Grandfathered Underfunding Solution Thread

All topics about cryopreservation costs, membership dues, etc.
paulwakfer

Re: Grandfathered Underfunding Solution Thread

Post by paulwakfer » Fri Feb 17, 2012 8:46 pm

bwowk wrote:
paulwakfer wrote:
bwowk wrote:If we grandfather neuro members to present minimums, we'd have a $5.6 million shortfall to make up.

Which should be able to be made up by the $9.7M overfunded neuros.
....

I don't see why bequests should be needed when there is already more than sufficient neuro overfunding. I think that possibility of mismatches and consequent "cash squeeze" can be well analyzed by examining the ages of those neuros who are underfunded versus those who are overfunded. If the underfunded group are substantially older than the overfunded group, then I agree that there may be a problem.
With significant remaining life expectancy, it's still a problem even if they are the same age. Overfunding decreases as costs rise with inflation, while underfunding remains constant under your proposal. The overfunded members eventually become minimally funded members, while the liability of previously underfunded members remains.
Brian, your point is valid, but you are forgetting that if the proportion of overfunded members and the relative amounts of such overfunding continue into the future as they have been in the past, it is that new overfunding which will easily pay for this limited amount of liability under my proposal (which as I have stated will become less and less of a percentage of the total funding).
bwowk wrote:
paulwakfer wrote:
bwowk wrote:This is especially so because bequests are often directed to specific purposes such as PCT that couldn't be used to pay for upfront costs of underfunded cases.
Just so your meaning of "upfront costs" is clear (Kitty did not get it until I explained), I am assuming that you mean the sum of costs of CMS plus transport/perfusion/cooldown/human remains disposal - all the immediate out-of-pocket costs incurred by a neurocryopreservation. But then I ask: if the PCT is "fat" from bequests, then why not direct all of the funds of an underfunded case to the upfront costs? - after all, the PCT doesn't have any knowledge of or "care" where the money comes from since it is a big collective pot, unlike "upfront costs".
We don't have the flexibility to do that. The disposition of funds above minimum is directed by the individual elections in each member's Cryopreservation Agreement.
Okay, with Kitty's help I have finally seen your point. Unfortunately we have been talking past one another, because my entire concern on this thread is with the PCT under and overfunding. Therefore, I assumed that the overfunding amount of $9.7M was entirely PCT overfunding. However, I think that my point is still valid, because a goodly portion of that $9.7M is surely allocated by member selections to the PCT. So at least that portion can be used as I have indicated and now describe with an example.

Instead of the (current) distributions from an $80K neuro member being:
$15,000 to the CMS fund pool
$25,000 to the Patient Care Trust
$40,000 to cryoprotection, cool down, and long-term transfer expenses

for a $50k neuro member the distributions would be:
$10,000 to the CMS fund pool (up from the $5K which is currently distributed for that purpose from a current member funded at only $50k)
$0 to the Patient Care Trust (as opposed to the $15K which is currently distributed for that purpose from a current member funded at only $50k)
$40,000 to cryoprotection, cool down, and long-term transfer expenses (up from the $30k which is currently distributed for that purpose from a current member funded at only $50k)

or something like that, because the PCT already has sufficient funding from bequests and the overfunding of some members already cryopreserved. Perhaps the above are not the exact amounts currently distributed (I certainly don't have everything memorized), but the method should be the same.

Brian, if the amount of liability based on my approach is still too high relative to the member-selected overfunding of the PCT, then similarly to my weakening approach (taking everyone as effectively having the neuro funding of the next future minimum, whatever that will be) instead go back one step and take everyone as effectively having funding at the $50K level requiring only funding to be now made up from $50 to $80K, and so on with every increase. This would still upset a lot of members, but much less so, I am convinced, than the very abrupt current board proposal.

It would also be much less upsetting to members (and the public watching Alcor) if the board strongly admits that Alcor was grossly negligent in not enacting these changes many years ago, highly regrets having to do so at this late date and has offered the yearly underfunding fee and the hardship fund as ways to help long-time members.

IMO, the absolute worst thing to do is for Alcor to keep insisting, as Michael R Seidl is determined when he stated "Your suggestion, if adopted, would create the impression that Alcor presently grandfathers its members. It does not", that Alcor has not been grandfathering its members. While it is true that as of the publication (more correctly the future board passage) of the proposal to solve the underfunding problem, Alcor does then not grandfather its members, for almost 40 years up to that official decision the de facto policy has been that Alcor does grandfather its members!

paulwakfer

Re: Grandfathered Underfunding Solution Thread

Post by paulwakfer » Fri Feb 17, 2012 9:16 pm

Here is another suggestion to help with the abrupt end of grandfathering, which only occurred to me now.

My suggestion is based on the fact that the major reason for the jump from $50K to $80K minimum at the beginning of 2005 was to include the CMS within the minimum fee rather than have it separately paid for as had been the policy to that date. Therefore, members funded at $50K or less were not expecting to get CMS automatically with no additional payment. (I and Kitty certainly were not and did not want/need it since we are determined to be right next to Alcor when/if we deanimate, which is why we hurried to signup at the $50k rate.)

Therefore, why not simply tell all members funded at $50k and less that they will only get CMS under the user pay methods that were in force before the hike to $80K. This alone should greatly reduce the current underfunding liability and together with my other limiting proposal should reduce the problem to entirely manageable proportions.

Aschwin.de.Wolf
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Re: Grandfathered Underfunding Solution Thread

Post by Aschwin.de.Wolf » Fri Feb 17, 2012 9:40 pm

paulwakfer wrote:
Therefore, why not simply tell all members funded at $50k and less that they will only get CMS under the user pay methods that were in force before the hike to $80K. This alone should greatly reduce the current underfunding liability and together with my other limiting proposal should reduce the problem to entirely manageable proportions.
Paul,

This is a sensible approach and relevant to what I have argued here:
http://www.alcor.org/forums/viewtopic.php?f=13&t=49

The CMS is compounding the underfunding problem and is partly responsible for the high annual dues that many Alcor members cannot or are reluctant to pay.

My own position is that national standby and stabilization should be an optional service and not subject to a "mandate" with associated risk pooling. I will be making a case against CMS on this forum soon but I want to express my support for identifying CMS as an issue that cannot be ignored when discussing the underfunding and member cancellation challenges.

paulwakfer

Re: Grandfathered Underfunding Solution Thread

Post by paulwakfer » Fri Feb 17, 2012 10:30 pm

Aschwin.de.Wolf wrote:
paulwakfer wrote:
Therefore, why not simply tell all members funded at $50k and less that they will only get CMS under the user pay methods that were in force before the hike to $80K. This alone should greatly reduce the current underfunding liability and together with my other limiting proposal should reduce the problem to entirely manageable proportions.
Paul,

This is a sensible approach and relevant to what I have argued here:
http://www.alcor.org/forums/viewtopic.php?f=13&t=49
Thanks for joining (and even more thanks for supporting my idea :)). I read your original post in the Private Forum thread that you began and was in total agreement with it. I only did not integrate that proposal to my other one on this thread because the board seemed to be so set on keeping the bundled CMS and I did not want to make it any more complicated than what I thought was necessary to start (and then, to be honest, I forgot about the idea). I also did not want to continue with this or any other discussions in the Private Forum because I am convinced that hiding one's thoughts and actions from others is long-range harmful to oneself and everyone else.
Aschwin.de.Wolf wrote:The CMS is compounding the underfunding problem and is partly responsible for the high annual dues that many Alcor members cannot or are reluctant to pay.
Absolutely! CMS is a bundled set fee into a collective pool for something the cost of which is highly variable among members. IMO, that sort of approach is always impractical and to use Michael R Seidl's phrasing "inequitable" and "penalizes those members who have had the foresight or wherewithal" to arrange their living situation so as to need minimal CMS.
Aschwin.de.Wolf wrote:My own position is that national standby and stabilization should be an optional service and not subject to a "mandate" with associated risk pooling. I will be making a case against CMS on this forum soon but I want to express my support for identifying CMS as an issue that cannot be ignored when discussing the underfunding problem.
I am 100% in agreement with you on this issue (and always was).
Thanks again for your support which was particularly heartening when it seemed like I was getting no where in attempts at persuading the board to change away from what I consider could well be an organization terminating decision.

On a separate note, since I still have had no assurance that all the board members are following this thread or will be informed of its existence (particularly not from Max More to whom I formally requested that this be done), I will tonight be sending a message to all board members that I know a way to reach about its existence and importance for them to read and think about before any board decision is made.

Aschwin.de.Wolf
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Location: Portland, OR
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Re: Grandfathered Underfunding Solution Thread

Post by Aschwin.de.Wolf » Sat Feb 18, 2012 1:51 pm

The underfunding problem was not created in a day and cannot be solved in a day.

I think the first thing to recognize is that quite a few (neuro) members who are underfunded are only underfunded for bundled cryopreservation and standby services. Unlike inflation, Alcor created this kind of underfunding problem when it established Comprehensive Member Standby and the associated CMS allocation. So the first thing I would suggest is to return to the old system where members had more flexibility and re-do the analysis. In fact, anyone can do this analysis because the numbers are known.

Before introducing any additional underfunding fees I think that Alcor should launch a serious comprehensive campaign to encourage members to adjust their life insurance and funding, especially aimed at members who are underfunded for cryopreservation and long term preservation costs. Send them individual letters, provide weekly updates about the underfunding problem, etc. Perhaps the new communications staff member can play an important role in this.

I also agree with those who think Alcor should do more in cost cutting and improving staff efficiency. I do not think that Alcor has exhausted this approach at all and we need some independent benchmarks instead of just comparing Alcor's situation to an arbitrary point in time in the past. It is easier to shift the burden to members but it is my distinct impression that number of staff and overhead can still go down without decreasing the quality of Alcor's operations.

In the case of whole body members (note: I am a whole body member myself) I think we should think carefully about introducing new technologies. For example, the introduction of the new vitrification solutions produced a substantial increase in perfusate costs for whole body members. I know it is possible to bring down these costs and still have a vitrification solution with robust glass forming properties and low toxicity. If Alcor wants to keep offering whole body as a relatively affordable option, some modifications are required here, I think.

I am not opposed to charging underfunded members an additional fee but I think that this approach should be only utilized when other means of improving the situation have been exhausted. One response that I think is particular corrosive is to counter any suggestion with the argument that it does not do much to reduce the underfunding problem on its own. That is exactly why we need a combination of solutions.

If Alcor first pursues all credible solutions that do not increase annual dues and then does a new calculation of the magnitude of the remaining underfunding problem, we may find that we can substantially reduce both the number of people who will be paying an underfunding fee and the amount of that fee.

I decided to focus on CMS because it is not only one of the main drivers of the underfunding problem but it also contributes to membership cancellations of people who simply cannot pay these high combined dues. If there is anything that Alcor members are telling Alcor it is that these combined annual dues are too high already! I will have more to say about CMS after the weekend.

bwowk
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Re: Grandfathered Underfunding Solution Thread

Post by bwowk » Sat Feb 18, 2012 6:57 pm

paulwakfer wrote:Here is another suggestion to help with the abrupt end of grandfathering, which only occurred to me now.

My suggestion is based on the fact that the major reason for the jump from $50K to $80K minimum at the beginning of 2005 was to include the CMS within the minimum fee rather than have it separately paid for as had been the policy to that date. Therefore, members funded at $50K or less were not expecting to get CMS automatically with no additional payment. (I and Kitty certainly were not and did not want/need it since we are determined to be right next to Alcor when/if we deanimate, which is why we hurried to signup at the $50k rate.)

Therefore, why not simply tell all members funded at $50k and less that they will only get CMS under the user pay methods that were in force before the hike to $80K. This alone should greatly reduce the current underfunding liability and together with my other limiting proposal should reduce the problem to entirely manageable proportions.
Implementing the Underfunding Proposal advocated in last year's inflation article, but reducing standby coverage for underfunded neuro members who can't afford underfunding fees rather than cancelling them is being seriously discussed by the board. My argument favoring this is that the misfortune of members whose life circumstances don't permit them to increase funding with inflation is not that different from the misfortune of many cryonicists who suffer unexpected legal death and are unable to receive a good standby. Even if a state-of-the-art response cannot be provided, they are still cryopreserved. I think changing standby practices for underfunded neuros who can't or won't pay underfunding fees can still address the underfunding problem without having to cancel anybody's cryonics arrangements. Even underfunded whole body members who can't pay underfunding fees, and who decline to switch to neuro, could still switch to CI.

Paul, your private message to Ralph and I has been forwarded to the board. Also be aware that for various reasons postponement of the March 3 board meeting is presently under discussion. A new date later in March will be published once it is determined.

Thanks for your continuing input.

Merkle
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Re: Grandfathered Underfunding Solution Thread

Post by Merkle » Sat Feb 18, 2012 7:32 pm

This is just to let you know we've been working on these issues, and looking at how to resolve them in the context of an overall plan that satisfies a number of constraints. Sometimes we can improve quality while simultaneously reducing cost, but the thought that a component of higher costs has been caused by quality improvements that need not be used if funding is an issue has been discussed. How to use this knowledge in the context of an overall plan that is fair, avoids creating adverse incentives, protects long time members, and gives new members who are critical to the future growth of Alcor a good feeling about our community, requires careful thought.

southbay

Re: Grandfathered Underfunding Solution Thread

Post by southbay » Mon Feb 20, 2012 2:05 am

Resolve it soon. Frankly, the news of fees going up to $800 per year was already enough to make me leave Alcor. I signed up when fees were well under half of that, and never asked for or agreed to large new fees and standby charges. Inflationary increase I could have understood. Time to fix this or more members will leave, creating an even larger financial crisis.

paulwakfer

Re: Grandfathered Underfunding Solution Thread

Post by paulwakfer » Mon Feb 20, 2012 2:44 am

southbay wrote:Resolve it soon. Frankly, the news of fees going up to $800 per year was already enough to make me leave Alcor. I signed up when fees were well under half of that, and never asked for or agreed to large new fees and standby charges. Inflationary increase I could have understood. Time to fix this or more members will leave, creating an even larger financial crisis.
I have said this once before, but after the previous good post, this seems like a good place to say it again.
I and Kitty were not going to pay the yearly fees at the start of 2011 because of the increase. We only decided to do so in order to give the new CEO Max More a chance to solve some of the major financial problems that Alcor has and has had for years. Max has done a bit, but not nearly enough and now with the proposed grandfathering solution, unless there are very drastic financial changes (or unless I am personally finally exchanged some value for my dewar boiloff reduction design, which I recently found out that Alcor implemented without ever giving me either credit or value), then I and Kitty will no longer be members of Alcor once our non-payment of dues and underfunding fees causes us to be officially terminated. We plan to maintain all our paperwork and our funding allocations to Alcor (along with all our other assets), but we can not and will not pay those yearly fees. Our income is far too small to enable that waste and the money can be much better used for our long range benefit by investing it. Doing so will soon create the extra fee needed for a last minute sign-up. And such a last minute sign-up will likely be unnecessary anyway since our lifestyle will almost certainly allow us to live many decades yet and then to know when the end is near.

paulwakfer

Re: Grandfathered Underfunding Solution Thread

Post by paulwakfer » Tue Feb 21, 2012 8:02 pm

southbay wrote:Resolve it soon. Frankly, the news of fees going up to $800 per year was already enough to make me leave Alcor. I signed up when fees were well under half of that, and never asked for or agreed to large new fees and standby charges. Inflationary increase I could have understood. Time to fix this or more members will leave, creating an even larger financial crisis.
This is four people that I know have not yet paid this years fees.

Previously I suggested that Alcor needs to do a survey of its members to see what would be their reactions to various proposals vis-a-vis the grandfathering problem, but there is already information available relating to the potential intentions of Alcor members.

Therefore I ask Max More to take this as a formal request to produce the numbers of Alcor members who have not yet paid this years dues and, in addition, to compare this with the situation for previous years if that can be figured out.

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