Category Archives: Current Affairs

Entrepreneurs guide to getting a health insurance plan

With all this talk about health care reform, here is one entrepreneur’s thoughts on how to choose a health care plan that fits the needs of your employees.

Understand your employees
The type of health care plan you’re looking for depends on who your employees are. If they are generally healthy, you might need a different plan than if they are more prone to illness and health needs.  If your employees have higher salaries, (like at an Internet company) you can offer a more flexible health care plan than if your employees are lower-salaried or paid hourly.

Group policies are usually more expensive than individual policies
There is a huge myth that employers pay less than individuals for health care.  That’s only true for people with chronic illnesses or people who are very large consumers of health care.  For a relatively healthy person, a group policy plan costs roughly twice as much as an individual policy plan. (If you hire an employee who is used to paying for health insurance herself, she might be bewildered what the company pays for her.)

The reason why employers pay more for group plans is to offset the insurance company’s risk for future hires. Because insurance companies guarantee their premiums no matter who a company hires, they will charge more to cover the future employee with high health-care needs and in doing so, raises the premiums for everyone.  This is especially true for small companies who do not have tons of employees to lower the average cost from one potential high-cost employee.

HSAs are awesome
Health Savings Accounts (or HSAs) are essentially flex-spend IRAs that helps individuals save approximately $3000 per year tax-free on anything medical spending (including contact lenses, eye doctor and dentist visits, etc.). And unlike their ugly cousin, the Medical Savings Account (or MSA), you don’t have to spend the money you put into an HSA in that calendar year — anything you don’t spend rolls over to the next year.  The main issue with HSAs is that they are only legal with certain (usually high-deductible) health care plans. However, their benefits more than warrant the effort in finding a plan that makes HSAs a reality.

Tip: sometimes it is hard to know which expenditures are health related and which ones are not.  For instance, is an aspirin purchase health related?  Sites like make the decision is made for you – you enter in credit card info for both your HSA and normal credit card and they will automatically deduct them accordingly. 

“Health care” or “health insurance”

Do you want to get a plan that covers all the little health related issues, or do you want insurance that covers just high-cost things?  I personally think insurance is much better for people at a high-tech company where salaries may be higher, especially since little of the insurance costs are covered by employees themselves.  These plans are generally called “high deductible plans” since the employee has to cover the first $3000 – $5000 of expenses in the year.  While that may be a lot to cover, insurance plans come with massive flexibility – you can go to almost any doctor or specialist you want without having to go through referrals or waiting.  And if anything bad happens, the insurance covers ALL costs over the deductible.  So if your employees are well-paid, this is a good plan because it has maximum flexibility, is much lower cost, and can be paired with HSAs. 

Companies with more hourly workers will have to make a different calculation.  In their case, health “care” might be more appropriate because the hourly worker might not be able to afford a $300 doctor test.

Summation: look closely at your employees and make a health plan accordingly. 

(Special thanks to Michael Hsu and Jenny Oh for helping edit and research this blog on health care)

Military questions we should be asking

One of the hardest things to do in management is not strategy, actions, or implementations … it is asking the right questions.

Recently many people have been asking tough and thoughtful questions about our role in Afghanistan.  These are important questions that need to be asked.

But we should also be asking other questions about our military like:

– Are the South Koreans capable of defending themselves?  If not, why not?  (South Korea is a massive economic power). 

– Does it make sense to have tens of thousands of American troops stationed in South Korea (which is arguably the most dangerous place in the world)?

– Could the military be modernized faster?

– Could we have smarter financial controls over military spending?

– Is it possible to win in Afghanistan before the American people tire of it?

As we ask smarter questions, we will get a much better

who cheats more: Democrats or Republicans? — econometric solution to determine the answer

The thing I hear often from Republicans is that "Democrats don't play fair.  They cheat."  And the thing I hear often from Democrats is that "Republicans don't play fair.  They cheat."

Who's right? 
(I have no idea)

However, we can devise a simple research project to see which side cheats more.  Just look at recounts of federal and state races.  

Recounts are conducted when the race is too close to call.  In the midst of a recount, many votes can be tampered with, found, manufactured, and challenged.  I propose that some researcher look at the last 500 federal and state recounts of races between Democrats and Republicans.  If Democrats and Republicans cheat equally, then you'd expect them to win recounts 50/50.  If one party wins over 60% of the recounts, they are more likely to be the greater cheater.  If one party wins over two-thirds of the recounts, they are most surely the cheating party.

There have been many famous recounts in recent memory.  Minnesota just had a grueling recount of its U.S. Senate seat.  And who could forget the famous 2000 Presidential recount in Florida.

Unfortunately I don’t have time myself to do this exhaustive study, but it might be really interesting if a researcher took it on — I guarantee whoever did the study would get their 15 minutes of fame.  

how come no one wants to serve in the senate?

year has seen more people voluntarily quitting the senate before their term
runs out than any other year in recent memory. 
For years people have said that being a Senator is the best job in
America.  But it is obviously not the
case as a whole bunch of people are leaving before their term ends.


Obama and Joe Biden left the Senate this year. 
But they, at least, had a really good excuse.  They became President and Vice President –
definitely a promotion.  Hilary Clinton,
too, left the Senate to become Secretary of State … also a promotion.  But a bunch of people left the Senate for
lateral moves.


Ken Salazar
left to run the Department of the Interior. 
No slight to the Interior, but it doesn’t seem as impressive as the being
the senior Senator from Colorado – especially one that has only had the job for
four years.  And Judd Gregg from New
Hampshire tried to leave the Senate to become Secretary of Commerce before
having a dispute about the census.


And now
there’s Mel Martinez from Florida.  He’s
just leaving after four years for no stated reason.    

Clinton and Wal-Mart

according to the Wall Street journal today, Hillary Clinton was formerly a board member of Wal-Mart.

that was the first I’ve heard of this.   i did some digging and, sure enough, Mrs. Clinton serves on the Wal-Mart board of directors from 1986 to 1992 (not long before she became first lady).

During those six years, Wal-Mart was one of the fastest growing companies in the world.   This experience must have been one that us useful to Senator Clinton.

Who are college students today??

Price Roe sent me this fascinating study on college students. It is a detailed survey of 263,710 students at 385 4-year colleges. That’s comprehensive!

The American Freshman: National Norms for Fall 2005
By Sylvia Hurtado & John H. Pryor
(the 2006 study should come out next month)

they have been doing these studies since the mid-sixties and the results and trends are fascinating.

global energy demand increasing

So there was big news today … the Wall Street Journal reported that the International Energy Agency presented a paper to the G-20 meeting in Melbourne on global energy demand. The paper predicted that global energy demand will grow 50% in the next 25 years.

50% sounds like a huge number, but over a 25 year period it means it is only growing 1.63%/year. that number doesn’t sound like it would be insurmountable to deal with. it is much less than the global economy is predicted to grow. couldn’t a potential plan of conversation and new energy sources deal with this increase in demand???

Peter Thiel on saving

Peter Thiel penned a very thought-provoking commentary in Forbes on Americans and their inability to save.

Warning: Save, Save, Save


The grim facts: After peaking at a peacetime high of 15% thirty years ago, the savings rate fell, plunging below 0% last year. Over the same period, the Boomers went from the start of their careers to near the end. All the while, life expectancies grew. You’d expect the savings rate to be trending up, not down.

The nation didn’t stop saving because it finally built a solid nest egg. The median American household has just $37,000 in assets other than a home. Even those closest to retirement have surprisingly little saved–the oldest Boomers have about $180,000 to their credit. That’s nothing to sneeze at, but consider that $180,000 produces an income of just $750 a month.

Peter’s famous quote on the subject is: “The good news is that Americans are living longer. The bad news is that nobody believes the good news.”

health insurance premiums and higher deductibles

I am a huge proponent of HSAs and high deductible plans. They might single-handedly save health care in America.

But when you are getting a high-deductible plan, it pays to get the highest deductible you can get. Here’s the facts:

If you want to get a high-deductible plan in California and you are 30-34, you have two choices with Blue Shield — a $2400 deductible and a $4000 deductible. A $1600 difference (all the other items on the plan are the same). You’d think that the yearly premium would be fairly similar with the 2400 being a bit more expenses – maybe about $200 more. But here is where it gets crazy.

The 2400 dues is $114/mo or $1368/yr

The 4000 dues is $63/mo or $756/yr.

So that means the 2400 Plan is $612 dollars more expensive than the 4000 Plan even though you only get a maximum of $1600 in additional coverage. That is a HUGE premium for that insurance.

So if you are healthy, plan on being relatively healthy the next year, and are financially stable, you’d think it was in your obvious best interest to get the highest deductible possible.

(by the way, this analysis is even more true for car insurance and other types of insurance).

Los Angeles Times endorses Steve Poizner

i rarely blog about politics even though i am passionate about it. but something is newsworthy. My friend Steve Poizner is running for California Insurance Commissioner (one of seven state-wide elected offices in California). Steve is a wonderful man, a dedicated public servant, and someone I think extremely highly of.

Today, the Los Angeles Times endorsed Steve (see full text of the endorsement below). Steve has also been backed by the Oakland Tribune, Sacramento Bee, and other papers. he’s essentially the “good government candidate” in the race (his opponent is the infamous Cruz Bustamante).

if you are in California, I encourage you to consider voting for Steve.

More info at:

Steve Poizner for Insurance Commissioner
Republican entrepreneur is a more competent and reliable consumer advocate than Cruz Bustamante.

October 4, 2006

CALIFORNIA HAS ONLY HAD TWO elected insurance commissioners. First there was Democrat John Garamendi, who was seen as a champion of consumers, and then Republican Chuck Quackenbush, who resigned in disgrace amid allegations he allowed insurance companies to underpay their 1994 Northridge earthquake claims. Prosecutors never filed charges, but after two appointees filled out the term, voters returned Garamendi to the job in 2003.

Now Garamendi is leaving again, and the fight is renewed between consumer advocates — who say the industry is out to cheat customers — and insurance companies, which say regulators don’t understand the market. Garamendi is backing Democratic Lt. Gov. Cruz Bustamante over Republican tycoon Steve Poizner. The twist is that the best choice for consumers, hands down, is Poizner.

The Silicon Valley entrepreneur has solid market credentials, having built a billion-dollar company from a global positioning device that locates cellphone users for emergency operators. He has made reducing insurance fraud a priority, which would protect the industry but also would allow companies to offer lower prices to consumers. He acknowledges that “insurance companies want to own this position” — and he vows not to let them. He has said he’ll defend Garamendi’s auto insurance rate regulations, which put a person’s driving record ahead of where the driver lives. He vows to defend Proposition 103.

He’s credible, and his history shows he’s a man of integrity. He thinks before he acts, a trait exemplified by his careful study of a liberal Democratic Bay Area Assembly district that he almost won, and his equally studious approach to and backing for Gov. Arnold Schwarzenegger’s redistricting reform, a measure that, while unsuccessful, was worthy. The insurance commissioner’s job, he notes, “requires analytical horsepower.” Poizner has it.

Bustamante, as a legislator, often backed bills that insurance companies sought to help them avoid complying with Proposition 103. For example, he advocated the repeal of the initiative’s good-driver discount. When he ran for governor in the campaign to recall Gray Davis, he misused donations from Indian tribes and was heavily fined. As a candidate for insurance commissioner, he accepted insurer contributions, then returned them when it became a campaign issue. It was not a proud day for Democrats when it became clear that he would be their nominee. His election would be a step backward for consumers.

Poizner is no Garamendi; with his market orientation, Poizner is open to permitting lower-premium health policies and other types of coverage with very high deductibles, along with other moves that may not prove popular with consumers. But he is dedicated to making sure insurers are competitive and, where the market falls short, he will be an effective consumer watchdog.

dynasties and American politics

Whill26I’ve been think a lot about dynasties … and I don’t think it is good for America …

Particular the Clintons and the Bushes. If Hillary Clinton wins in 2008 (I would say that is a good possibility) and goes two terms … and then she is followed by Jeb Bush for two terms (another possibility) …

In every presidential election from 1980 – 2020 (or 32 yrs), either a Clinton or a Bush will have been on the winning the presidential ticket. That makes us look like a development nation with a struggling democracy.

Already a Bush or a Dole has been on the Republican presidential ticket since 1976 (28 yrs).
And are we ready for a Chelsea Clinton vs George P Bush in 2032? (they’ll both be about 50 then).

Do we really want presidential politics dominated by just a few families? This isn’t to say that a member of a family dynasty can’t be a good President. It is only to be very wary of concentrated power.

Our founding fathers were very concerned about dynasties. It isn’t coincidence that out of our first five Presidents, only Adams had a son. And Adams was very telling. He was the only one of the first five Presidents to last only one term and, to prove the power of dynasties, his son, John Quincy Adams, became the sixth President.

risk aversion in intelligence analysis

One of the things I have been doing for Rapleaf is talking to people that gather and analyze intelligence. We’re very interested in systems that gather discreet pieces of info and put them together to find patterns and good intelligence.

while talking to intelligence officers (mostly those in the US govt) i found something very interesting: an incredible fear of failure. the fear for a false positive (falsely identifying something) is so incredibly high that these officers err on the side of massive false negatives (in this case, not going out on a limb or being creative).

essentially, they seem highly risk averse … and there seems to be very good reason to be risk averse as a false positive is often a career ending move in many intelligence services (often yielding to career stagnation or even firing).

somehow … and i’m not sure how … we need to reward people for being wrong. and then protect those people. encourage good mistakes (not stupid mistakes — there is a big difference).

of course, i’m not an intelligence expert … but the fear amongst analysts is so pervasive that it MUST be a signal of an endemic problem.