Fellow Alcor Members,
My name is Maximus (Max) Victus Peto, and have been an Alcor member for just over 1 year, and most recently a biological scientist at the SENS Foundation in Mountain View for the past 20 months. Previous to this, I earned a B.B.A. in Finance in 2002, then an MBA in 2005, and performed various finance and accounting functions from 2002-2009, including cost and general ledger accounting, lending (bank) finance, and teaching business, accounting, finance, financial auditing, and computer software courses at several colleges, then completing the core biochemistry undergraduate coursework requirements at the University of Toledo, in Toledo, Ohio from 2009-2010. I am very much interested in personal life extension, radical life extension, and learning and developing the sciences which enable the achievement of both. You can learn more about me on my Google+ page here: https://plus.google.com/u/0/104584573318108937134/posts
I'm pleased that Paul Wakfer has begun this discussion on possible solutions to the grandfathered underfunding problem. I have had concerns over the rather large (compared to the cost of life insurance to cover the actual cryopreservation) annual fees which I am expected to pay, so much so that after a year of Membership with Alcor, I'm strongly considering ceasing my Membership until Alcor can solve this underfunding problem (and cost-management problem, more generally) without my having to pay such large fees for (presumably) decades and decades (I'm currently 29).
I have carefully read all comments and responses to this thread up until those posted in late February (it's taken me some time to write this draft), and I'm encouraged by a number of good suggestions discussed thus far (and I think I can add to these). In my comments here, I try to summarize those suggestions which I support (and why), those I don't (and why), and offer additional suggestions which I haven't seen on this thread.
First, I understand that the online published by Alcor at the end of September 2011 (at this web address: http://www.alcor.org/Library/html/Cryop ... ation.html
) describes the favored underfunding solutions favored by the board of directors, which is stated:
"Option 10: Establish an Underfunding Reserve Account Funded by Underfunding Charges"
The article goes on to describe what is involved with that proposal.
I find it encouraging that the board of directors has taken the time and effort to consider alternatives, selected their favored solutions, communicated these via an Internet publication, given time for further consideration, and seemingly have extended the board decision deadline to allow for further consideration. This illustrates a sincere effort on the part of the directors to finding the best, long-term solution to this problem.
One aspect of this proposal is the Underfunding Charges, which I don't think are unreasonable, particularly if they are charged only to underfunded accounts. This makes individuals responsible for the degree to which they're underfunded. However, it doesn't take into consideration the extent to which they've already paid dues (i.e. duration of membership), and doesn't consider the understanding of likely many (including myself) that if one signs up for cryopreservation at a given rate, that rate won't increase (i.e. the "broken promise" problem Paul mentions).
I'm not so sure about the Hardship Fund. I certainly agree that members should be encouraged to make up for underfunding by various other means, such as increasing insurance, paying underfunding charges, doing various outreach work for Alcor (as I describe as a suggestion below), conversion to neuro, etc., if they're not able to pay for this difference immediately in cash. However, I'm concerned that the Hardship Fund is to be funded out of general (i.e. other peoples') funds.
After carefully considering the September 2011 publication, and all of the comments on this thread, I'm convinced there are better methods than those favored as of the September 2011 publication. Here are some suggestions with which I agree:
First, I agree with Paul's suggestion:
Brian, You and all other directors at Alcor need to be aware of a reasonable interpretation of this wording in Schedule A (bolding mine):
"All Members owe the cryopreservation minimum in effect at the time of membership approval for the elected method of cryopreservation, subject to the provisions of Section II, DUTIES OF ALCOR, Article 2, of the Cryopreservation Agreement."
This wording very clearly states that the amount needed to ensure a fully paid cryopreservation is the"minimum in effect at the time of membership approval for the elected method of cryopreservation" - which is the definition of "grandfathering" the minimum enrollment fee (as per definition in Merriam-Webster Unabridged). Unless the reader goes on to fully read the referenced Section II, Article 2, (which s/he might not because why would "DUTIES OF ALCOR" relate to the member's duty to pay more for hir cryopreservation?), I think that this will be the interpretation of most people.
I think Paul is correct here, at least from my own experience. I was under the impression, when I was urged to sign up by the end of 2010, that should I sign up at that time, I would be grandfathered into the $150k whole body rate. I signed up at that time, without more carefully considering the options and alternatives, because I thought I should "lock in" at this lower rate, and could more carefully consider the alternatives later. Clarifying this passage (as Paul suggests) would make this more clear that I *would* need to increase funding should costs increase (such as due to inflation).
Regarding whether Alcor does, in fact, grandfather, I agree with the notion that Alcor *has* been grandfathering its members. I understand that, as Michael Seidl pointed out, Alcor's contract language allows for Alcor's option to increase its funding minimums. But when a new or potential member reads the article at this page - http://www.alcor.org/Library/html/Cryop ... ation.html
- and reads:
"Whenever Alcor has increased cryopreservation minimums, it has traditionally only required new members to meet new minimum funding requirements. Existing members were “grandfathered,” and allowed to remain members even if their cryopreservation funding fell below new minimums."
...it is made very clear that Alcor *does* grandfather its members. So indeed, there is a contradiction here between what Alcor says and has done, and what Alcor's contract language states. I agree that a clarification in the contract language needs to be part of the solution (i.e. I agree that grandfathering should no longer happen, and the contract language should state thus, since I agree that it is not sustainable with inflation and other disruptions to the value of money).
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).
I think I understand what Paul is suggesting, and I think it obviates Brian Wowk's concern here about a potential decrease in overfunding due to inflation. I'm going to try to explain it differently here.
Under Paul's suggestion #2 or #3, he states:
2) Possibly in addition to the above, one way to cap the underfunding liability would be to announce that all the cryopreservation funding of currently grandfathered members would cease grandfathering at the amount of the current cryopreservation fee. This would mean that all members would need to increase funding by the amount of increase from current to the next cryopreservation fee level whenever that occurs in the future.
In my interpretation, this means that currently-grandfathered members would get some benefit by effectively getting a "discount" on whatever the *next*, current cryopreservation fee would be. I think this is a good idea, because it both (a) effectively gives a discount to those who have signed up early and paid fees for years or decades, while simultaneously (b) formally ends grandfathering, which is important in the long-term viability of Alcor.
I'll use a whole-body example to illustrate (note my figures may be wrong, but the principle is the same) Let's say I'm a whole-body member, currently signed-on and :grandfathered" at a $100,000 fee. Let's assume for this example that $150,000 is the "current, whole-body fee". Thus, I'm "underfunded". If Paul's suggestion is implemented, I would be "grandfathered" at *my*, grandfathered, whole-body fee of $100,000.
Continuing with this example, let's first assume that Alcor adopts Paul's suggestions to publicly end grandfathering, and changes the contract language to reflect this end. Then let's assume 1 year after that time, Alcor decides that they need to adjust the "current, whole-body fee" to $200,000, an increase of $50,000 ($150,000 to $200,000). This *nominal increase* would need to be paid by *everyone*, including *everyone who was previously grandfathered, including me*. However, because I was grandfathered at $100,000, my fee would now only be $150,000 (the nominal increase of $50,000), while all new members would pay the newest, current fee of $200,000. In this scenario, should this be adopted, the "grandfathered" members are converted to "discounted members", and the nominal gap between their discounted rate ($100,000 in this example) and the current rate ($150,000 in the beginning of this example) *will not increase*. This is what Paul means when he says this will "cap the liability". This difference will never grow, and will decrease as a proportion of total funding (assuming an increase in membership).
As to my sentiments about this idea: I think it is a good one. I support it, and I think it is highly equitable. It (1) gives a permanent discount to those who have supported the organization for years or decades, while (2) ending grandfathering, while (3) limiting any further increase in liability due to grandfathering. I agree, as a relatively young person, that these long-time supporters *should* get a discount (and yet should *also* pay their way, which Paul's suggestion stipulates, with a discount) because without their long-time support and resulting continuing existence of Alcor to this day, a young person such as me would not even have the option of *being* a member! And the discount is elegant because under Paul's suggestion, the amount of discount increases with the length of time a member was supporting Alcor - also appropriate (IMO)!
I also agree with Paul's suggestion that Alcor publicly acknowledge its past de facto policy of grandfathering its members, and that has been negligent in continuing to do so for so long a time, and will now and in the future cease doing so. Paul suggests this:
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.
I strongly agree that such a public admission of negligence and regret, as well as a public description of how the resulting problems will be remedied, will go a long way to increase the standing of Alcor management, and the long-term viability of Alcor, in the eyes of individuals (including myself).
Paul elaborates on this point:
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 decisionthe de facto policy has been that Alcor does grandfather its members!
I recognize that Michael Seidl is discussing the cyropreservation contract according to its legal interpretation, and I think that's good and appropriate. However, it concerns me gravely that my impression from Mr. Seidl is total denial that any grandfathering has ever occurred, whether legally or de facto. This concerns me because if this contradiction between Alcor's stated policies and the legal implications of the cryopreservation agreement are not acknowledged by the board, then it is as if such a contradiction does not exist, and thus, *no solution needs to be implemented to fix it* (it is this last, that no solution will be considered or implemented, which concerns me). And in the one post by Mr Seidl as of the end of February, he did not indicate that such a contradiction exists, nor did he agree that a re-wording of the cryopreservation agreement was warranted.
Moreover, simply invoking the 90-day minimum funding clause to remedy the current grandfathered underfunding problem will be particularly difficult for some current members because some have rather large differences between current funding and current minimums. At least for this one-time situation (i.e. implementing Paul's suggestions I discuss herein), six months notice is particularly justified.
I want to acknowledge that I am not completely familiar with Mr. Seidl's statements regarding "an interpreter must give meaning to all provisions of an agreement". In response to the following exchange between Paul and Mr. Seidl, I have a question. First, the exchange:
Michael R Seidl wrote:
An axiom of contract interpretation is that an interpreter must give meaning to all provisions of an agreement.
I am well aware of that. In my own enhanced version of "Valid Contract" -http://selfsip.org/solutions/NSC.html#contract
- there is a necessity for an Arbitrator one of whose jobs is just that - to see that all parties to the Contract have the same understanding of it.
The Agreement and Schedule A, as noted above, permit Alcor to increase funding minimums upon 90 days notice.
But my point is that the current wording makes the Agreement self-contradictory. And, as I am sure that you are aware, a contradiction logically implies anything at all. I did not suggest a wording change before, because I left that up to the credentialed lawyers on the board, but here is a new wording that I think would suffice to remove any hint of inconsistency.
"All Members owe the cryopreservation minimum in effect at the time of membership approval for the elected method of cryopreservation, unless and until the end of the grace period for increases in such minimums, see the provisions of Section II, DUTIES OF ALCOR, Article 2, of the Cryopreservation Agreement for the conditions under which minimums may be increased."
In citing the provision you do and suggesting it needs change, you do not give effect to the other provisions.
Correct. Because on the face of it the wording that I cited is inconsistent with those "other provisions", and, furthermore to reiterate the interpretation problem: "why would "DUTIES OF ALCOR" relate to the member's duty to pay more for hir cryopreservation?"
Moreover, the provision you cite is necessary for an effective agreement--it provides, in sum, that a member who provides the funding required at the time of the agreement is a member and will continue to be a member until (among other things) (a) Alcor gives 90 days written notice of a funding increase and (b) the member fails to provide additional funding in accordance with that notice.
I did not suggest a removal of that "provision". It should be obvious that my rewording above provides that "necessity" that you seek and at the same time completely removes the effective inconsistency of different parts of the Agreement.
The question I have is this: do Paul's suggestions to (a) clarify the agreement (quoted above) and (b) not remove the provision cited by Mr. Seidl, assuage Mr. Seidl's (and other Director's) concerns over Paul's suggestion to change the wording of this one specific part of the agreement? If so, then I think this change in wording would make Members' responsibilities more clear to them, while simultaneously reducing the possibility of interpreting the agreement in a way that suggests that grandfathering occurs, while *also* avoiding explicitly saying anything in *in the agreement* about "ending grandfathering".
Backing up a bit in that exchange between Mr. Seidl and Paul, I also agree with Paul's suggestion to increase the notice period from 90 days to 6 months. Here is my reasoning.
It is reasonable to give 6 months instead of 90 days for a number of reasons, one being that (from my limited experience, and even as a young person) it takes at least several weeks of phone calls, mail exchanges, setup of physical or blood work tests (for life insurer testing of insure-ability) to increase funding amount (unless one has purchased a rider or has some other way to eliminate these requirements). And this is assuming one is automatically approved for funding, and it is implemented by the insurer and communicated to Alcor immediately. And increasing insurance funding may be the fastest method to increase funding (and probably not affordable, and thus feasible, for all Members, particularly the very old or already-in-ill-health). For those not able to do this, a more lengthy option may need to be pursued, such as asking for loved ones or a bank for a loan (such as a mortgage), or picking up additional paid work and time to accumulate savings. 90 days is almost certainly not enough to complete some of these last, slower options to supplement current funding levels.
Mr. Seidl asserted the reasonable concern over Alcor needing to cover the risk associated with the increase of this notice period (an additional 90 days of risk). But from the following graph, six months of risk is actually a big improvement for whole-body Members:
(graph from: http://www.alcor.org/Library/html/Cryop ... ation.html
My point here is that, under the legal interpretation offered by Mr. Seidl (that Alcor does *not* grandfather its members), Alcor has been carrying some risk from whole body members since shortly after 1980! (this is illustrated by how the "whole body minimum" line is consistently, since 1982, under the line for "1982 whole body minimum adjusted for CPI inflation"). Interpreted one way: assuming the 1982 cost, adjusted for inflation, is the true, final cost of whole-body cryopreservation, this means that at any given moment during that period from 1982 to present, Alcor has been carrying the risk that an underfunded member would de-animate, and by this graph, *all* minimally-funded, whole-body members have been "underfunded"! In such a scenario, Alcor would be contractually obligated to perform cryopreservation on the underfunded member (because no 90 day notice was given), essentially "locking-in" an increase in the funding shortfall.
Also note: this is *exactly* what I (and likely Paul) mean when I state that Alcor "de facto" currently grandfather's their members, and why it is so critical to formally and completely *end* grandfathering ASAP - to eliminate this risk. I think this is what Paul means by "capping the liability", since doing this eliminates the possibility (except for the 6 month notice period) that a current Member could de-animate and Alcor be contractually obligated to cryopreserve an underfunded member, so the funding shortfall will cease to grow.
This means that In other words, unless and until Alcor *actually requires underfunding to be funded by Members *now* (i.e. that current funding meet current minimums or membership is lost), Alcor will continue to carry this risk. Paul's suggestions (and Aschwin's, regarding that CMS should be included in this discussion of underfunding) are a reasonable and equitable way to do this, and reducing this "constant" risk to "6 months" of risk is a big improvement, in my view.
Moreover, I think six months is reasonable particularly since Alcor does not have an internet service (like nearly any bank, website, social networking site, etc. does), where members can log-in, review their membership, dues, fees, insurance funding, insurance company, due dates, notices, personal file contents, estimated underfunding or overfunding based on current insurance benefit and other contributions, choice of preservation (neuro or whole-body), which cryoprotectant is opted for (cheaper vs. state of the art), CMS services desired and paid for, etc. Such a service would not only make Members' monitoring of their own memberships much easier, such a service would also (1) reduce the amount of time (and thus, expenditure) on the part of Alcor employees in following up with Members, calling them, asking them for certain information, documents, etc. (much, but probably not all, could be updated at, or uploaded to, the website, directly into one's electronic Member File, with no phone call, snail mail, or fax machine needed), and (2) greatly enhance the convenience to new members in setting up their Membership (my setup experience last year was "so-so" - it took much reading and shifting through papers, which is expected, but I still don't feel particularly informed about the options, such as the currently-discussed option of choosing cyroprotectant). I'm highly convinced that my experience could have been much enhanced, and much more efficient for everyone involved in making it happen, by an online member page which described in detail which documents were required from me, which signatures needed submitted, which options were available to me, and what optional (but very helpful) supporting documents (perhaps videos/interviews of me, stating I want to be cryopreserved, to help prevent family members from being able to contest my decision) could be recommended to, and added by, me (this last I still am not clear on, and would like to know about, particularly via online.)
My above comments answer Mr. Seidl's question to Paul:
Michael R Seidl wrote:
What is your rationale for 6 months as opposed to 90 days (effectively doubling the risk period for Alcor)?
Perhaps this next question should be on the cost-savings thread, but I'll post it rhetorically here: why hasn't Alcor created such an internet-available Member Account service? I strongly suspect the set up cost would quickly pay for itself by the cost savings related to no longer having to personally contact members, insurance companies, send snail mail, etc., to do all of the above member communication and document requests and management. These documents could even be backed-up daily (or even more often) such that Alcor will have multiple, digital copies of these documents, to ensure they're not lost.
The final topic I wish to address at this time is the CMS service/fees.
I, too, agree with Aschwin de Wolf when he says:
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.
And with Paul's recommendation (also supported by Aschwin):
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.
his is a sensible approach and relevant to what I have argued here:
I agree with Aschwin when he asserts that the underfunding problem can not be addressed without discussing CMS. I, for one, am considering cancelling my Membership until the annual fees are more reasonable (Max More posted to this thread at the end of February, indicating that he has seen very few people show concern over fees, and in fact, has experienced fewer complaints this past year than the year before).
I understand that Alcor may have a concern that many people simply won't arrange for CMS-related services on their own. I suspect (and admittedly could be wrong) that Alcor may have decided to make CMS bundled because they didn't want to (1) feel obligated to obtain the de-animated Member when (2) said Member didn't arrange for CMS services outside of Alcor. In this scenario, Alcor will want to uphold its part of the contract (to cryopreserve the member), but the condition of the Member will likely dramatically deteriorate if proper CMS is not arranged by the Member (or *someone*) *before de-animation*! I wonder if, rather than be stuck in this quandary, Alcor decided to simply bundle CMS with cryopreservation services.
However, as I said above, I agree that CMS need not be bundled with cryopreservation, and I do not *want* CMS to be automatically bundled with cryopreservation services. I *do* appreciate Alcor providing the option for me to use their CMS service, if they want to continue to do that, and if they do so, I hope individual circumstances are kept in mind when determining the cost of these services (related to what Aschwin said about "risk pooling" - I'd rather pay for my own circumstances (such as by simply having additional cash to bequest to whomever will take care of my CMS-related services), and have a lower annual fee until that time (i.e. I'd like to save and invest these funds for myself).
One way to obviate this "quandary" of un-bundling CMS and cryopreservation is to simply state, *in very clear terms*, that if CMS is not completely arranged and paid for by a Member, either with Alcor or some other person/group, or if the Member does not have clear and adequate over-funding to pay for CMS though Alcor (if not arranged with another party), *then Alcor will absolutely not cryopreserve the Member*, or a weaker version: "Alcor *will* preserve the Member, even if the member is in such an irreversibly deteriorated state as to make reanimation practically impossible". This (or some similar statement) should make it abundantly clear to the Member that *s/he* is entirely responsible for setting up and fully funding CMS *as well as* cryopreservation, and that the Member may be totally eliminating any possibility of successful reanimation if s/he does not address this adequately (i.e. "it is life-or death!").
In closing, I again want to thank those who have spent time reading and considering my comments, as well as the comments of others. I would like to continue to update and elaborate on this post, but I understand that the board decision is this coming weekend, and this post is getting very long, so I'll stop here. I'll continue to watch this thread, and especially the results of the vote of the board of directors with regard to what solutions they decide to implement for this underfunding problem.
I sincerely hope my comments and those of others are thoughtfully considered, partly because I hope to see Alcor solve this problem, grow, and be a leader in making cryopreservation a common medical practice for a great many people, and partly because if I perceive the decision board of directors to be particularly harmful for the organization (including requiring too high of annual fees), I will simply need to cancel my membership and await the existence of a different, more financially viable cryopreservation organization.