get sick or injured.  Routine care is both expected and necessary.  So, that challenges risk models right away.  Secondly, health crises, unlike a house fire, are normally long-term events, requiring progressively more expensive care as time goes on.  Third, lower income is a key predictable risk factor of poorer health.  There is a clear correlation between income and conditions and risk factors for chronic disease.  So the people who are least able to afford it are most likely to be a higher risk and require a higher premium.  And, fourth, those all-important low-risk customers that are the anchor of financial stability for any insurance company are the least likely to see the need to pay for coverage, making it very difficult to re-balance costs.

All of these factors make healthcare as an insurance model especially challenging.  It's also why the individual mandate imposed by the Affordable Care Act (Obamacare) was so important.  The health of the whole portfolio is guaranteed by ensuring low-risk customers are built into the model.

Let's do the math:
Say the total cost of health care for Arizona is $10 Billion a year (I'm making this up).  With six million Arizonans, that's about $1,650 per person, per year in risk / cost.  Using tiering, 80% of your risk is in the top 20% of your pool.  Their "fair share" is $66,000.  That's 133% of the median Arizonan household income.  Hello bankruptcy!  Do we just write off coverage 20% of the population?  Or put them into high risk pools?  Either way, the money has to come from somewhere.  Hospitals and insurance companies will continue to incur the costs.  And you can be sure they will be passed back on to you, either in the form of premiums or, if through government subsidies, taxes.

But even in the lower risk tiers, at the lower income levels, the costs become prohibitive.  $2,500 a year may not feel like much to someone making $80-$100k in salary.  But to a person making minimum wage, that's 13% of their income.

As with anything, the devil is in the details.  And our personal health and that of our loved ones is an emotional strain as much as a financial one.  Still, these principles of insurance hold true, regardless.

Sunday, April 16, 2017

Lies... Part of this Balanced Breakfast

When I was a kid, I loved me some Cocoa Puffs.  I didn't get them that often, because my parents were not advocates of hyping me up on sugary cereals.  But I was never convinced that they had the right of it.  My Saturday mornings were laden with, between incidents of Wile E. Coyote blowing himself up (yet again) with a pair of Acme rocket-powered roller skates, an endless parade of commercials showing me how my beloved chocolatey puffs could be part of a balanced breakfast, so long as you surrounded it with piles of toast, juice, fruit, and milk.

If you're wondering why we Americans find it difficult to discern the truth anymore, maybe it's because we haven't heard much of it in a very long time.

As a marketer, I know that the key to getting people to respond is not through facts, but through emotion.  I can't tell you that eating your vegetables will promote a whole host of health benefits, even though it's true.  But if I show you images of a happy family eating a meaningful dinner together featuring a bowl of steaming green beans being passed around, now I've got you.  In fact, I can sell you something that you are factually skeptical about and make you willingly ignore those rational concerns if I package it right.  As humans, we are hard wired to prefer feeling good about something than being correct about something.

The applications of this tactic are literally everywhere in our life.  My time researching and writing on nutrition and fitness brought this home with a thud.  The fitness and nutrition industries are MASSIVE, multi-billion dollar enterprises, and the vast majority of what we are sold is of little or no actual value or benefit.  Vitamins, cleanses, fancy diet plans, diet books, the Thigh Master?  And the labeling and packaging practices of food manufacturers are so cleverly crafted, we actually think Nutella is "crafted from wholesome ingredients".  Yet, the country is fatter and sicker than ever before.  We ignore the obvious lack of results and opt instead for the validation of a label.

The effect of this endless barrage of insincerity on our brain is alarming.  It's bad enough that we are conditioned over our lifetime to believe things that we would otherwise rationally dispute.  In doing that - in rejecting that skeptical part of our mind - we have atrophied our ability to smell a fish story when we hear it.  Our entire perception of reality is therefore compromised.  We're basically mentally handicapped through conditioning.

And here's the thing:  political strategists have been following this practice for decades.  They know they don't need to (or even want to) tell you the truth about eating your vegetables.  They know they can get a lot more votes by striking an emotional chord, even if it is factually dubious. Campaigns pioneered micro-targeting and commercial marketers have taken their lead in using "Big Data" to refine and retarget their messages down to a segment of "you."  They no longer have to guess what will outrage or energize you; they KNOW.  And all they have to do is, quite literally, tell you just what you want to hear.  We know politicians lie.  We accept it.  And, we don't care.  That's surrendering what you know to be real in order to feel that emotional appeal.  And that should scare the crap out of you.

Aren't you tired of being lied to?  Aren't we all?  Red or Blue, left, right, or center, don't we deserve better?  Of course we do.  But we haven't demanded to be treated with respect by those who wish to represent us in government.  We haven't held ourselves accountable to rise above the "feel good" bumper stickers we are fed.  We keep buying Cocoa Puffs and calling it part of a balanced breakfast.

Expect more of your elected officials.  Reject the politics of emotion.

Thursday, April 13, 2017

What you don't know about military veterans (part 2 of 2)

In part one, I raised the issue that the military and our veterans are equally misunderstood by conservatives and liberals alike (and maybe we could even be considered a marginalized group).  Here, I'd like to share some insights common to most veterans I know.

We don't know what to say when you thank us.
My fellow veterans and I talk about this a lot.  We are all thrilled that we have learned as a nation from the mistakes following the Vietnam era, but we're at a bit of a loss when a random stranger decides to thank one of us individually.

Our thought process goes a little like this:  Why are they thanking me?  They don't know what I did or didn't do.  They don't appear to have any way to relate what it meant to them or to me.  I know people who did so much more and sacrificed greater than I did.  There are people downrange right now that need your support; not me.  Your appreciation is misplaced.

After all that, we shrug and try to figure out whether re-thanking them or "you're welcome" is the more appropriate response.  We just don't know what you're looking for.

If I may make a suggestion: if you want to show your appreciation to a veteran, ask a few questions instead of poking us with an arbitrary "thank you."  Where did you serve?  Do you have friends still in the military?  What was it like for you?  What could we do around here?

We keep our politics somewhere south of our dog tags.
I sort of think the "veterans are all conservative hawks" narrative comes from the squad of retired officers who have sold out to a career of punditry on television.  These folks, by and large, come off as quacks to me.  They know how to serve up some movie-worthy imagery, but they're a cartoon.  They pander to what civilians expect to see when you watch a retired general.  For myself, I can't imagine actually serving under any of these blowhards.  It would be a nightmare!

As a member of the military, the uniform weighs very heavily on us.  Ask any veteran and they'll tell you that, in uniform, you represent the entirety of the US Armed Forces (or the entire country if you're overseas) as well as every person that ever wore the uniform before you or will in the future.  That's a pretty full load; there's not a lot of room for personal politics alongside all of that.  So we push it down.  We all have our points of view, but we are instruments of national policy, not practitioners.

We know how thin the veneer of "polite society" really is.
Anybody that has been to very troubled regions of the world will tell you: we're all about  three degrees of separation from "The Walking Dead."  A relatively brief interruption in the basic systems that keep our society flowing will turn people into the basest version of ourselves in a matter of days.

Starvation, dehumanization, genocide, all protracted for years and even generations on end.  These things cannot be unseen or unfelt.  And when we come back home (thank you for your service), the constant nattering of "first-world problems" from people who have never seen true suffering grates on us like nails on a chalkboard.

We deploy in support of our brothers and sisters; not the mission.
This isn't a politically partisan post, but a recent example sticks out for me, and stuck in my craw at the time.  When Chief Petty Officer Ryan Owens was killed during a raid in Yemen, the White House came to its own defense, claiming "he believed in the mission."  It was a disgusting display and it was total bullshit.  Chief Owens believed in not letting others carry his load.  He believed that it was his turn to go into harm's way and he wasn't going to let anybody else take his place.

As I said before, politics and national policy aren't the job of a soldier.  Our job is to obey orders.  The reason we keep doing that job is the love and respect we have for our brothers and sisters on our left and right.  We may hate the mission; we may think it's completely hare-brained.  But we are going because our brothers and sisters will be there.  They're not going into that alone.  I've got their back, just like they have mine.  And I mean that literally.  The entire fabric of the military depends on this bond.

We have seen, first hand, the consequences of foreign policy decisions.
There's one fundamental truth about the presidency every Soldier, Sailor, Airman, and Marine understands:  the president decides who lives and dies.  Either through action or inaction, the president will either send troops into harm's way, or decide to keep the troops home, allowing others to continue to suffer in far-away places.  The decision to apply diplomacy, provide foreign aid, condemn in the United Nations, or just take an unscheduled trip to a hot spot will have a direct impact on events on the ground.  And nothing happens in isolation.  Dominoes fall and fates are sealed, one way or the other.

As I sit here, I have a hard time thinking of a completely "successful" foreign policy decision during my adult life.  And I was there on site for quite a few of them.  When I hear people rant for "obliterating ISIS" or "taking out so-and-so," my first thought is to cringe at the train wreck I see coming.  My second is to suggest that this patriotic individual should get right on that his-own-damn-self.

Governing, by and large, isn't about winning and losing.  Most times, it's about holding things together. the best you can.  Every now and then, you get a chance to make real progress.  But, in all of them, there is an element of life and death.  And I'd just as soon people not be so free with throwing mine in the fire for a passing fad of political football.

We really don't understand why you don't get it.
Once you've been exposed to the world through the experience of military service, there is no going back.  You simply can't put the blinders back on.  The world is simultaneously smaller and unimaginably huge.  It's both simpler and infinitely more complex.  We see a new sort of truth about things and how they work.  It's more pragmatic, more jaded.  It's both skeptical and optimistic.  Maybe we've traded our rose-colored glasses for camouflage ones, but the things people say (either about us or the things we've seen and experienced) never cease to amaze.

Thursday, March 30, 2017

What you don't know about military veterans (Part 1 of 2)

"Thank you for your service."

Conventional wisdom says conservatives are staunch backers and supporters of the military and veterans.  Liberals, not so much.  As a veteran and a liberal, I've got news for you. Neither side seriously considers or understands the issues, needs, or perspectives of those who served and continue to serve today.  And, to be honest, I'm kind of tired of the platitudes.

In the 60's, liberals were the original "Flower Children" opposing the Vietnam War.  Opponents of the war treated returning veterans shamefully afterward.  Three decades later, many Democrat officials opposed the invasion of Iraq.  Ironically, both of those actions have come to be viewed as historical mistakes, but that has done nothing to lessen the narrative that liberals are "doves" and "hippies" and therefore dislike the military as a matter of principle.

Even my fellow liberals are surprised when they learn that I have a long, multi-generational military background.  Sadly, this particular piece of conservative mythology has seeped across party lines to the point where it is almost universally accepted as true.  The truth is, red or blue, support for the military is more of a prop than a genuine, heartfelt belief.

There's a joke:
     "How many Vietnam Veterans does it take to screw in a light bulb?"
     "I give up, how many?"
     "You weren't THERE, man!"

In those three lines, you can find a whole host of lessons about understanding the military culture.  If you're not sure you should laugh or why, there's a reason.  Let's call it "Civilian Privilege".

You may not think of veterans as a "Marginalized Group" and I can understand that.  Veterans, by and large, have enjoyed special access to services, support, and recognition that many groups have not.  Add to that the inherent strength that is associated with the US military, and it would be easy to dismiss the idea of veterans as a minority or class at all.  And that's sort of the problem.

According to the Department of Veterans Affairs, about 7% of the American populace living today ever served in the military.  The LGBT community is somewhere around 5-6%.  The African American community is around 12-13%, and the Hispanic community about 17%.  Statistically, that puts veterans in a sharp minority, comparable with other protected classes.

Did you know that the US military has been in virtually constant hostile action since OPERATION: DESERT STORM in 1991?  That's 26 years.  Entire careers have been spent deploying from conflict to conflict.  Were you aware that there are still over 8,000 US troops in Afghanistan today?  Most people aren't.  That's because, in modern America, nobody has to sacrifice to support ongoing war efforts overseas.  The shelves are full.  There's no rationing.  And news cycles just sort of blow through periodic spurts of coverage when things go sideways.  We've got very short attention spans.  You can turn off your television, close your front door, and forget entirely that there is a segment of the population that has spent two and a half decades in harm's way, and that nobody comes home unchanged from that.  That's the very definition of privilege.

Americans are absolutely shameless in brief, shallow, pre-fabricated displays of patriotism and support for veterans.  We stick a flag out on a holiday, or post a meme on Facebook and call it good.  It's exactly the same sort of co-opting we do during Black History Month.  We talk about Fredrick Douglass, Harriet Tubman, and Martin Luther King for a week and walk away feeling like that qualified as substantive support and understanding.  Nonsense, right?  But, when it comes to veterans, we don't have that same feeling in our guts - that feeling of knowing that we are doing ourselves, our history, and our posterity a disservice by relying on token gestures.

So, red or blue, left or right, when people wave their little plastic flags and say "support our troops," in my heart of hearts, I say the same thing: "You weren't THERE, man!"

In Part 2, I'll discuss common veteran perspectives and how we can do a better job of actually engaging them.

Saturday, March 25, 2017

How do we take big money out of politics? You just did.

The defeat of the American Healthcare Act (aka TrumpCare, RyanCare, or TRyanCare) was a win for people who don't want to see tens of thousands of people left out of a basic need of all citizens.  But it was more than that; it was the culmination of three months of concentrated grass roots engagement and activism by voters who, like me, just showed up.  And that's the bigger lesson in all of this.

Campaign finance is a mess.  Corporate and fringe political interests have held sway for far too long.  But in 2017, people have proved that no amount of money can outweigh genuine engagement on the part of the electorate.

Our message was clear.  Our efforts were focused.  Our determination was palpable.  It changed things.  And it didn't cost a dime.

The conversation around politics has changed since election day.  The ubiquitous "they" is no more.  We are talking about policy in the first person.  "How will this affect us?"  "Do we need this?"  "What can I do?"  There is no greater power in the American model than an informed and energized voting public.

This is just the first step.  A victory feels good.  But now the veil has been pulled back.  We see the bad actors, the gross incompetence, and the real interests that are driving our legislatures and national government into the ground.  There's a lot more work to do.  So, take a moment, look around, and savor the victory.  Then roll up your sleeves.  We've got more to do.  And we can't be bought.

Thursday, March 23, 2017

Finding the Zebra Among the Stripes

The poor zebra is the perfect metaphor for where we are in America today.  One side looks at it and says "it's black with white stripes"  while the other says, "No! It's white with black stripes!"  Both are arguably true and neither one can be objectively disproven.  We are diametrically opposed!  There's just no middle ground.  

The part neither side seems to want to admit is that they are BOTH looking at the same zebra!  

And that's how it goes.  Whether it's an argument about civil rights, justice, school choice, healthcare, marriage equality, or women's reproductive rights, we are fixated on the stripes.  Nobody wants to talk about the zebra.

Ladies and gentlemen, we are not a Red country with some Blue people.  Nor are we a Blue country with some Red people.  We are Americans, lumped together in this messy, chaotic grand experiment of liberty first envisioned almost a quarter millennium ago.  But we have been sold a lie.  Or, rather, two of them.  The red and blue stripes are an illusion.  They've been crafted by micro-targeting, big-data, big-money interests who only want their fringe version of America to ascend.  DON"T. LET. THEM!  It's time to recognize the zebra for what it is and stop arguing on behalf of people that just want to keep you in line.