What The Hell Were They Regulating

This is mind boggling:

As the pilots of the doomed Boeing jets in Ethiopia and Indonesia fought to control their planes, they lacked two notable safety features in their cockpits.

One reason: Boeing charged extra for them.

For Boeing and other aircraft manufacturers, the practice of charging to upgrade a standard plane can be lucrative. Top airlines around the world must pay handsomely to have the jets they order fitted with customized add-ons.

Sometimes these optional features involve aesthetics or comfort, like premium seating, fancy lighting or extra bathrooms. But other features involve communication, navigation or safety systems, and are more fundamental to the plane’s operations.

Many airlines, especially low-cost carriers like Indonesia’s Lion Air, have opted not to buy them — and regulators don’t require them.

Now, in the wake of the two deadly crashes involving the same jet model, Boeing will make one of those safety features standard as part of a fix to get the planes in the air again.

Thoughts:

1.) What the fuck are you regulating if you have decided the safety features are… optional.

2.) Imagine buying a car, and then being told the brakes are optional.

3.) Since the regulators clearly are not doing their fucking jobs, every time you buy a plane ticket, it should say on the ticket, “THIS PLANE DOES NOT HAVE THE SAFETY FEATURES.”

In other news, Acting Secretary of Defense Patrick Shanahan is under investigation for using his office to help… Boeing, his former boss. BECAUSE OF FUCKING COURSE HE IS.








Monopoly insurer strategies in 2019

In 2019, 1,058 counties had only a single insurer on Healthcare.gov. 1,056 of those counties had the insurer offer at least one Silver and one non-Silver plan. I am curious about what we can figure out about the monopoly insurer strategies. I’ve contended for years that a monopolistic insurer can effectively choose their enrollee pool by how they manipulate the spreads from the benchmark plan to the other plans.

Insurers can choose their risk pool by offering very low cost plans. The people who are on the cusp of buying insurance are price sensitive. The healthiest slice of the cohort will be the people who are flipping a coin between buying insurance and not buying insurance. The sickest slice of the cohort will be the people who look at a $1,500 monthly premium and are doing a happy dance as they know they are still getting a great deal. The risk pool will be, on average, healthier if the cheapest plan available costs $15 for the incremental buyer rather than $100.

Monopoly insurers get to choose their spreads**.

So this is very curious when I look at the difference between the Silver Spread which is the difference of the Benchmark Premium to the cheapest Silver premium and the Other Metal Spread which is the difference of the Benchmark Premium to the Cheapest Gold/Bronze premium for 2019.

There is wild variance. A few counties in Wisconsin and Ohio have no Bronze plans. Their cheapest not-Silver plan is significantly above the cheapest Silver plan.

Wyoming, on the other hand, is running a massive spread so that their cheapest Bronze plan has a significantly lower subsidized premium than the cheapest Silver plan.

One of the big things to note is that insurers that are operating as effectively a state wide individual market monopoly do not have to consider risk adjustment in their decisions. Insurers that are in a fragmented state wide market with only a county or regional monopoly may have risk adjustment concerns.

This risk adjustment concern leads me to scratch my head when I look at the different strategies that are evident in Mississippi and Wyoming. Both are single insurer states. Wyoming’s Exchange strategy creates very low premium for subsidized buyers who are flipping a coin. Lots of people earning between 100% to 400% federal poverty level are seeing Bronze and some Gold plans that will cost them and their families less than two medium three topping pizzas at a national delivery chain every month.

Mississippi is also a single insurer monopoly state. There is a different pricing strategy. The Gold plans are priced over the benchmark silvers as they broad load. The low cost Bronze plans are creating very few truly low premium plans.

I am confused as pure monopoly ACA insurers that have no risk adjustment concerns should be able to create their own risk pools for whatever purpose they so choose. They can choose a sick pool. They can choose a healthy pool. They can choose a small pool. They can choose a big pool. Wyoming’s pricing and plan offering strategy is a choice to pick a big and comparatively healthy pool. Mississippi’s sole insurer, Centene, is picking a comparatively small and comparatively unhealthy pool.

That just seems odd to me.

** I am using a single 40 year old non-smoker non-subsidized for all examples. For purposes of the blog, I am not looking into EHB percentage of premium which will slightly alter final numbers.








Going to the Moon the Second Time

It’s happy hour and my inhibitions are down, so I’ll confess that I am a major National Transportation Safety Board (NTSB) report junkie. Sadly, I’ve read almost all of the major incident reports going back for a stretch of time I’m embarrassed to name. So, I know that I shouldn’t speculate about the two 737 MAX incidents, but tequila tells me differently.

First, as a matter of historical interest, this isn’t the first time 737s have fallen out of the sky. In the early 90’s, an issue with the rudder actuator in 737s caused a couple of fatal accidents. If the first of these (in Colorado Springs) had happened today, it would have killed at least 100 people. However, back in the days before computer systems that sell every seat, 25 people were killed. Read that Wikipedia article I linked to see some excellent engineering in practice, as the NTSB was able to weave together a similar incident in a 747 to help solve the mystery of 737s falling out of the sky.

Second, the FAA has always been an industry lackey. If you read through NTSB reports, you’ll find that a remarkable number of their recommendations are rejected by the FAA. A good example is fire suppression. The NTSB had consistently recommended the use of fire-resistant materials in planes, and also the use of materials that don’t turn into poisonous gas if they burn. It took Air Canada 797 in 1983, where a fire in the lavatory ended up killing 23 persons despite some Sullenberger-level flying from pilot Donald Cameron, to push the FAA to finally beef up their recommendations for fire retardant materials and other measures to combat fire in an airplane. Everyone flying today owes a debt of gratitude to those poor people who died the miserable deaths that finally changed aviation. Since commercial aviation accidents are rare, it’s always easy for the FAA (with industry prodding) to say that the accident was an “isolated incident” or “pilot error” or whatever bullshit excuse they want to use.

Third, Boeing ain’t what they used to be. Their decision to farm out the manufacturing of the 787 to every corner of the Earth caused delays and if it weren’t the batteries that caused the grounding of that plane, it would probably be something else. With the 737 MAX, Boeing’s issue was that they wanted to push out another new variant of their popular narrow body plane without re-training pilots. Since the engines on the new variant were so large that they have issues with the 1960s era design of the 737, Boeing used a software hack (MCAS) to address a possible issue when the 737-trained pilots flew the 737 MAX by hand, and they somehow lubed up the FAA to accept that an airplane with a much different instrument layout didn’t need new training. But don’t trust me, listen to what a pilot said:

I think it is unconscionable that a manufacturer, the FAA, and the airlines would have pilots flying an airplane without adequately training, or even providing available resources and sufficient documentation to understand the highly complex systems that differentiate this aircraft from prior models. The fact that this airplane requires such jury rigging to fly is a red flag. Now we know the systems employed are error prone–even if the pilots aren’t sure what those systems are, what redundancies are in place, and failure modes.

MCAS plus an equipment failure is probably what caused the crash in Indonesia, and perhaps what happened in Ethiopia. The good news is that, unlike a rudder actuator or metal fatigue. this problem can be fixed with a combination of software upgrades and pilot training.

Fourth, Trump’s government shut down probably contributed to this problem. Boeing was working on a software fix to MCAS that was held up when the FAA shut down slowed negotiations.

Finally, if you’re interested in more on this, look at James Fallows’ posts.

The post title is a reference to the fact that human beings take for granted that once a engineering challenge is solved, it should be trivially easy to solve it the second time, so it should take a fraction of the time and money to fix. The 737 MAX is a great example of why this isn’t true: Boeing engineers, under massive constraint, built a new plane and called it a 737. If their engineers had started with a blank slate, Boeing management would have been a lot more cautious about rolling it out. Instead, here we are.








Liz Warren: Let’s Break Up Big Tech

Senator Warren announced yesterday morning that she thinks we should break up the big tech monopolies. She focuses on Google, Facebook, and Amazon in particular, though there are obviously other companies that would also fit this description.

Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.

One focus is on how companies use mergers and acquisitions to limit competition, like how Facebook snaps up every available messaging company. This seems pretty self-explanatory. The other main focus of her Medium post, which I find more interesting, is that companies which own networks should not be allowed to participate in those networks. This one’s a little less clear to the layperson, so she lays on some history.

But where the value of the company came from its network, reformers recognized that ownership of a network and participating on the network caused a conflict of interest. Instead of nationalizing these industries — as other countries did — Americans in the Progressive Era decided to ensure that these networks would not abuse their power by charging higher prices, offering worse quality, reducing innovation, and favoring some over others. We required a structural separation between the network and other businesses, and also demanded that the network offer fair and non-discriminatory service.

Her plan:

My administration would restore competition to the tech sector by passing legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.

[…] Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law. Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.

This is an interesting idea! And it’s high time we had this conversation at a presidential-campaign level. (I’m sure this was eaten by various shitstorms in yesterday’s news, but still.)

She sort of talks about how we also need to deal with privacy, but it’s not included in this plan, which is fair. The post says the same about preventing foreign tampering. To me, the big thing that’s actually missing is how to handle the infrastructure platforms like Amazon Web Services and Google Cloud Platform. Those two service umbrellas undergird a great deal of the world’s technological infrastructure, including that of the American government. In the case of Amazon, they also provide most of the actual corporate profit, I believe. The cheapish, on-demand infrastructure they provide is actually pretty helpful to small innovators too.

Anyway, this, the co-determination bill, the CFPB, are all good examples of what I love about Warren. Her “making capitalism work for everybody” shtick just really resonates with this neoliberal shill.


I was originally going to post this yesterday afternoon, but my flight had terrible wifi, so now you’re getting it after dinner from Tokyo.








Amazon Out

After much ado, it turned out to be nothing.

Amazon said Thursday it was canceling plans to build a headquarters campus in New York City because of local opposition.

“There are a number of folks on the ground who oppose our presence,” Amazon spokeswoman Jodi Seth said. “We don’t think there’s a path forward in terms of working with them over the long term.”

The company issued a statement shortly before noon saying it did not intend to reopen its search for a second headquarters at this time, but would continue with plans to put at least 25,000 jobs in Arlington in Northern Virginia and 5,000 in Nashville.

Here in the Rochester area, there were months of hype about HQ2, with areas wishing and hoping and praying they’d be chosen, even though it was clear from that start that only a big urban area with a well-developed mass transit system was going to satisfy Amazon.