I HaZ Bitcoin

Many of you have asked me what the heck Bitcoins are. Well, I spent 3+ hours today trying to get this video right in one shot. Every time I went on a huge tangent about currencies so I had to start over and tried really hard to keep it simple. But it's just not a very simple discussion. 

Challenge: If you're part of the first 100 people to subscribe to my blog and put  your public wallet address in the comments, I will deposit a small fraction of a bitcoin into your wallet. It won't be much, but it will get you started. Offer ends 1/1/2014 :)

Cheers

Why I'm considering going without health insurance for the first time in 20 years

I've been with Kaiser for the past few years and have enjoyed affordable and ample care. But as of next year that's all about to change thanks to Obama care. My premiums are going up by 55% while my coverage will decline tremendously. I'll let you watch the video on why I think this has happened.

5 changes that will make the Covered California (Calheers.ca,gov) site better instantly

I spent about 30 minutes today to try and sign up for Covered California. Sort of a eat my own dogfood type of effort. Immediately I noticed some really big things that will turn even the most eager users off. I am writing this post so that maybe they will pay attention and make some changes. 

The overarching message here is: "Keep the user in mind". 

To set the stage, I'm a married man in my mid-30s who currently has health insurance through Kaiser Permanente. I work in the technology sector.

I tried about 12 times using the chrome browser to get the login page to load and each time I was greeted with this message: 

Clicking on the link did nothing.

After 12 attempts I switched over to Internet Explorer 10 and was finally able to sign up and login. 

The sign up process was relatively simple with the exception of the fact that it asked me for my SSN without ensuring me that it would stay safe in their hands. I was able to skip this field during the signup process so that was good.

The username has to be 8 characters long which is in my opinion a point of friction and will cause the form to produce and error for 1/2 the people who try to sign up. Why not do a quick edit check with Javascript and let the person know right away before they have to submit the form and see the error? 

Anyway, I then tried to login and got a 404 not found page. I refreshed 2 times and got the login screen which asked me for 5 answers to secret question. As soon as I selected those, it crashed and made me login again. That I will forgive because it is a new site and they're still working out the bugs. But the secret question thing .... it should be optional IMO. 

Then I tried to actually Apply for a plan. That's when things got really ugly. I cannot proceed in this form without providing them with my SSN and Naturalization documentation. WHAT?!! Why do you need these just to show me what plans I qualify for and how much they will be? Why at this stage? And again, I don't feel safe entering my SSN in your 404-Not-Found website just yet, so unless you're gonna make me feel safe with my information with a robust website, then don't ask me this stuff until I'm ready to commit. I can't even navigate directly to www.calheers.ca.gov ... What is v.calheers.ca.gov? You have to know that this is confusing your users. You have to know that I may not be interested in the plans once I see them, so having given you a bunch of information during the shopping stage is just going to drive users away. I would love to see the bounce rates of this page. Let me guess, 100%. 

And really, what is with all the different branding? Are you trying to make me suspicious of you? There is healthcare.gov, that takes me to coveredca.com, that takes me to v.calheers.ca.gov which has the title AHBX portal. How is that user friendly?

But don't worry, CoveredCA. I'm not all negative feedback. I actually have some very simple solutions to make this easier for you:

1) Pick a web domain and stick with it. CoveredCa.com makes sense since people have been hearing it.

2) Allow the user to enter non-personal information and arrive at a quote with details. Then if and only if he chooses to select the plan, make him verify all you want.

3) At least try to have the styling of your site match Healthcare.gov in some meaningful way. Users like continuity, it builds trust.

4) If you want me to enter my SSN and DOB and other identity information ensure me that it's going to be safe somehow. 

5) This initiative already has enough barriers, if I am having trouble using the system, you can be sure that my mother is definitely going to have issues. Things like browser compatibility, Http routing errors, general performance, and post submit error checking are only going to add friction to the process. As it stands right now, I cannot imagine you'll have many people complete the application process, much less sign up for coverage. Glad to help. 

ObamaCare (ACA) for Dummies - Understand it all in 4 minutes

I've been seeing a lot of posts on my social network about the ACA (Accountable Care Act) also known as ObamaCare and it seems to me that nearly all of us are to some degree confused what it means. So I figured why not post some of the major highlights so that you understand them better. Much of what you will read in this post was copied and pasted from Healthcare.gov. So here goes:

What is a Marketplace?

The Marketplace is a new way to find health coverage. It can help if you don’t have coverage now or if you have it but want to look at other options.

Insurance plans in the Marketplace are offered by private companies. They cover the same core set of benefits called essential health benefits. No plan can turn you away or charge you more because you have an illness or medical condition. They must cover treatments for these conditions. Plans can't charge women more than men for the same plan. Many preventive services are covered at no cost to you.

No matter what state you live in, you can use the Marketplace. Some states operate their own Marketplace. In some states, the Marketplace is run by the Federal government. Find a marketplace for yourself.

What are "essential health benefits"?

Essential health benefits must include items and services within at least the following 10 categories: 

• ambulatory patient services
• emergency services
• hospitalization
• maternity and newborn care
• mental health and substance use disorder services, including behavioral health treatment
•  prescription drugs
• rehabilitative and habilitative services and devices
• laboratory services
• preventive and wellness services and chronic disease management
• pediatric services, including oral and vision care.

Insurance policies must cover these benefits in order to be certified and offered in the Health Insurance Marketplace, and all Medicaid state plans must cover these services by 2014.

How should I choose a plan?

Plans in the new market place are put into 4 basic categories:

• Bronze
• Silver
• Gold
• Platinum

IMPORTANT: The categories do not reflect the quality or amount of care the plans provide.

The category you choose affects how much your premium costs each month and what portion of the bill you pay for things like hospital visits or prescription medications.

You just gotta ask yourself: Do you expect a lot of doctor visits or need regular prescriptions?

• If you do, you may want a Gold or Platinum plan.
• If you don't, you may prefer a Bronze or Silver plan. But keep in mind that if you get in a serious accident or have an unexpected health problem, Bronze and Silver plans will require you to pay more of the costs.

What are the different plans? 

Basically there are two categories:

• Private: Depending on your household income you may qualify for reduced premiums. All plans cover essential health benefits, pre-existing conditions, and preventive care. If you don’t qualify for lower costs, you can still use the Marketplace to buy insurance at the standard price.
• Medicaid and CHIP (Children Health Insurance Program): Both of these are for those with VERY limited income. 

When can I sign up and when does coverage begin?

Marketplace open enrollment begins October 1, 2013  and ends March 31, 2014. If you enroll by December 15, 2013, coverage can begin as soon as January 1, 2014.

Do I have to offer health coverage to my employees?

Short answer: If you have less than 50 FTE employees, No. Otherwise, maybe. Long answer.

What if I'm self-employed (and have no employees)?
You're not considered an employer. You can use the individual Marketplace to find coverage that fits your needs.

What is AIM and do I qualify? 

AIM: Access for Infants and Mothers provides low cost health insurance coverage to uninsured, middle income pregnant women. The total cost is 1.5% of the subscriber's adjusted annual household income. This is much less than the cost under Covered California. If you are pregnant, with income between $3,256 - $4,884 per month for a family of 3, you may qualify for AIM. You’ll find a complete income chart by family size for AIM here: http://www.aim.ca.gov/costs/income_guidelines.aspx . Medi-Cal provides coverage if your income is below these limits.

What if I don't want insurance?

Most people must have health coverage in 2014 or pay a fee. If you don’t have coverage in 2014, you’ll have to pay a penalty of $95 per adult, $47.50 per child, or 1% of your income (whichever is higher). The fee increases every year. Some people may qualify for an exemption to this fee.

Will there be enough doctors and will they accept these plans?

Maybe, maybe not. But that's the beauty of a free market (all private plans). It will self-adjust until it works. Nothing is sustainable without all parties benefiting to some degree and it may take a few years but it will adjust appropriately. In the mean time, your doctor may not accept your new plan but some doctor somewhere will. If you don't like it, opt for a more expensive option or pay cash for your care. 

To Conclude ...

If you already have health insurance then ACA shouldn't effect you unless you want to shop again starting today. 

If you don't have health insurance now you have to have it and you can get some very basic insurance very cheap. It won't be great, but nothing cheap ever is. 

If you have very low income, you now have an option you didn't have before.

Ready to apply? Get started.

Questions? Call 1-800-318-2596, 24 hours a day, 7 days a week. (TTY: 1-855-889-4325)

Things I take for granted Part 1: Hot Shower

So lately I've been noticing some very big things that we take for granted. If you really think about it, a hot shower is just about the most luxurious amenity in our homes these days. On any given morning, I can roll out of bed and walk into my shower and turn the faucet on and within seconds, water perfectly heated to my desired temperature flows out effortlessly for as long as I like. I can literally sit for an hour and relax under this substance that in parts of the world could satisfy the survival needs of hundreds of dying thirsty villagers.

I live in Southern California. An arid desert with no substantial fresh water source. The seemingly
limitless water gushing out of my shower head has no business being anywhere near my house. Technically, I shouldn't even be able to live here much less use up ridiculous amounts of water every morning. So am I really taking it for granted? Well, in 1960, California voters approved financing for construction of the initial features of the State Water Project (SWP). The project includes some 22 dams and reservoirs, a Delta pumping plant, a 444-mile-long aqueduct that carries water from the Delta through the San Joaquin Valley to southern California. The project begins at Oroville Dam on the Feather River and ends at Lake Perris near Riverside. At the Tehachapi Mountains, giant pumps lift the water from the California Aqueduct some 2,000 feet over the mountains and into southern California. The rest of my water comes from the Colorado River. A 1440 mile long river that runs through seven states, several Indian Reservations and Mexico. And about 30% of it comes from under ground well sources. All that water goes through reservoirs, treatment facilities and is finally delivered through large distribution networks that were developed to pipe treated surface and groundwater to my home where it waits at the tap for me to turn on the faucet. Oh and I totally skipped over the fact that a similar thing has to happen with natural gas, which goes through similar pipelines to get to my house, and is used to heat up 80 gallons at a time to near boiling temperatures and keep it there until I'm ready to use it in the morning. And yes, every day, I take all that for granted.

The lie about saving for your retirement

I got out of college in the late 90s in the middle of perhaps the best job market in decades. The biggest requirement for a well paying job with great benefits was being able to fog up a mirror consistently. So like many in my class, I put my dreams of graduate school on hold to pursue a well paying job and never looked back. The company I worked for hired me and a few dozen others as "College Hires" and sent us out for  two week of training in of all places Mishawaka IN. There were close to 60 of us and since for most of us, our first paycheck was the most money we had ever made, our employer, being socially responsible, felt it was necessary to give us some training on retirement planning.

The session was taught by So-and-so from Such-and-such Investments LLC and focused on the 401K plan and a diversified portfolio and made some grandiose claims about how saving a nickel a day when we were 23 could be turn into a million dollars when we're retired. There wasn't a word about anything other than ways to manage your money in how to plan for retirement. We all bought it. All of it. 

The Cliff Carl took us too

Fast forward 15 years and a day after my wedding I met Carl. He was walking along the beach in Palos Verdes, CA when my wife and I ran into him and he told us about a small cliff we could dive from about a mile away. He led the way and we followed. He was fast and in our great wedding shape we had a hard time keeping pace. After a few dives I talked to Carl and quickly found he was a Viet Nam vet and a retired professional who now works part time as a consultant. What came next was a total shock. Carl was 73. I had figured him for 53 max. He told me about his grand kids and how he can still outrun them and how he spends most of his free time with them playing around.

Carl made me think of all the others in his age who spend most of their time at the doctor's office and hardly ever have time for their families. And even when they have time, the quality of the time they spend with their family is affected by the poor health. They can't be active and they spend most of their money on medical expenses. That short conversation with Carl showed me the inauthentic lie retirement planning had been all along. What were we saving all this money for? To pay our medical bills when we get old? That's precisely it.

Medicare covers only 59% of the cost of health care for seniors and that's predicted to only decrease making the personal contribution a larger percentage of the care. In fact, a couple aged 65 might need $387,000 saved in order to be confident of covering their health care costs in retirement, not including outlays for long-term care, finds a report from the Employee Benefit Research Institute (EBRI). Add that to the fact that the cost of healthcare and the worker contribution are increasing at a much faster rater than compensation and inflation, and you get to know why saving money for your retirement should be re-branded as saving money for your healthcare.

Healthcare expenses for seniors increased by 5% in 2011 from the previous year. And that percentage increase is likely to be small compared to what we see year-over-year in the next 20 years. So the dollars you save today will have to grow by 5% annually just to meet the increase in your future healthcare costs, and they have to grow by an additional 6% to meet Such-n-such Investments LLC's projections for you to retire by 70. That's 11% annual increase in your retirement savings just so you can have 90% chance of having enough money to survive. If you know anything about money, you know that 11% is a ridiculous expectation.

You may have already jumped ahead of me here and figured out for yourself that an investment in your health and wellness is far greater than an investment in your 401K. Not only is being healthy going to prevent unnecessary healthcare dollars from being spent, but you'll be able to work and keep active well into your sixties and seventies if you are healthy and well. I'm not saying that you shouldn't save your money, but I am confident that your health and wellness will count far more than your money. No amount of money is going to cure diabetes, heart disease, or any of the other dozens of completely preventable killers that will have you spend your old age in a wheelchair.

What's more, my new friend Carl, even though retired, still works 20-25 hours a week doing consulting. That's additional income he can count on in his 70s which is allowing him to be net positive far longer than the average for his generation. I'm no mathematician, so I used Bloomberg's 401k calculator to determine how much a very well deciplined 23 year old could save for retirement if he starts out making 50k/year and contributes 5% of all his income for the next 42 years towards retirement.

401K Summary
Your Contribution:	5%
Employer Match Rate:	50%
Percentage of Contribution Employer Matches:	100%
Investment Rate:	5%
Salary Increase Rate:	5%
Value of Your 401(k)Plan in 42 Years:	$1,223,797.79

The answer is $1.22M. That's with a 5% consistent salary increase. Not a bad loot. But if that 23 year old starts today, he'll be 65 in 2055. Now earlier we said that the cost of Healthcare is increasing at 5% a year and for a 65 year old in the US it's close to 15k/year. If the growth continues at 5%, then in 2055 the cost his health care will be closer to $116k per year. Not to mention that if his additional living costs go up by even 2% year over year at a modest 40K for current cost of living, he's looking at $92k/year to pay his non-healthcare related expenses living very modestly. 

$92K + $116K(healthcare) = $208K Total cost of modest living in 2055

And that's just his 65 year old self. If you notice the graph above has a much higher rate of change when he's in his 70s. His cost of living is likely to be well into $300k/year when he's Carl's age. And the majority, more than half, of the cost will be his healthcare cost. 

Well, it doesn't take a rocket scientist to realize that an investment in your wellness will pay much higher dividends than an investment in your 401K when you retire in 2055. I'm not saying you shouldn't save your money. But I would rather see a few of those dollars go towards:

• Eating healthier and natural foods
• Buying better, more natural groceries and cooking at home
• Gym membership and exercise equipment
• Adventure travel that involves activity
• Better chairs, beds, and furniture that ensures better posture
• Moving to geographical areas with lower smog and other environmental hazards
• Cycling or walking as a means of transportation
• Dedicating yourself to an active lifestyle

What investments are you making in your wellness?

Amazon AWS, Should I choose a reserved or OnDemand EC2 instance?

Well I'm glad you ask. I set out to answer the same question for our mobile app backend servers. Our mobile app currently runs on two Medium EC2 instances along with several other services like RDS, S3, and SES. We also have 1 micro development server, and 1 micro test server. Setting this all up can be a real challenge but figuring out how much it's all going to cost you is nothing short of rocket surgery.

Reserved vs. OnDemand EC2 AWS instances Cost Analysis

As you may already know, much of your AWS bill is going to come from your EC2 instances (Amazon Elastic Compute Cloud). Now Amazon gives you this nifty "simple" calculator to use to determine what your total cost is going to be but if you're like me, that's only going to confuse you more than help. To further complicated things, Amazon gives you several choices on how you can consume these instance:

• On Demand - "pay for compute capacity by the hour with no long-term commitments"
• Spot - "bid for unused Amazon EC2 capacity" and save upto 50+% but variable availability.
• Reserved - make a low, one-time payment for each instance you want to reserve and in turn receive a significant discount on the hourly charge for that instance. This reserved option comes with several options of it's own based on how much you want to use the thing.
• Low Utilization
• Medium Utilization
• High Utilization

The trouble is you now need to answer some tough questions. What do I need this instance for? How much utilization do I need (how much uptime)? And how long am I willing to commit for? I had these same questions but wanted a way to see all the hard dollars before I made a decision. In the case of our app, I know I'll need the two medium instances for at least the next 5-6 months and potentially longer. As for the Micro instances, they are actually quite useful regardless of what's going on so we may use them for the entire year no matter what is happening. But is it all worth committing to a whole year?

So I took a few minutes (okay an hour) to sift through all the pricing information on the AWS pricing site and put together a spreadsheet that gave me the information I needed, mainly:

• Compare the cost of several sizes of reserved vs. OnDemand instances over 6 and 12 months
• Determine the % savings over 6 and 12 months  on all utilizations and sizes
• Determine how long it would take for us to break even with the 1 year commitment.

I found some pretty neat stuff. It turns out that the reserved instances can save you upto 44% in 1 year when compared to OnDemand instances when you pick the heavy utilization option and since our app is always on we would likely choose that option. It's important to understand what AWS intended for the different utilization types. They don't mean you are getting a different kind of instance, it's just a billing scheme. You're able to get a deeper discount if you're using more, that's all. So effectively, the following savings is what you can expect:

Reserved EC2 Savings over 6 and 12 months

Another thing I found interesting was that even if you're using the instance at 100% utilization, you're better of with the light utilization option if you're only going to keep it less than 7.5 months. Haha, how did I get that number?

Well, lets say:

L= upfront cost of light utilization

c= hourly cost of light utilization

H= upfront cost of heavy utilization

h= hourly cost of heavy utilization

X= Number of hours  before it's suitable to upgrade from Light to High. 

Then:

L+(cX) = H+(hX) 

so

X= (L - H) / (h - c)

Divide that number by 720 (The number of hours in a month) and you get 7.5

As similar calculations will show that you're better off for 8.3 months on Low vs. Medium, and 6 months on Medium vs. Heavy. In other words, at full utilization:

Months before I should upgraded from

Small to Medium: 8.3 months

Small to High: 7.5 months

Medium to High: 6 months

All this actually makes the medium option a lame duck unless your needs are unique. 

So the basic lesson here is, if you're planning to keep an instance for at least 100 days (3.3 months) at full utilization, you're better off buying into the AWS reserved instance. 

Here's a link to the google spreadsheet I put together so you can do your own variation. Also note that the numbers don't apply to the micro instance the same way as they do to the other instances. 

Cheers

LINK TO THE GOOGLE SPREADSHEET