Monthly Archives: December 2009

Reporting From Iowa

 

This could be me, but it’s not. It is an intrepid Iowa blogger taking advantage of free wifi, at whatever cost. Picture courtesy of The Hawkeye.

Unlike last year, Christmas Day finds the ground clear of snow after two days of drenching rain, 20 mph winds, and temperatures in the high thirties. In other words, the worst of winter without the kindness of a snowscape. There are flurries at this moment, with the high today of 22, so we may yet  have a white Christmas.

The wonders of the 21st Century just provided us in Iowa a nice chat with them in South Carolina via Skype. What a great tool that is…and my in-laws are demanding that we put it on their desktop. Tomorrow we will be invading Staples for to buy a webcam for their desktop. Henceforth, we will be able to chat with them at least weekly (gulp).

Last night the in-laws invited their closest friends to join us for Christmas Eve supper. Yours truly was the appointed chauffeur, who drove to various ends of town to retrieve Eleanor (91), and the lovely couple Bob (84) and Margi (90). Walkers and wheelchairs took up the third seat. While the median age of the table was probably about 40, the mean had a pretty serious rightward skew. But fun was had by all, and the Christmas Spirit flowed smoothly between the generations.

Now it’s football games, judicious exchanges, and endless nibbling on forbidden foods.

Reporting from Iowa………..

On Bonuses and Deductibles

 

Nobody has asked me what suggestions I might have for two of the most vexing problems of the time, but in a moment of clarity at 3:00 AM this morning I received these messages and am now compelled to report them to you, dear reader.

Bonuses

Obama may regard them as "fat cat bankers", but you won’t hear those words pass my lips. Having said that, there is something slightly obscene about the enormity of the bonuses being doled out by our country’s investment banks. $20 Billion for the top guys at Goldman Sachs? A federal pay czar establishing salary levels? One look at the salary discrepancy between the average federal employee and Joe the plumber in Alabama should be enough to tell us that this model can’t be good in the long term. Fox guarding the hen house, etc.

Military leadership in combat, and Infantry officers in particular, should provide the guiding principle on the bonus conundrum. Their operating principle is that they don’t eat until all the troops have been fed. Ergo, the "fat cat bankers" don’t get their bonuses until all of their employees get a bonus. And the bonus should be the same percentage for all pay levels. At most places I visited during my working life, the typical bonus on the warehouse floor was 1 week’s pay, and in really good years might have been a bump in their profit sharing plan percentage. If it’s good enough for the shop floor, shouldn’t it suffice for the executive suite? If they want to spread the $20 Billion around, spread it evenly. It’s called leadership.

Deductibles

Ahh, health insurance. What a goat rope. No legislative solution will ever be better than common sense, and that unfortunately is why our political leaders in Washington cannot craft any legislation that will improve our predicament. But the same principles suggested in the bonus solution inform.

For example: Assume that Goldman Sachs, or any Fortune 500 company, or a state agency, or the insurance agency on the corner all have a health plan for all of their employees. Rates for employees are based on marital status; single, married, family. Doesn’t matter how old you are, how many children you have, or how much your employer pays you…the rates are standardized based on family size. Typically, your employer pays a percentage of the actual premium, and you pay the balance.

The problem lies in the amount that different employees pay out of pocket. Most plans that I’m familiar with have an individual deductible, a family deductible, an 80/20 split of medical expenses up to some value, and co-pays for ancillary coverages like prescription drugs, office visits, etc. The receiving manager in the warehouse and the CEO have the same plan. But the receiving manager makes $24,000 annually, while the CEO makes $240,000, has a car allowance, a company credit card for entertainment, and other related perqs.

It occurs that the CEO, and maybe the CFO, the CIO, and other top executives could afford to bear a slightly heavier burden than the receiving manager. Why can’t health plans have a means test wherein employee expenses are scaled according to annual compensation? Why should an employee making 10 times more than another employee have the same out of pocket medical expenses? Sounds like a another leadership issue.

There….that didn’t take 2,000 pages plus amendments plus millions of dollars spent by lobbyists. And it sure does make sense, at least to me.