#1040 Musings Beyond the Bunker (Wednesday December 18)
Good morning,
WHEN DOES INSURANCE MAKE SENSE?
I’ve been thinking a lot about insurance, when it makes sense and when it does not. One of my favorite axioms is that one generally should accept any free option that is offered. follows that, if something from which you might benefit has a low cost, it’s probably worth buying. When the benefit is not that great but the cost of insuring that risk is high, one should take a pass. Here are my a few examples of this concept:
Many people, my wife included, don’t want to waste a minute at the airport. Showing up a little early is anathema to them. To me, I want to de-stress before boarding a plane. I like to allow some extra time for a possible traffic slow down or other unforeseen delay. This means one may arrive a few minutes early, which is, after all, better than arriving a few minutes too late. The cost of avoiding calamity is just a few minutes of reading one more chapter of a book at the airport.
Health insurance plans go out of their way to sell vision insurance and dental insurance. Any number of consultants have told me that, regardless of the apparent low cost, not much is really covered and deductibles are high. Plus, the cost of teeth cleaning or eye exams is pretty low. So, typically a healthy person need not pay the cost of the insurance and, instead, pay for the service out of pocket.
Is travel insurance a good idea? I’m going to suggest it isn’t or that we purchase more than we need. First, insuring airfare is absurd, as most airlines will allow cancelation with perhaps a $250 penalty to change. Second, often one can negotiate some partial credit with a hotel, if they understand the exigency. Finally, I’ve tried to collect from travel insurance in two instances, each of which was open and shut. Each took nearly a year. They, like all insurance companies have a simple business model: collect premiums and don’t pay out claims. They can wage a war of attrition, in which only the most stubborn and tenacious of insureds can engage.
Then there are potential major losses, for which the damages could be high but the likelihood of the event is fairly low. Whether to purchase earthquake insurance is a difficult calculus, as we are trained by the news and our inherent fear of disaster to view the chances of a catastrophe as higher than it actually may be. If one is in a well-built house on land that is not prone to liquefaction (I’m guessing much of Santa Monica falls in this area), and one is not at or near the fault line, the odds of some damage might be high, but the odds of a significant damage is relatively low. And if there is major damage across a wide area, it is possible there is too much economic strain on the insurance (and reinsurance) industry to create a plausible scenario where the insured become the creditors of an insolvent insurance industry. Finally, I’m guessing there will be government assistance to take care of major losses. After the 1994 earthquake, we had to replace our chimney, which was damaged. We didn’t have earthquake insurance. My mother said I should call FEMA, as there probably was a fund that would pay for the work. She was right. A check came in the mail, no questions asked.
I have railed quite a bit about the unholy nature of our healthcare system. For us to have a system where one’s coverage is dependent upon an employer’s decisions, and where the same party that must fund care is the came party that determines whether to do so, is one even Rube Goldberg couldn’t envision. There must come a more equitable manner of providing healthcare, cutting out the costs of middlemen, and allowing doctors to focus on their jobs, rather than filling out forms and fighting with insurance companies. I think that solution is called a single-payer system. Let’s debate that and other alternatives.
In the meantime, our healthcare system is grossly skewed toward treating disease, rather than preventative care and more healthful living. I would think the best way to change this imbalance is to create incentives to visit the doctor once a year (or even every other year). What if the government mandate a credit for such preventative doctor visits? If there is a $200 rebate for that simple task, I’m guessing the overall cost of healthcare would decline…
HOW TO RAISE GOVERNMENT REVENUE
Want to raise more money for the government? Move the IRS into the 21st century. For relatively low cost, we can have more agents, better trained, and equipped with better hardware and software to maximize tax receipts. It seems so clear. Yet, because the Democrats say yes, the Republicans seem almost duty-bound to disagree. The excuse? That the IRS has been weaponized. Without proof, they seem to believe that arming the agents of our government to collect from tax cheats somehow unduly increases the power of the state. Conspiracy theories only. Even if there is some risk of this, then increase the amount of oversight and fund an inspector general. And as a result of starving the IRS of the tools and personnel it needs, the government is ill-equipped to compete with the tax-avoidance practices of the very wealthy corporations and individuals, with their highly complex structures and legions of lawyers and accountants. Such a shame.
TRYING TO UNDERSTAND THE INEXPLICABLE
We all know the general contours of the Menendez case. Two boys who killed their parents brutally, with seemingly no explanation. The Netflix miniseries, Monsters: The Lyle and Erik Menendez Story, offers insights into the sociopathy of the Menendez brothers. Dig a little deeper than the basic crime and the story is one of terrible, often indifferent, perhaps even predatory, parenting, misunderstood arrogant kids, an immigrant success story, an aggressive, almost delusional, desire to climb the social and political ladder, and a weird brotherly connection. Dig another level down and one finds closeted and confused sexual identities, parental abuse (verbal and physical for sure and possibly sexual as well), infidelity, alcoholism, and privileged kids who are overindulged and lavished with too much money.
At its core, it is the story of sociopathy at a grand scale, with a manipulative older brother dragging an insecure younger brother down a rabbit hole. The story is told through shifting among the different perspectives of the various key characters. The relative unknown actors playing the brothers are joined by Javier Barden and Chloe Sevigny as their parents. While generally riveting, the series can drag, particularly in the middle. You can watch the first ten minutes of the fifth episode and fast forward to the last five minutes of that episode and you’ll get the idea. The notion that the inexplicable can be explained, and that people capable of hideous crimes can be shown with a touch of humanity (enabling us to explain, though not justify, behaviors) is good enough for me to consider watching the first season, about Jeffrey Dahmer (although I can’t imagine anything redeeming in that character).
Have a great day,
Glenn