A Solution to the High Cost of US Health Insurance

A Solution to the High Cost of US Health Insurance

I’m an employer and have been providing health insurance for my employees since I started my company in 1996. The cost of providing that insurance has increased by 8% to 15% every year except one. That year I asked my insurance agent why the rate didn’t increase and he said, “I don’t know and I’m not going to ask.” Needless to say, health insurance rates in the US have increased at a rate far greater than inflation. As an employer, I have dealt with it by switching carriers, increasing deductibles and just accepting that the cost of running my business would increase.

The Problem

I haven’t covered my wife and children through my company health plan in many years because it’s just ridiculously expensive. They are all quite healthy so I have had them on high deductible ($6500 per year each) health insurance plans. Earlier this year Humana (the company from which I purchased coverage for my kids) notified me that they were not going to renew our plan and that I should go to the Healthcare Marketplace to find a new one. As it turned out, they were exiting the market entirely (at least where we live) so buying from them would no longer be an option. I went to the Affordable Care Act Healthcare Marketplace website to find that to get a plan with a $6500 per year deductible, I had but one choice: an HMO plan from Blue Cross/Blue Shield at rate 40% higher than what we had been paying. This was bad all the way around. It’s an HMO so my kids would not be able to continue to see their existing doctor. Only one company offering plans means there’s no competition to drive efficiency. And of course a 40% increase for a plan that is arguably worse, is just insult to injury. My wife’s insurance situation wasn’t considerably better.

I started adding things up. If I accepted the Blue Cross/Blue Shield plan for my kids, when  factoring in the cost of my wife’s insurance and mine, we would be paying $1410 per month for our health insurance. What am I getting for that? Well, let’s look at my out of pocket maximums. At $6500 for each of my children and my wife plus $4000 for me, that’s $23,500 per year in potential exposure. In other words, if we all had something terrible happen that caused us each to hit our out of pocket maximums (very unlikely I will admit but it’s the risk nonetheless), we would end up paying out $23,500 in any given year in addition to $16,920 per year in premiums. The purpose of insurance is to avoid situations like this. When your risk is that high, what you have is only insurance by the strictest definition of the word. I figured there had to be another solution.

I’ve heard Senator Bernie Sanders (and others) talk about Medicare for All or Universal Healthcare. That’s not ideal because it allows the government to essentially dictate pricing and that’s not the free market that I think drives efficiency. However, even if I was a fan, Congress is so hopelessly divided that the odds of such a bill passing are nearly zero. I continued looking for solutions and I was quite surprised to have found one. However, before we get to that, why are health insurance costs getting out of control? The reason is that insurance companies are for-profit enterprises and thus the bigger spread between what they charge and what they pay out in claims, the more money they make. This puts their interests in direct conflict with yours and mine. Don’t get me wrong. I run a for-profit company. I’m all for free enterprise. However, medical care is a bit different. When your health is at stake, you’re not in a position to bargain. It’s like being mugged in a dark alley. The thief is pointing a gun at your head and telling you to hand over all your money. Are you really going to ask, “How about just $20?”

The Solution

As it turns out, affordable health coverage is actually available through something called a Health Share Plan. Health Share Plans are run by non-profit organizations called healthcare sharing ministries. They charge  the equivalent of a monthly premium and they have a yearly deductible though they don’t use these terms because technically, they are not insurance. They provide much of the same function as traditional for-profit insurance companies but by the letter of the law, they are not providing insurance. The one I chose comes from an organization called Liberty Health Share. The idea is that you pay into a pool and from that pool, eligible medical expenses incurred by members are paid. Your monthly payment is called your Monthly Shared Amount. It’s the amount you are essentially sharing with other members who need it. You are also responsible for paying a certain amount of your own medical expenses. This equivalent of an annual deductible is called your Annual Unshared Amount. It’s the amount you pay that isn’t shared by other members.

Coverage through Liberty Health Share pays for each members annual physical/well-check as well as preventative measures such as vaccinations. You are responsible for paying your Annual Unshared Amount and after that (depending on the plan you choose), Liberty pays for the rest. I cover my family on the most expensive plan Liberty offers (that also provides the greatest benefit) which provides up to $1 million per incident in coverage. An incident is everything connected with a particular healthcare event. For example, you fall inside your home, breaking your leg. There’s no one home so you call for an ambulance that then takes you to the hospital. You require an operation so you’re in the hospital for a few days. Over the next month or two you have a few follow up appointments before your cast comes off and you’re right as rain again. All of that would be considered a single incident. A million in coverage will take care of just about anything you can imagine including a heart transplant.

Over the past two decades, I’ve found information on coverage from commercial insurance companies to be confusing at best. Liberty on the other hand, provides a simple and clear document called their Sharing Guidelines that explains exactly what is covered and what is not. It explains what requires pre-approval and what does not. The reason for pre-approval is mostly to give Liberty the opportunity to make sure that the procedure really is necessary. You’d be amazed at how many doctors admit they conduct unnecessary tests and procedures to cover themselves for liability reasons. The entire document is 30 pages. You can read it in a half an hour or less.

Commercial insurance plans are typically either an HMO or a PPO. In the case of an HMO, the healthcare company has doctors as employees and you are limited to choose amongst those. A PPO is similar except the doctors are not employees connected with the insurance company but must be part of the insurance companies’ network. If you have doctor you like and trust, you will only be able to realistically see them if they are a member of your insurance companies’ network. Not so with Liberty as they have no network. You can see any doctor you like. You can go to any health care facility you like. You can even go overseas for health care as long as the cost is not greater than it would be here in the US and the invoice is provided in English. You’re also automatically covered by them no matter where you go in the world. That is not typically the case with commercial medical insurance policies.

Liberty provides you with a card that is quite similar to the ones provided with commercial insurance plans and you use it the same way. We have only been to the doctor a few times since signing up with Liberty but each doctor knew who Liberty was and was quite happy to bill them directly. Liberty will then negotiate with the provider to reduce the bill as much as possible, typically 35% to 65% according to Liberty. I’ve been told that health care providers in general like working with Liberty because they know how much they will be paid up front and are typically paid within 30 days, a time frame unheard of with commercial insurance carriers. What if your doctor won’t bill Liberty? In that case you pay cash and submit the bill to Liberty through their web portal for reimbursement. I’m told that having to do this is the rare exception.

If Liberty concludes that a medical expense you have incurred doesn’t meet their guidelines, they will tell you so but they make a point to also tell you that you should call them to discuss it. They claim that most situations can be cleared up with a phone call. If the phone call isn’t enough they have two other levels you can go through in an attempt to work things out with them and they openly encourage this. In researching Liberty I did find a handful of people complaining (via the Better Business Bureau) about bills that were not paid. However, in every case the member either clearly did not understand how Liberty works or Liberty had already responded to the complaint, explained what the issue was and was reaching out to the member to resolve it.

Cost

Liberty’s pricing is very straight-forward and simple. They have pricing for individuals, couples and families. As a reminder, I would have been paying $1410 per month for a $6500 deductible plan for my wife and children and a $4000 deductible plan for myself through my work. That’s $23,500 per year in risk exposure. My risk exposure with Liberty is only my Annual Unshared Amount which for my entire family is $1500. That’s it. There’s some additional risk as well which I’ll get to in a bit. Instead of $1410 per month, the cost to cover my entire family for Liberty’s most expensive plan is $449. That’s a savings of $961 per month or $11,532 per year for a plan that reduces my risk exposure by $22,000 per year. When I say I found this to be as unbelievable as you may find it now, I’m not kidding. I don’t think I completely believed it myself until a friend of mine who has spent his entire life in the insurance business reviewed their sharing guidelines then called them and asked a lot of questions then became convinced himself to switch.

Their pricing is very affordable. For example, for a single person under 30 on their most expensive plan (Liberty Complete), the monthly cost is only $149 and the Annual Unshared Amount is only $500. For someone working full-time for minimum wage, nothing is really affordable but $149 per month can be managed and they have other plans for as little as $107 per month. For a couple under 30, the price is only $249 and for a family, $399 no matter how many children you have. If there’s only one parent on the plan, they give you a $50 per month single parent discount. When you reach 30, prices got up $50 across the board. At 65, they go up again $25 for a single person and $50 for couples and families. Like I said, their pricing is very reasonable.

You’re probably wondering how soon it will be before they raise prices. I wondered that as well. It turns out that they have never raised prices though according to the Liberty rep I spoke to, they did lower them once. When you’ve stopped laughing, read on. I asked them what would have to happen for them to raise prices? The rep said that they have a certain percentage of buffer they require between what they take in and what they pay out. If they ever have less than that percentage, the Board of Directors meets to decide if rates need to be raised temporarily or permanently. So far, they have only lowered rates, not raised them.

Liberty has 140,000 members across the country. Their membership has doubled over the last two years. It looks like they pay out about $12 million a month in claims. Based upon their rates, I don’t see them needing to raise their rates anytime soon. Members receive a monthly newsletter that spells this all out.

Never Heard of Them?

You’re probably wondering why you have never heard of them. I had never heard of Liberty or health share plans prior to about 6 months ago. That’s because they are a nonprofit organization that spends very little on marketing instead choosing to rely upon word-of-mouth so they can presumably keep rates as low as possible. However, Liberty has been providing this service since 1990 and formally as Liberty Health Share since 2012. There are several health share plan organizations that have been in business as long as Liberty. I chose Liberty because of all of them, they are the most transparent in my humble opinion.

What about the Affordable Care Act?

Health Share Plans are specifically exempt from the Affordable Care Act. That means if you are covered by one, you are considered to be insured in the eyes of the IRS. You just have to include a special, one page IRS form with your tax return to avoid the penalty.

Nothing’s Perfect

Like me I’m sure you’re wondering, what’s the catch? Well, nothing is perfect and Liberty is no exception. First, their prescription drug plan is not great. You can probably get as good or better a deal on prescription drugs at Costco or your local grocery store pharmacy. I’ve done some research and found that a lot of prescription drugs have generics that are quite reasonably priced. What about something expensive? For example, if you were diagnosed with Hepatitis C, the drugs would set you back something like $4000. That’s a lot to be sure. However, you have to look at how much you are saving per year with Liberty. In my case, I save almost 3 times that every year in premiums alone. It’s just important to understand that there is no maximum out-of-pocket limit for prescription drugs. So if you’re HIV-positive for example, it’s not going to work for you.

Liberty, like all the other health share plan providers, started inside a church. They are Christian organizations that believe people should help each other in their time of need. I can’t speak for the other providers, but despite Liberty’s Christian origins, they will sell coverage to anyone regardless of faith, age, gender, race, marital status or sexual orientation. Having said that they do not recognize same sex couples as married and thus require them to buy individual plans rather than a couple’s plan. That means they will be collectively spending $50 per month more but on the other hand, they will have each have an Annual Unshared Amount of only $500 compared to $1000 for a couple. I personally would prefer them to be secular as what they provide is not religious in any way but regardless, they started as a Christian organization. That they will provide coverage to anyone regardless of faith works for me. They don’t require you to go to church for example nor evangelize at all really but they do expect you to be the kind of person that generally takes care of yourself. They do not cover the cost of an abortion unless the life of the mother is at risk. I’m guessing that if your commercial insurance covers the cost of an abortion, it’s simply because that’s less than what it would cost them to pay for a delivery. Read through their sharing guidelines. I find them to be quite reasonable.

If you aren’t taking decent care of yourself physically, they will assign you a health coach who will meet with you by phone once a month to help you get back on track.  For example, if you’re overweight (according to their very reasonable guidelines), you’ll need to lose weight. They charge $80 per month for the health coach. Once you reach your agreed upon goal, the $80 per month charge ends. You can drink but you can’t abuse alcohol. If you need a liver transplant because you have abused alcohol your entire life, I would not count on them to cover that. You cannot smoke. If you’re a smoker, you must agree to quit smoking within 3 months. It goes without saying that you can’t abuse drugs either.

When you sign up, nothing but accidents, acute illness or injury are covered for the first 60 days. After that, pre-existing conditions are not covered for the first 12 months. They are covered up to $50,000 for the next 12 months and after that they are not considered pre-existing anymore.

All of this is my understanding of how Liberty works. Before signing up you should throughly research their offerings yourself.

A Better Solution

Health Share plans are not perfect but for the overwhelming majority of people, they provide a far more affordable alternative than just about any commercial health insurance. If they were scaled up even larger, for example if they have several million members, the economies of scale would likely provide even greater value. In my humble opinion, Health Share plans are a better solution than the commercial insurance provided through the Healthcare Marketplace or even through most employer-based programs, at least for dependent coverage. The US Government could still provide income-based assistance to help offset the monthly cost for the poorest among us for a fraction of what the cost of the Affordable Care Act today. For those for whom a Health Share Plan would not make financial sense (such as those who are HIV-positive), early eligibility for Medicare should be provided. However, if 10’s of millions of Americans were covered by nonprofit Health Share Plans, it’s certainly possible that even those with expensive, chronic conditions could be covered.

I’m currently exploring ways to scale up Health Share Plans so that more Americans can be covered by them and they can be even more efficient. However, you don’t have to wait for that to happen in order to save money. You can do your own research and choose to sign up with one like Liberty today.

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Nest: Another Company You Can Count On

Nest: Another Company You Can Count On

wrote recently about how Sony let me down for the third time whereas Apple, under a very similar circumstance, proved once again that they are a company upon which you can rely.

I’ve just had yet another customer service experience with a consumer electronics company when a product of theirs I had purchased, failed. Like the Sony and Apple products, this one was also connected to the Internet through my wifi. It was one of my Nest Protect smoke alarms. They are great. I wrote about them last year.

A few nights ago, one of the Nest Protect smoke alarms went off around 1AM in the morning. All of the units began announcing that there was smoke in the living room. We all got up (except my son who miraculously slept through the entire event – I’ve got to get his hearing checked) and went to the living room only to discover no indication of smoke. We shrugged our shoulders and went back to bed. About 5 minutes later, it went off again. This time, I went to the garage, brought in the ladder and removed the offending Nest Protect. I then called Nest. Someone answered quickly and after I explained what had happened, they determined that it was likely the smoke sensor that had failed. They then told me they would express ship me a replacement unit which arrived the following day. Unlike Sony, Nest never asked me to prove the unit was still within the warranty period. I bought these units from Amazon so the only way Nest knew I had them was that they automatically register themselves with Nest over the Internet, just as you’d expect any electronics product connected to the Internet to do. I just installed the new unit and will be shipping them the failed one (with the pre-paid shipping bag they included with my replacement unit) back to them for their analysis.

This is the kind of customer service I’d expect from a company that stands behind their products and hopes that their customers will recommend them. As I said in the last blog post about Sony vs. Apple, a product is only as good as the customer service you get if and when that product fails. Sony gets an F from me for customer service. Apple and now Nest, get an enthusiastic A. Thank you, Nest.

Customer Service: A Tale of Two Very Different Consumer Electronics Companies

Customer Service: A Tale of Two Very Different Consumer Electronics Companies

If you make a product that is so well-designed, so perfect in its production that no customer will ever experience a problem they cannot quickly and easily remedy on their own, you can get by without good customer service. I’ve yet to see such a product.

This of course means that all companies producing products should have at least good customer service. After all, once you have an issue with a product, it’s only as good as the customer service you get when you contact the company to resolve the issue. Let me tell you a tale of two companies with which I have recently had two very different experiences. Both companies make wireless earphones. Both products failed me while in their warranty period.

Sony Corporation

I’ve written twice before (here and here) about Sony’s apparent disinterest in customer service. I’ve had such bad experiences with Sony that when my son wanted a game console, I seriously considered purchasing the Xbox for no reason other than to deny Sony the sale. I ended up buying the Playstation 4 because it’s the better gaming console and I didn’t feel that I should penalize my son for the problems I have had with Sony.

2014-07-24-product-8Last Christmas my wife and I decided to buy our son the Sony Gold Wireless Headphones for the Playstation 4. Recently, a piece of plastic on a moving part of the headphones (the part that makes them adjustable) broke. I contacted Sony and after a very long time on hold, a rep answered who asked me if I had the receipt showing that I purchased the headphones within the warranty period. I did not. It never occurred to me to keep the receipt for a item like this. If it included a product registration card, I don’t remember. I explained that we purchased the headphones from a Radio Shack store that is now out of business. The Sony rep said she would note that and have the repair facility fix them without proof of purchase. Great. She me where to ship them and gave me the case number. I shipped off the headphones that same day.

A few days later I received an email from the repair facility asking me for proof of purchase. I called the phone number included in the email and explained to another Sony representative all that had happened. Her response was, “Well, I don’t know why that other rep told you that because it is not our policy to repair anything without proof of purchase. That rep cannot go against our company policy. Perhaps you should contact Radio Shack corporate and see if they can provide you with a copy of the receipt?”

I contacted Radio Shack who, after a few days, replied that they are in bankruptcy and do not have access to those records. I’m not sure what bankruptcy and access to sales records have to do with each other but it is what it is. I called Sony back and explained that I could not obtain a copy of the receipt from Radio Shack. The Sony rep said there was nothing he could do without proof of purchase. He had no ability to override that requirement. I had already spend $18 to ship the headphones to Sony. I asked if I could pay Sony a fee to fix them. No. Sony ONLY repairs under warranty. They do no out of warranty repair. Unlike the previous Sony rep whose heart appeared to be frozen inside a block of ice, this rep understood where I was coming from and wanted to help. He suggested I bring the headphones to Best Buy as they have been able to repair game controllers for him in the past. When the headphones are delivered back to me, I’ll give that a whirl.

Keep in mind that these headphones are connected to our Sony Playstation 4 which is connected to Sony’s servers through the Internet. Yet despite this, they cannot determine that the headphones were first used on December 25th, 2016. They need me to send them a copy of a paper receipt that I no longer have. They aren’t willing to trust me either. The default assumption is that I’m trying to get some service I don’t deserve.

Sony continues to remind me at every opportunity that customer service isn’t something they care about. That’s surprising given that virtually every product category they are in is one of low margins and high competition. You’d think they would want to differentiate themselves by having great customer service. The likely problem is that they see customer service as nothing but a cost, not a feature of being a Sony customer and certainly not a reason to be a repeat customer.

Apple

Last October I ordered a pair of AirPods (Apple’s new wireless earbuds). After waiting many weeks for delivery due to their backorder status, my much-anticipated AirPods finally arrived. They were simple to connect to my iPhone and other Apple devices, they are so easy to use that they are almost magical. I primarily use them when I go for a walk each morning. Should I come across a neighbor and want to talk, just removing one of the AirPods automatically pauses whatever I’m listening to which then begins replaying when I put the AirPod back in my ear. Should my phone ring in my pocket, double-tapping on either AirPods answers the phone. They come with a tiny case that is also a battery and thus when you put them away, they immediately start recharging. As a result, they are pretty much always charged. I just can’t say enough good things about them.

airpods-main

Recently I’ve noticed that the left AirPod was not charging correctly. When you put the AirPods in your ears, a chime is played on the left side to let you know they are paired with a nearby device. All of the sudden, the chime was playing on the right side. A quick check revealed that while the right AirPod was fully charged, the left was not. It had a 23% charge despite being in the same charging case as the right one. After fiddling with the left AirPod a bit, it began to charge. It appeared to take 10 seconds for every 1% of charge. After watching it charge for a bit, I calculated that it would be about another 10 minutes to recharge the left AirPod to 100%. I left it charging and went off to do other things. 15 minutes later it was only charged to 99%. Clearly the charging of the left AirPod was not linear.

I went to Apple’s website and was given the option to receive a call from Apple. I entered my phone number and began the estimated 2 minute wait for the phone call. It was more like 20 seconds. The rep that answered understood the problem and asked me to verify the serial number which was easy to find from the iPhone. She told me that I received them in February so they were obviously still under warranty and suggested that she make an appointment for me at the local Apple Store. There wasn’t a time available until Monday so she recommended that I head to the Apple store early, arriving before they open. She said if I’m there when they open, there’s a good chance they will be able to see me right away. It was worth a shot. She warned me however that AirPods are still back-ordered so if they have to swap out my AirPods there was a good chance I’d have to wait for the new pair to be shipped to me some weeks from now. It was unlikely they would have any in the store. The idea of having to go back to my wired earbuds for a few weeks was not a pleasant one but if that’s what had to happen, so be it.

I headed down to my local Apple store. Sure enough, there were 5 or 6 people like me waiting to get in as soon as they opened. About 10 minutes before opening, two Apple Store employees came out and went over each of our issues with us so their technical people would be ready to help us as soon as the store opened. A few minutes later, a friendly Apple Store technician named Coby was helping me with my malfunctioning AirPods. Every time he wanted to examine then, he asked my permission. That was surprising and delightful at the same time. While he examined them he reviewed the notes from my case that had been entered by the rep I spoke to by phone. He added some of his own while explaining to me that either the left AirPod was broken or the case itself was. He suggested we replace the left AirPod and if that doesn’t resolve the issue, he would replace the case. I agreed. While he typed a few more notes, what seemed like a disembodied hand appeared and left a small box on the table next to his iPad. I never looked up to see who it was nor did Coby. He thanked the hand and the hand disappeared, no doubt off to deliver other small packages to waiting technicians.

Inside the box was a left-side AirPod. Coby went through the process of pairing it to the case (a process that is normally done ahead of time for you but since this was a replacement, it was being done now and takes 10 minutes for some reason). He asked me if it would be OK if he help others customers while we waited the 10 minutes. I told him that would be fine. Almost exactly 10 minutes later, Coby reappeared, we paired the AirPods to my iPhone and tested to make sure they work. He suggested that I take them home and see if the issue is resolved. If not, I could come back and he’d replace the battery case as promised. That sounded fine to me.

The Difference

The difference between these two experiences cannot be over-stated. Every contact with Apple was quick, efficient, helpful and facilitated by Apple representatives that appeared to genuinely care about making me happy. In both cases, the wireless headphones were connected to another internet-connected device made by the same manufacturer and yet, while Sony had no clue at all about the purchase of my son’s wireless Playstation headphones, Apple knew not only when I ordered them but when I received them. Apple told me that my AirPods were still under warranty and was not only able to resolve the problem the same day, but within 3 hours. It’s been 3 weeks now and the $99 broken headphones Sony was unwilling to repair have yet to be returned.

This isn’t just me. There is a methodology many companies use (including my own) to measure how well they are doing in the eyes of their customers. It’s called a Net Promotor Score or NPS. It indicates how likely your customers are to promote you to their friends and colleagues. Research shows that companies with higher scores are more profitable and faster growing than those with low scores. Scores vary depending on the source but Apple’s appears to often be between 70 and 80. They are amongst the highest if not the highest in consumer electronics. Sony’s score is about 44. Apple’s percentage of net income for the most recently reported 12 month period was 21%. Sony’s was 1%. Not all of that difference can be attributed to customer service of course but bad customer service certainly does not lead to higher profits.

Apple, the largest consumer electronics company in the world, sees great customer service as an important part of their relationship with their customers. Every customer service interaction I can remember with Apple has been excellent. The best I have managed with Sony after repeated attempts is poor to down right awful. I look forward to never again purchasing a Sony product and will continue to remind the many people I interact with that Sony is not a company that cares about its customers. Apple has made me an enthusiastic promoter. Sony has made me an equally enthusiastic detractor. It didn’t have to be this way. It would have cost Sony so little to make me into a promoter.

As the saying goes, a fish stinks from the head down. Clearly it’s time for a change at the top of Sony Corporation.

An excellent, bluetooth speaker

An excellent, bluetooth speaker

Last Christmas my kids bought me a small, waterproof bluetooth speaker so I could listen to music while in the shower. It worked as advertised however, the sound quality was lacking (it didn’t have much bass) and the battery didn’t last very long. It seemed like I was recharging it about once a week or so. It also didn’t have much of a range, requiring my phone to be within 10 feet or so for a good connection. You may have seen this type before. They look like this one:

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They don’t cost much, around $10 to $15 on Amazon, but you do get what you pay for.

A Better Option

I wanted better sound quality and a longer lasting battery. I found both in the Hydra, a water and shockproof, bluetooth 4.0 portable speaker from Photive.

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The Good

The Hydra has good bass, mid-range and highs for a small, portable, wireless speaker. It’s waterproof so you can keep it in the shower or bring it out on the patio and not worry about it getting wet. The battery must be pretty big because the it weighs more than you’d expect which to me means that most of the weight is the battery. That’s good because the battery lasts a really long time. I use my Hydra every day for perhaps 10 to 15 minutes at a time and I literally can’t remember how long ago it was that I recharged it. I’d say it lasts at least a month but probably closer to two months.

Pairing the Hydra to your smartphone or computer is simple since it shows up as discoverable device. Once you turn the Hydra on, there’s a button on the back that will connect it to your device quickly. Just a single press and you’re ready to go. There are also buttons to increase/decrease the volume, skip to the next track or go back to the previous one. These buttons, despite being on the back of the unit, are easy to reach as the unit is designed to point upward with both the front and back at 45 degree angles.

When you do need to recharge it, the unit comes with a USB cable that connects to a port protected behind a rubber cap on the right side of the unit.

The Bad (well, the somewhat bad)

There are two downsides to the Hydra. First, the on/off switch is also behind that rubber cap which means you have to remove it to turn it on and again to turn it back off. I can’t imagine why they didn’t make the on-off switch a pushbutton like the rest of the buttons. This isn’t a huge deal as it only takes a few seconds to pop the cap off, press the on/off switch then pop the cap back on. Still, it’s one thing they could improve. Second, some wireless, waterproof speakers allow you to answer a phone call. The Hydra doesn’t have this capability. If this feature sounds good to you, I’ll tell you that in reality, it’s not. I tried it with my the small, round speaker my kids bought me. It’s not that easy to hear the other person because of the noise your shower makes and it’s not all that easy for them to hear you. It’s also, believe it or not, a little awkward once they realize you’re talking to them from the shower.

The Hydra is not inexpensive. It’s $146 on Amazon compared to only $15 so for the small, round ones. However, the difference between them can’t be overstated. You really do get what you pay for. If you want quality sound from a speaker you can get wet and won’t need to be charged weekly, the Photive Hydra is a great choice.

 

Update: March 9th, 2017

After about 10 months the screws that hold the front speaker screen on began to rust. I contacted Photive and they offered to replace them if I sent them the speaker. I asked if they could just send me the screws and they did so at no charge. It look me a total of 5 minutes to replace them. I appreciate their customer service.

The Chip Card Disaster

The Chip Card Disaster

Credit cards have never been terribly secure. I’ve eaten at a restaurant on a Friday night and by Sunday realized I left my card there and the waiter had taken it to the bar district that night. From the charges, I’d say he bought a round for everyone.

These one-off fraud cases aren’t the real problem though. The problem has been the large retailers who store customer credit card numbers by the millions with less-than-ideal security. The hackers break-in and everyone needs a new card.

So the credit card industry decided a more secure card was the answer. Today’s chip cards no longer provide your number to the retailer (despite it still being written in large, friendly numbers on the front of your card). Instead, the chip card has encrypted data on it that is transmitted to the vendor’s credit card processor. The vendor themselves never gets your card number.

Almost a year ago, here in the US, we were supposed to be switching to these new chip cards that have been in use in Europe for several years. While I’m seeing more and more of them these days, about half are like the one above, with the chip reader taped off and a message telling us to swipe instead. If you wonder why, you’ll know once you try using one.

When they do work, the user experience is nothing short of awful. First, why do I have to insert this card and then wait? Who thought changing the way people have been passing their card info (swiping) was a good idea? Swiping wasn’t a great idea to begin with since it’s not obvious which way you should hold the card when swiping it. We eventually learn of course but it’s not obvious.

Quite often I’m stuck in line behind some poor shmuck who is just trying to pay for his turkey sandwich and can’t figure out which of the four possible ways this card could go in to the reader is the right one. Swiping a card takes half a second. These chip cards take something like 10 seconds to authorize. I could literally type in the number, digit by digit, faster. And when you get the card in right, when finally unlock that achievement, you’re reward is a loud alarm sound  suggesting to everyone around you  that your card has been declined. What panel of experts thought this was an improvement?

It’s my guess that most of the chip card-enabled readers actually work but the retail staff are so tired of the problems they create, they just pretend they don’t work.

Let’s compare this with ApplePay, Apple’s iPhone-based payment system. I pull my iPhone from my pocket, position it near the card reader and rest my thumb on the Home button. My screen comes on showing my default card and a little animation appears indicating that it’s detected my valid fingerprint. It ends with a friendly checkmark on the screen and a happy bling! sound. The entire process takes 1 second tops. It’s simple, faster than getting my card from my wallet and just as secure as a chip card. I presume Android Pay is similar though I have no experience with it.

This chip card transition is like a Greek trajedy. Almost every aspect of it that could be done poorly, was. Fortunately, more and more retailers are taking Apple Pay and Android Pay. If you work for one that doesn’t, please urge your employer to do so post haste. Paying for my turkey sandwich should never be the most complicated part of the transaction.

The Austin Uber Backpedaling Begins

The Austin Uber Backpedaling Begins

Bang! It hasn’t even been two weeks since Uber and Lyft left the Austin market and already the Austin City Council is beginning to backpedal on their demand that ride-sharing companies do fingerprint background checks on their drivers.

The Austin-American Statesman is reporting that Austin City Council member Ellen Troxclair has suggested that Austin should make fingerprint background checks optional just as San Antonio and other cities have done. Shocking. Why didn’t the Austin City Council simply look at how other cities have dealt with this problem in the first place? Why waste hundreds of thousands of dollars of taxpayer money which resulted in nothing but loss? What do I mean by loss?

  1. The City of Austin spent who knows how much in City Council members time debating this issue as well as the cost of having an election on Proposition 1.
  2. Thousands of Uber drivers found themselves out of work.
  3. Thousands of Uber passengers had to find alternative and usually more expensive or less convenient forms of transportation.

Was there a winner here? No. Austin will almost certainly adopt optional fingerprint background checks just as other cities have.

The sad thing is that even those optional fingerprint background checks don’t solve any problems. They are purely security theater. A few people who care might feel safer but that doesn’t mean they are. Additionally, all 7 of last year’s reports of sexual assault by Uber drivers came from drunk, young women none of whom will be in a state of mind to request only an Uber driver who has passed a more rigorous background check when they stumble out of a Sixth Street bar at 2AM on a Saturday night. So even they won’t be any safer.

My original post on this caused several people to tweet at me about how Uber is some big, bad corporation with greedy investors who care nothing about passenger safety and want to squeeze their drivers while they sit in high towers twirling the ends of their mustaches. It saddens me that anyone lacks the critical thinking skills to the degree that they would believe such nonsense.

Of course Uber cares about passenger safety. If Uber had a widespread reputation for being unsafe, they would be out of business. Caring about passenger safety is good for Uber’s profit. Having said that, like many investments, there’s the law of diminishing returns.There’s a point at which riding with Uber is safe enough. As I stated in my last post on this topic, Uber is already extremely safe. You are more likely to be hit by lightning than assaulted by an Uber driver. There’s a point at which Uber won’t benefit by trying to make their service even safer and in fact will instead cost them which ultimately costs the consumer. How does that work?

Like any business, Uber is in this to make a profit. If you think that’s a bad idea, you don’t like free markets and should probably stop reading now. The more expense they have, the harder it is to make a profit. That leads either to charging customers more per minute or making less profit. They won’t do either unless they have no choice. You may think that regulations can be put in place so they won’t have a choice. That’s faulty logic. People always have a choice. If regulations make providing ride-sharing unprofitable or simply less profitable than deploying their money elsewhere, Uber and its shareholders will move on. That’s exactly what they did do when this ridiculous regulation could not be over-turned. They exited the Austin market. Would you leave your money in a savings account that paid far less interest than at another bank? Would you leave your money in a poorly-performing stock when you knew of a better one? Would you keep paying for your child’s college education when they were spending so much time partying that their grades were suffering? Of course not.

Why would Uber leave over such a silly little thing as requiring fingerprint background checks? Because it’s not a silly little thing. Uber knows better than anyone that fingerprint background checks don’t solve any significant problems but they do make the process of hiring drivers more onerous. If they don’t make sure there are enough drivers, enough supply for the demand, passengers will no longer feel that Uber is a reliable service and they will stop using it. This isn’t Uber’s first rodeo. They have been down this path before in other cities. In most every case, the city eventually receives enough complaints about Uber leaving the market that they backpedal (as Austin is doing now) and make the fingerprint background checks optional. The fact that Uber was willing to leave the market over this should tell you something.

Most people work for someone else. Unfortunately, that leads to a very one-sided view of how businesses work. It’s been tweeted at me that Uber pays less than minimum wage (they don’t) and that as a result, Uber drivers must rely on government welfare. Let’s examine that for a moment. First, we don’t know that this is even true but let’s assume that it is. Bob is an Uber driver. In our fictional scenario, Bob can’t make enough driving for Uber so he qualifies for government benefits. Why doesn’t Bob stop driving for Uber and take that high-paying corporate job he keeps getting offered? Because no such job offer exists. Bob drivers for Uber because Bob thinks thats his best option. If there was a better one, Bob would likely take it. In other words, if Bob stops driving for Uber and goes to work elsewhere, he’s likely to earn a similar amount of money which means he is just as qualified for government assistance as before. Nothing has changed. If Bob could earn more elsewhere he wouldn’t be driving for Uber. This is the same argument that has been used with Wal-Mart. I quite rarely shop at Wal-Mart nor do I own stock in the company. I’m no fan. However, if people who work at Wal-Mart could make better money elsewhere, they would do so. Since they can’t, they are no more reliant upon government welfare than they would be any where else. If they instead increase their skills to the point where they make enough to no longer need welfare, great. However, that is up to them, not their employer.

It has been tweeted at me that Uber is under-cutting taxi services. That’s a charge that is absolutely true. That’s the free market folks! That’s competition. That’s how the world becomes more efficient. Someone finds a better way and people pay for it. If the taxi services had been smarter, they would have seen Uber coming. They would have become Uber before Uber ever arrived. They didn’t because people tend to get stuck in their old habits. Companies are as guilty of this as anyone else because companies are made up of…wait for it….people! Do you want to know why Apple is the biggest publicly-trade company in the world with profit margins that other companies only dream of? Because Apple admits to something that the overwhelming majority of other companies do not: there’s someone else out there right now working on creating the product that will obsolete what we sell so we better do it first. Apple doesn’t care that the iPad might result in fewer Mac sales because they are still making money. If Apple doesn’t create it, someone else will.

I have been self-employed most of my adult life. It’s not easy. I remember hiring my first employee (Jason, who still works for me 20 years later btw) and thinking, “What if I can’t generate enough revenue to pay his salary? That would mean he can’t pay is rent or buy food!” Being an employer is a huge responsibility. That feeling never goes away. I’ve been running my current business, Xojo, Inc., for 20 years now. While I have gotten used to the feeling of responsibility for my employees and while it’s easier to manage that responsibility than it was when I first started, I still feel it. Being self-employed changes you. It changes how you look at the world. It makes you realize that there are two-sides to everything. The best thing is being able to see any situation from all sides so you can most efficiently resolve it. We would be better off if everyone, at some point in their lives, ran their own business.

That’s not likely to happen but what can happen is for more people to apply critical thinking to situations they encounter. When faced with a problem, try to avoid immediately getting caught up in the emotions of it and instead apply some rational thinking. Try and see it from all sides. Do some research (which with the Internet is so easy now) and see if the problem really does exist and is big enough that we should spend time and resources to resolve it. Not every problem is actually worth solving. We don’t have unlimited resources. We must prioritize our activities. You can do a few things really well or a lot of things really badly. Critical thinking helps us realize this and it’s something we could use a lot more of in today’s society.

I’m confident that Uber will be back in operation here in Austin within the next 30 days or so. I’m glad for that because it’s a valuable service that I have only just begun to utilize. I’m also glad that the Austin City Council has at least one reasonable member in Ellen Troxclair.

Uber is leaving Austin and your city might be next

Uber is leaving Austin and your city might be next

So it appears there’s a huge dearth of critical thinking in Austin, Texas. There was a vote today on proposition 1 which was attempting to repeal the Austin City Council’s requirement that ride sharing companies like Uber and Lyft do extensive background checks on their drivers.

On the surface this might seem ok. After all, if Uber does more background checks, Uber passengers will be safer, right? Wrong. Uber drivers collectively conduct 1 million trips every day around the world. If Uber had 100 assaults each day it would be an epidemic that would put them out of business and yet your odds of being attached would then be 1 in 10,000. You are almost certainly far more likely to die in a car accident while riding in an Uber car than to be attacked by an Uber driver. For example, your odds of dying in a car accident are about 1 in 100. It should be needless to say that using Uber is very safe. Nothing is completely safe of course. People die in their sleep every year by being strangled to death by their sheets but that doesn’t keep us awake at night.

Let’s say you are a violent person out there looking for the best way to find your next victim. You could choose to simply find people who are home alone, break-in and assault them. If you’re smart, you’ll wear a mask and gloves so you leave little or no evidence behind. Instead, you decide to use Uber to find your next victim. Never mind the fact that everything about your transaction (your name, address, photos of your driver’s license and insurance as well as detailed photos of your car, the passengers name and address, as well as when you accepted the trip, when and where it started, the destination, the time it began and more) will all be tucked securely away on a server of which you have no access. The evidence supporting the victim’s claim that they were assaulted by you will be overwhelming. You’d have to be the stupidest person in the world to think that attacking your passenger is a good idea.

So the city council first wasted tax payer dollars coming up with this ridiculous idea in the first place then Uber has had to waste their time and money trying to fight it. Finally, the ignorant voters, only a tiny percentage of which bothered to vote, came out against the proposition. Worst of all is that the people already have a choice. If you think Uber is dangerous don’t use it.

Now Uber and Lyft will abandon the Austin market all because some ignorant city council members couldn’t be bothered to do a little critical thinking before wasting taxpayer dollars to stifle a valuable service. For those that think Uber is bluffing, they have already announced they are pulling out of Austin effective Monday morning and they have done this before in other cities. If it’s happening in a high-tech city like Austin, Texas with an very educated population, it can happen where you live as well.

Folks, we need more critical thinking. We all need to use common sense, do a little more research and spend a little more time considering our decisions before just reacting to every little headline that comes along. We should all know by now that the media is NOT aligned with our best interests. Their job is to create juicy headlines so you’ll see the ads that make them money. The next time you are outraged by a headline on Facebook or Twitter, spend an extra minute or so to determine if it makes any sense before clicking that Share button. You’ll be the better for it and you’ll be providing a valuable service by not spreading the news equivalent of cow manure.

In this world of instant 24/7 news and social media that can spread a story at nearly the speed of light, it takes an extra level of vigilance and critical thinking to be part of the solution rather than part of the problem.

Update (5/11/16): In 2015 The Austin Police Department received 7 reports of alleged sexual assaults committed by Uber/Lyft drivers. What percentage of all fares does this represent? I’ve read there are about 5000 Uber/Lfyt drivers. Let’s assume the average driver handles only 2 fares a day to account for the many drivers that only occasionally drive. That’s 3.65 million fares a year. Divide the 7 assaults by 3.65 million and you get just under two millionths of one percent. That’s a microscopic number. This does not seem like a problem worth solving with tax payer dollars. Note that almost all if not all of those reports were made by young, drunk women. While these women certainly deserve to be able to get home without being assaulted, this problem is actually too small to be worth addressing with tax payer dollars. I don’t wish to be insensitive but we wouldn’t be willing to spend $7 million dollars to stop 7 alleged assaults, right? That means there must be a cost-benefit analysis there’s just no way the cost-benefit analysis works here. Uber knows this. They know that in a few months the Uber users will pitch a fit, the City Council will make the background checks optional and Uber will return.