Author: philg

Does it make sense to pay for high-net-worth insurance in coastal South Florida?

by philg

Happy Middle of Hurricane Preparedness Week for those who celebrate…

Conventional insurance companies such as State Farm have mostly walked away from insuring coastal South Florida due to a combination of litigation risk (“Prior to the reforms, Florida accounted for more than 72% of the nation’s homeowners claim-related litigation in 2023, despite representing only 10% of US homeowners claims.”) and hurricane risk. Our house is about 2.5 miles from the ocean, but it is still redlined by the insurance companies most people have heard of. Here are the options for insurance:

  • a Florida-only carrier that turns most of its premium over to reinsurance
  • a “non-admitted” specialty company that isn’t regulated by the state and that may have unfavorable terms, including penalties for early cancellation and even a “wind exclusion” (i.e., they pay nothing in the event of the most obvious risk: hurricanes). (This option is so expensive and dumb that I won’t cover it here.)
  • a “high-net-worth” (HNW) carrier such as Chubb (mostly rejects additional Florida risk; famous for a low loss ratio (payments as a percentage of premium collected)), Vault, PURE, and Berkley One (despite the name, these are available to peasants whose house is worth less than a Palm Beach starter home ($10 million))

The cost of HNW insurance is 2-4X what a Florida-only company might quote.

Nearly all Florida insurance includes at least a 2% wind exclusion. If the dwelling value is $1 million, in other words, the homeowner pays the first $20,000 of any hurricane-related loss. Thus, the vast majority of customers with hurricane damage will receive nothing from their insurer because the typical hurricane damage might involve only some blown-off roof tiles or shingles. The band of likely serious damage from a Category 4 or 5 hurricane making landfall is 20-60 miles, e.g., for Hurricane Andrew in 1992 that resulted in major changes to the Florida building code or Hurricane Michael in 2018 that damaged Tyndall Air Force Base. Note that this exclusion results in the HNW policies paying less after what would be typical hurricane damage because HNW companies write for 2X the dwelling value on the same house.

The Florida-only carriers are typically unrated by AM Best, the standard rater for insurers. It has been historically rare for an insurer rated A or better by AM Best to fail. Florida insurers get rated by Demotech. How well does it work for an insurance company to have all of its customers in Florida? According to ChatGPT, nearly all of the Florida-only companies that have gone insolvent had A ratings from Demotech (i.e., the ratings were worthless in terms of distinguishing the vulnerable carriers from the solid ones or, perhaps, the solvency of a carrier simply depended on their luck regarding how many customers were in a hurricane destruction zone).

Insolvency after a major hurricane doesn’t work the way that one would think, with the failed insurance company realizing that it is doomed to failure and going into a bankruptcy-style process where every claimant gets paid a percentage of his or her full claim amount. Instead, the insurance company, even after a major hurricane, pays claims as they’re made and adjusted at 100%. When the company runs out of money they turn out the rest of the claims to the Florida Insurance Guaranty Association (FIGA), which will pay up to $500,000 for a destroyed house. So… the customer with a major loss either gets 100% or a fixed $500,000. The more complex the claim, the less likely it is to be paid. ChatGPT says that it is reasonable to assume a 10 percent chance of insolvency for a Florida-only carrier in the event of a major hurricane. The most recent insolvency that triggered a FIGA payout was of United Property & Casualty Insurance Company in February 2023. That’s three hurricane seasons ago. Since then we’ve had some hurricanes, but none anywhere near as costly within Florida as 2022’s Hurricane Ian. Let’s use a 20 percent risk of insolvency if a house is damaged to policy limits and a 10 percent risk of insolvency if a house is damaged to half of the limits.

What is the risk of a total loss or serious damage? Gemini starts off by saying that it is pretty high, with 300,000-400,000 single-family homes in South Florida either substantially damaged or destroyed by hurricanes over the past 50 years. That’s out of about 2.7 million homes in South Florida today, but only an average of 1.7 million homes over the 50-year period. (ChatGPT estimates this number as only about half of Gemini’s figure; our future AI overlords are smarter than humans, but equally inconsistent?) So a homeowner’s insurance company has about at least a 1 in 7 chance of making a big payout? Not exactly. First, we have to separate out the houses that were damaged by flooding or storm surge, between 120,000 and 180,000. Homeowner’s doesn’t pay for flood damage. Now we’re down to a risk of about 1 in 10 over 50 years. What about the fact that Florida established a strict statewide building code in 2002, hoping to avoid a repeat of the Hurricane Andrew aftermath, roughly 25,524 homes destroyed and 101,241 damaged (Insurance Information Institute). Gemini:

In major storms like Hurricane Michael (2018) and Hurricane Ian (2022), structural engineers found that homes built to the 2002 code (or later) suffered roughly 80% to 90% less wind damage than their older neighbors.

A report from an insurance institute wasn’t quite as rosy:

IBHS evaluated 3,646 single-family homes, 327 light commercial buildings, and 230 multifamily structures [after Hurricane Ian] using aerial and street-level imagery. … Homes built before 2002 had structural damage levels nearly 2x higher, and 2.3x higher in areas with peak winds above 130 mph.

It looks as though no post-2002 house actually lost the plywood sheathing supporting the roof, but at least some had exposed sheathing and, presumably, water damage as a result. A companion report from the same organization says that asphalt shingles were the weak point, metal roofs were the best (12% damaged), and tile roofs weren’t significantly damaged except those more than 20 years old (“no tile roofs assessed that had greater than 50% roof cover damage” and, confusingly, “the small number of roofs with greater than 25% cover damage … These roofs were all 20 years or older”). Our 2003 house has a one-year-old tile roof with two layers of “peel and stick” underneath. If the tiles are blown off, but the peel-and-stick underlayment survives then we’re looking at a $120,000 insurance claim to put a new tile roof on the house (maybe less if the underlayment isn’t too old and can be retained).

ChatGPT says that 4-6 Cat 4/5 hurricanes hit the Miami-to-Stuart coastline every 100 years. Let’s take this distance as 108 miles. If you assume that the zone of total destruction is 20 miles wide then a typical house gets destroyed roughly every 110 years. If the destruction zone widens to 40 miles, the interval between destruction is 55 years. The most recent major hurricane to hit Palm Beach County was in 1949, 77 years ago, but we could use the 55-year estimate to make the high-net-worth companies look more attractive.

[We’ll ignore tornado risk. A tornado could destroy or seriously damage a house, of course, but it wouldn’t affect an insurer’s solvency because a tornado is local. This is a 1 in 100,000-year event for a typical South Florida house, according to AI.]

As noted above, one quirk of the HNW policies is that they force buyers to pay to insure the full rebuild cost of a house, which for a 2003 house like ours is much more than the house is worth. Imagine if we insured our five-year-old Honda Odyssey for the cost of a brand new Honda Odyssey. Why would we want to do that when what is actually at risk is only about half that number? A neighbor has Chubb and they would pay him over $4 million for the house and contents in the event of a total loss (maybe $5 million if we add “loss of use”). His house has a Zestimate of $1.8 million, has its original roof and non-impact windows, and sits on a lot that should be worth at least $500,000 if the house were razed. The contents of the house aren’t valuable. So he has perhaps $1.5 million that could conceivably be lost under his $4+ million policy. (Note that the neighbor won’t get the high dwelling value unless he actually does rebuild, an irrational choice to make compared to simply moving to a similar house and letting a professional real estate developer deal with the wreck. If the family moves to a $1.8 million house a few blocks away, he gets paid only about $1.3 million (the depreciated value of the structure).

Let’s have a look at a couple of quotes. Below is one from Olympus, a Florida-based company that was founded in 2007, i.e., 19 years ago. Whoever started the company should buy lottery tickets because it was founded right at the beginning the 2006-2015 “no hurricanes making landfall” period. That said, the company has survived the following hurricanes that did make landfall in Florida:

  • Hermine (2016)
  • Irma (2017)
  • Michael (2018)
  • Ian (2022)
  • Idalia (2023)
  • Helene (2024)
  • Milton (2024)

Furthermore, Olympus is unusual in being rated by KBRA, which is significantly more stringent than Demotech. Olympus is rated BBB+ by KBRA (over the minimum BBB accepted by Fannie Mae; it’s ironic that the enterprise that generated the largest insolvency in U.S. history, requiring $150+ billion in tax dollars as a bailout, closely scrutinizes insurance companies). For the handful of companies that are rated by both KBRA and AM Best, the ratings seem to be similar.

Could they survive a repeat of the 1949 hurricane that came right into Jupiter? (the most recent major hurricane to make landfall in Palm Beach County) There doesn’t seem to be any way to find out. An insurance company with 50,000 customers, each of which is on its own square mile within the 53,625-square-mile state of Florida is going to be much less stressed by a hurricane that hits Fort Lauderdale than one whose 50,000 customers are all in Broward County, for example. (Broward County was last hit by a major hurricane in 1947, though Hurricane Wilma, Category 2, did about $4 billion in insured damage in 2005.) The information on risk concentration by company is nowhere to be found. In theory, the reinsurers who agree to do business with the companies are looking at this and maybe the regulators.

It is difficult to have faith in regulation when one hears about Florida-based Slide Insurance. The founder and his wife siphoned off $50 million in compensation out of a total profit of $288 million in 2023-4 (source). Based on this, it seems that an insurance company could pay out all of its profits to employees and shareholders during 15 lucky years without major hurricanes affecting its territory and then fold up its tent after a Hurricane Andrew-type event occurs. ChatGPT: “There’s no strict statutory cap tying executive pay to solvency. … As long as they stay above minimum surplus requirements, they’re compliant. But those minimums may not cover a true tail event (e.g., Andrew-scale).” People with inexpensive-by-Florida-standards houses will still do okay with $500,000 from FIGA, of course, so this is a great example of privatized profits and socialized losses.

What did the high-net-worth companies have to offer?

Notice the PURE quote with a 5% wind exclusion. If our roof were destroyed, but didn’t leak, and we lost 7 or 8 of our impact glass windows they would still pay nothing because the wind deductible would be $195,000. In a “medium bad” event, the Olympus policy at less than one third the cost could easily pay 2X because of the deductible being only 2% of a much lower dwelling value.

Let’s do a spreadsheet model

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How about a school/camp that runs in Florida half the year and New Hampshire the other half?

by philg

It’s beginning to get hot here in South Florida. Rich people without kids generally stay in Florida for 4-6 months per year, 183 days/year if they’re anxious to preserve Florida as their primary residence/tax domicile. If that’s how people with infinite money live we can presume that it is a good way to live, I think (perhaps the Jeffrey Epstein and friends situation is a counterargument to that principle).

Carl G. Fisher created Miami Beach and, for his second act, wanted to build out Montauk on Long Island as the summer home for all of his customers.

What if we adapt Fisher’s idea for families with K-12-age kids? We set up a school that operates mid-October through mid-April (183 days/year or a little more) in Florida and then shuts down for a week while everyone moves up to New Hampshire. The kids can finish their school year up there and then the enterprise segues into summer camp mode, with activities all day every day for the same kids. The family can enjoy the best weather/seasons in the two states. The family won’t have to pay any state income tax (constitutionally barred in Florida so that should remain the state for 183+ days; NH could have an income tax, but presently does not), even if work is done in both places. The kids and adults will have built-in social circles in both places. If a great teacher doesn’t want to move, he or she can stay in Florida year-round and do the beginning and end of the school year virtually while the in-classroom students are organized by someone who is primarily a camp counselor.

The New Hampshire operation would run like a “family camp” in which everyone could meet for meals 3X/day if desired. Florida already has tons of restaurants and recreational facilities, so it would be more of a standard family life during the winter.

The main objection that I can see to this idea is the difficulty of scaling immediately to a sufficient size. A school with fewer than 200 students would presumably be overwhelmed with regulatory compliance costs and classes of fewer than 18 students would likely seem lame. Rich people are drawn to elite schools and it would be tough for an upstart traveling school to compete with The Greene School in West Palm Beach (founded by a billionaire; gifted students only) for quality, actual and perceived.

Also, there’s the question of where in New Hampshire to locate. Portsmouth has a fantastic airport, a beautiful river and ocean access, but it is expensive. Lake Winnipesaukee has a good airport (KLCI) and is in a traditional area for summer camps, but it is more isolated. The border towns with Maskachusetts could work because they provide quick access to Logan Airport for summer vacation trips, etc.

Obviously this wouldn’t work for most of the parents of the 3.4 million-ish school-age children who live in Florida, but why couldn’t it work for the parents of about 200 children?

From Helicopter images of the New Hampshire coast in foliage season:

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Building 6-story apartment houses in single-family neighborhoods in Cambridge

by philg

As part of cleaning out my old Harvard Square condo, I learned that the City of Cambridge has embarked on a plan to increase population density, a rare situation in which the people who advocate for open borders also do something about accommodating the new arrivals and their kids and grandkids.

Starting in 2025, the city began allowing developers to build 6-story apartment buildings/condos in neighborhoods that had formerly been restricted to single-family houses:

There is no requirement that the new apartment buildings be anywhere near public transit or that they make any provision for parking (i.e., competition for street parking spaces is about to hit Olympic Team levels, though maybe the Tesla Robotaxi will ameliorate the issue?).

I talked to a lady who lives in West Cambridge, which has a suburban feel. “A developer bought an 1890 Victorian house and is putting up a 54-unit building,” said said. “It’s 1.2 miles from the nearest T stop. There’s hardly any bus service except at rush hour. There won’t be any off-street parking built as part of this.” How do the Biden-Harris voters in the neighborhood feel about living next to people receiving subsidized housing (20 percent of the units must be “inclusionary”, i.e., rented or sold at below-market rates to the fortunate few)? “They’re fighting the project tooth and nail by claiming that the old house is historic and can’t be demolished.”

I remain mystified as to how those who decry “inequality” can support these programs in which a handful of people are selected to pay nothing or almost nothing for housing while the vast majority of others who are equally situated in terms of income, etc., are doomed to pay market rates (i.e., live 45 minutes away from anywhere that is considered nice).

Most of Cambridge is poorly served by public transit. The subway stations are widely separated. The subway itself doesn’t run fast or go most of the places that people need to go. Bus service is slow and infrequent, though the former “Dudley bus” was renamed in 2020 to “Nubian Station bus” (background). Google AI:

Nubian refers to an indigenous ethnic group and the ancient civilization from the Nile valley region spanning southern Egypt and northern Sudan. It describes people, languages, and cultures originating from this area, which is known for a history dating back to 3100 BC. It is also used informally to describe Black culture, people with dark skin, or specific livestock breeds.

Can anyone think of an example of a portion of an American metro area, population 2 million or larger, that has been built up to an average 6-story height, or higher, that doesn’t have horrific traffic jams? The advocates for higher density seem to assume that everyone in young, healthy, fit, childless, and happy to walk 1.2 miles through slush and/or in 10-degree temps. Or perhaps that the fit young parents will bundle their young children up like Eskimos and load them into $7,000 Dutch cargo bikes that get stolen every six months.

Trying to get to a friend’s house in Brookline from practically on top of the Harvard Square T station at 7:14 pm, i.e., after rush hour:

It was 54 minutes by public transit and add another 15 minutes for a more typical Cambridge location that wasn’t so close to the T. This should be a 15-minute drive, which shows you how much the mobility of people in the Boston area has been reduced by roads being narrowed, more people getting cars, population growth, etc.

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Boston Public Schools demonstrate the value of learning Haitian Creole in elementary school

by philg

Happy Haitian Heritage Month (invented in Boston) for those who celebrate.

It’s been almost 9 years since the Boston Public Schools began teaching a bilingual Haitian Creole-English curriculum at the Mattahunt Elementary School. The official web page says “dual language students have higher test scores and also seem to be happier in school.”

U.S. News ranks the school between 708 and 944 in Maskachusetts, out of a total of 1543 elementary schools:

Mattahunt Elementary School is a public school located in Mattapan, MA, which is in a large city setting. The student population of Mattahunt Elementary School is 512 and the school serves PK-6. At Mattahunt Elementary School, 22% of students scored at or above the proficient level for math, and 22% scored at or above that level for reading. The student-teacher ratio is 10:1, which is the same as that of the district.

It’s interesting that an elementary school can be mid-pack with 22% proficiency (i.e., 78% of students can’t handle grade-level work).

Niche says that the school deserves a C+ because it earned an A- in “Diversity” and that only 19-20% of students can handle grade-level math or English:

A- in Diversity means 2% white:

Recommended listening for today: Samuel Coleridge-Taylor‘s Toussaint L’Ouverture, Op. 46 (1901).

Separately, how is Haiti doing right now, 222 years after the white population was mostly exterminated?

Loosely related… “Double for Nothing? Experimental Evidence on the Impact of an Unconditional Teacher Salary Increase on Student Performance in Indonesia” (NBER 2015):

How does a large unconditional increase in salary affect employee performance in the public sector? We present the first experimental evidence on this question in the context of a unique policy change in Indonesia that led to a permanent doubling of base teacher salaries. Using a large-scale randomized experiment across a representative sample of Indonesian schools that accelerated this doubling of pay for teachers in treatment schools, we find that the doubling of pay significantly improved teacher satisfaction with their income, reduced the incidence of teachers holding outside jobs, and reduced self-reported financial stress. Nevertheless, after two and three years, the doubling in pay led to no improvements in measures of teacher effort, and had no impact whatsoever on student learning outcomes. Thus, contrary to the predictions of various efficiency wage models of employee behavior (including gift-exchange, reciprocity, and reduced shirking), as well as those of a model where effort on pro-social tasks is a normal good with a positive income elasticity, we find that large unconditional increases in salaries of incumbent teachers had no meaningful positive impact on student learning.

ChatGPT: “Individual reported salaries for experienced Boston Public Schools teachers (15+ years) are commonly in the $120k–$130k range.” (keep in mind that a teacher with 15 years of experience would be 37 years old because the job starts after receiving a bachelor’s degree and any additional degrees that boost pay can be obtained via online/afternoon/evening classes)

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Death of Spirit: a low-cost airline without the low costs (government should break up airport monopolies?)

by philg

Spirit is dead. I flew Spirit a few times and especially enjoyed their “Big Front Seat”. One flight out of FLL, I think, was delayed for hours due to a delay of the incoming plane on a perfect-weather day. Why can’t we have competition among airlines as they do in Europe and a wide range of low-cost carriers? First, Spirit was low cost to consumers, but it didn’t have low costs. Labor is the largest cost for an airline and Spirit’s union labor costs were similar to what the biggest airlines pay (ChatGPT):

ChatGPT on total cost for low-cost Ryanair vs. originally-low-cost JetBlue:

ChatGPT claims, incredibly, that Europe has more secondary airports:

I don’t think that this is correct, since the U.S. has tons of general aviation airports with long runways. Maybe the answer is that U.S. airports are monopolized, e.g., Massport owns both Logan Airport and Hanscom Field, the most obvious competitor for airline service to Boston. Massport isn’t going to undercut its own fees. A single port authority in NY/NJ owns LGA, JFK, EWR (Newark), TEB (the Teterboro airport for the Gulfstream crowd), and SWF (Stewart, too far from NYC unless a high-speed rail were built). There is more competition in Greater Los Angeles and the air carrier airports are owned by different agencies (LAX, LGB, BUR, SNA, and ONT are owned by their respective cities/counties).

Grok:

[in Europe] Many airports are privatized or compete aggressively for traffic, offering incentives to new carriers. US major airports have higher fees, complex slot controls (often grandfathered to legacies), and fewer viable low-cost alternatives near population centers. This raises barriers for new entrants or ultra-low-cost models

All publicly owned U.S. airports are paid for with federal tax dollars, e.g., from taxes on airline tickets, taxes on charters, and taxes on general aviation fuel (the one time that billionaires pay tax, according to Elizabeth Warren?). The Feds can’t seem to break up the airline oligopoly using antitrust laws and, in fact, may have contributed to our high-fare immiseration by blocking a JetBlue-Spirit merger (NYT: “JetBlue Airways and Spirit Airlines announced on Monday that they would not seek to overturn a court ruling that blocked their planned $3.8 billion merger. The decision is a big win for the Biden administration, which has sough to limit corporate consolidation.”; for the record, my first thought regarding the merger was that it shouldn’t be allowed because U.S. airlines were already far too concentrated). Maybe a good starting point would be to break up airport ownership. The five above-mentioned NY/NJ airports would have to be owned by separate competing government entities. Massport couldn’t own both Logan and Hanscom. Palm Beach County couldn’t own PBI/DJT and North County (F45; approved for a runway extension in 2024, but because the U.S. is incapable of working at Chinese speeds, construction isn’t even dreamed of before 2027). Miami-Dade County couldn’t own five airports (“Why do I own five airports? Because I couldn’t afford six.”).

Maybe robot 50-seater airliners would disrupt the market and enable some new carriers to thrive between city pairs in which a secondary airport isn’t owned by the same public agency that owns the main airport. But until “Big Airport” monopolies are broken up, it seems as though incumbent carriers could block most competition merely via a cozy relationship with each of the big airport authorities.

Meanwhile, let’s see how idiotic my investing advice has been. Back in 2010 I wrote “Unions and Airlines”, in which the take-away for investors is not to buy airline stocks because the unions will harvest any additional profits rather than the benefits flowing to investors.

Grok:

Airline stocks have significantly underperformed the S&P 500 since 2010 (roughly early 2010 through early May 2026, or ~16+ years). The S&P 500 (tracked via SPY total return, including dividends) delivered approximately +536% cumulative return, or roughly 12.0% annualized CAGR. In contrast, a broad airline index like the NYSE Arca Global Airline Index (^XAL) rose only about 70% on a price basis (from ~35.7 to ~60.5), equating to roughly 3.3% annualized price-only CAGR—and even adding typical dividends, the sector lagged dramatically behind the S&P 500’s total return (which compounded to roughly 7.8x your money). … Over a more recent ~10-year window (roughly 2015–2025), most major airline stocks delivered minimal gains or outright losses, while the broader market soared.

ChatGPT:

Since 2010, airline stocks have generally underperformed the S&P 500, despite some spectacular rebounds in individual years. … A cleaner “airlines as a sector” benchmark is JETS, the U.S. Global Jets ETF, but it only started in April 2015, so it cannot measure the full 2010 period. Its sponsor reports a 10-year annualized market-value return of only about 0.25% and a since-inception annualized return of about 0.38% as of March 31, 2026. That is dramatically worse than the S&P 500 over the same broad period. … If you cherry-picked Delta or United in 2010, you did pretty well, but still roughly trailed the S&P 500. If you bought airlines broadly, or bought Southwest, American, JetBlue, or JETS, you massively underperformed.

The investment story is consistent with the industry economics: airlines can have good earnings cycles, but shareholders have repeatedly been hit by fuel spikes, recessions, labor cost resets, aircraft shortages, fare wars, bankruptcies, pandemic shocks, and the need to constantly reinvest capital. As businesses, airlines can be necessary and sometimes profitable; as long-term compounders, they have mostly been inferior to owning the broad U.S. equity market.

Note “labor cost resets”!

Let’s close with a shout-out to Spirit for apparently having no serious accidents during its decades of operation, though one pilot may have died from toxic fumes, a known vulnerability with the Airbus. According to Wokipedia:

November 11, 2024 – Spirit Airlines Flight 951, an Airbus A320neo (registered as N966NK), was hit by multiple bullets on final approach into Port-au-Prince, Haiti after a flight from Fort Lauderdale, Florida. A flight attendant was grazed by a bullet and the flight diverted to Santiago de los Caballeros, Dominican Republic.

(This reminds us that (1) Haiti is a wonderful place and that only racism can explain Donald Trump’s negative attitude toward the nation, and (2) no migrant from Haiti can be sent back to Haiti due to the extreme risk of being killed.)

The last ACARS message:

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Wall Street Journal: Americans can’t afford to live in America because house maintenance costs too much

by philg

Happy National Home Improvement Month for readers who, like me, have been dumb enough to buy rather than rent. Also, Happy National DIY Day.

Previously, on this blog:

This month in the Wall Street Journal, “The Typical U.S. Home Is 44 Years Old—And Needs Tons of Work”:

More recent new construction hasn’t replaced America’s graying housing stock, meaning the age of the median home is a record 44 years, according to the Harvard Joint Center for Housing Studies.

The cost of home maintenance, even after accounting for broader inflation, has jumped. Structural repair costs grew by about 14.1% in real terms between 2022 and 2024, according to the Federal Reserve Bank of Philadelphia. Plumbing jumped by 23.6%. The increase reflects the rising cost of individual parts and labor, and the larger size of necessary repairs.

This is on top of the rising costs of home insurance, property taxes and homeowners association dues, which are making it prohibitive for many to simply own a home, not to mention buy one.

The newspaper says “it [is] prohibitive for many to simply own a home, not to mention buy one” and at the same time tells us that the U.S. should have increased immigration, i.e., more demand for a relatively fixed supply of houses.

Our shabby/old house by Palm Beach County standards is 23 years old and that puts us in the top 25 percent of home youth:

Getting close to my 4% number:

Financial advisers traditionally suggested setting aside 1% of a home’s value annually for upkeep, but many now argue that isn’t enough. While 1% may cover routine upkeep, 2% to 3% provides a more realistic cushion for expected maintenance, home-improvement projects and unexpected repairs, particularly for older homes, said Angie Hicks, co-founder of home-services company Angi.

The Americans who were most eager to lock themselves into their homes during coronapanic will now bear a heavy burden:

Forty-nine percent of all improvement spending is now for necessary replacements like HVAC that owners can’t delay, said Rachel Drew, director of Harvard’s Remodeling Futures Program. The financial burden is particularly heavy in regions like the Northeast, where homes tend to be older.

Speaking of old, the article highlights the inability of folks in the Northeast to adapt to changed circumstances:

Mindy and Joseph Mevorah own an 88-year-old colonial [“more than 3,500-square-foot”] in Sands Point, a New York City suburb with plenty of old homes that is often considered an inspiration for “The Great Gatsby.” The house is due for a new coat of paint, a task they know to approach with caution. … “A new brick next to an old brick would look terrible,” said Joseph, 66. … The Mevorahs have stayed in their home for 29 years … They have a pool that could be a draw for future grandchildren. … When replacing their copper gutters a few years ago, they considered switching to aluminum, which would have been cheaper, but ultimately stuck with copper to preserve the home’s integrity. After all, they expect to be there for many years to come.

A 66-year-old in Florida whose kids were grown wouldn’t stay in a 3,500-square-foot wreck of a house. The Floridian would recognize that different kinds of real estate are suitable for different phases of life and likely move to a condo or small new house.

Circling back to the immigration theme… how can end-of-career financially comfortable Americans who struggle to afford house maintenance imagine that the U.S. can afford to house tens of millions of additional welfare-dependent low-skill immigrants?

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Asian hate in Kansas

by philg

Happy Asian American and Pacific Islander Heritage Month to those who celebrate…

“Over 100,000 Pounds of Invasive Fish Pulled from One River to Help Restore Native Ecosystem” (Journal of Popular Studies, January 27, 2026)

Kansas wildlife officials have removed more than 100,000 pounds of invasive Asian carp from the Kansas River over the past four years … They are known for growing quickly, consuming massive amounts of food and crowding out native species that rely on the same resources.

#Science: Immigrant animals make us worse off by “growing quickly, consuming massive amounts of food and crowding out native species that rely on the same resources” while immigrant humans make us better off (don’t breed, consume food, or crowd out natives from resources such as health care).

Sad to say, but it seems that the haters in Kansas hate Asians almost as much as the Harvard admissions office (deemed racists by the U.S. Supreme Court, a rare distinction!).

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Brown University, Class of 2031 Tour

by philg

In which the father of a high school junior in the Boston suburbs visits Brown University. His posts from our group chat:

  • Brown tour. A few prospective students wearing masks. Not Asian.
  • A few students who are cosplaying as lesbian.
  • A few girls with Muslim hijabs.
  • It looks like the bridge of Star Trek.

He shared a photo of the acceptance rate by gender ID (not clear if this is discrimination unless we also know the SAT scores):

They’re shown the essay prompt that enables applicants to tell the admissions Mandarins their race:

Somehow they ended up in a chapel and there was a copy of African American Heritage Hymnal for each person.

  • Almost no males here. It’s all short lesbians.
  • Plus some East Asians and Indian
  • Trans
  • Student tour guide is articulate and bright and clean and a nice-looking guy according to Joe Biden.
  • didn’t show us inside dorms. Didn’t show us any dining areas. Didn’t show us any classrooms, labs, or facilities. Didn’t show any sports or workout areas.
  • Three of the students giving the tours said one of their deciding factors was that Brown gave them free tuition.

The tourists were subjected to a Land Acknowledgement from a greedy nonprofit that refuses to give the land back and pay rent:

My friend and his child decided not to take the Slavery and Legacy Walking Tour.

He had been wondering “What research are seniors doing related to menstruation?” Answered:

A poster from @brownriseup:

A still frame from one of his videos:

Happy End of College Admissions Month to those who celebrate!

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Genius doctors who actually do get paid 20X the fair price for procedures

by philg

Loyal readers may recall my previous posts on the subject of how health care providers in the U.S. are able to bill 10-15X the fair price to patients, accept the fair price from insurers, and chase after the uninsured for the absurd price. The latest: $1559 of lab work for $103. See also Recent health care scams.

The New York Times took a rare break from its “Bad Things about Donald Trump” coverage to write about some doctors who manage to collect at absurd multiples of the fair price, but from the insurance companies. “A $440,000 Breast Reduction: How Doctors Cashed In on a Consumer Protection Law” (NYT, April 22, 2026):

Dr. Norman Rowe, a plastic surgeon with offices in New York and Florida, advertises on his website that breast reduction surgery usually costs between $15,000 and $25,000.

But these days, his practice sometimes earns $440,000 for the procedure.

Dr. Rowe has taken full advantage of a new arbitration system, part of a major consumer protection law Congress passed in 2020 with bipartisan majorities. The No Surprises Act was designed to eliminate surprise medical bills, for patients who showed up in the emergency room and were treated by a doctor who didn’t take their insurance.

It bars those out-of-network doctors from billing patients directly. Instead, they can plead their case to a government-approved arbitrator. If they win, the patient’s insurer has to pay their desired amount.

By all accounts, the law is successfully protecting patients against bills from doctors they never chose. But it has also generated an expensive unanticipated consequence: Doctors have flooded the arbitration system with millions of claims. Most are winning, often collecting fees hundreds of times higher than what they could negotiate with insurers directly or what they could have earned from patients before the law passed.

When the law passed, government officials estimated that about 17,000 cases would go to arbitration a year. Instead, doctors brought 1.2 million such cases in the first half of last year, and won around 88 percent of them.

The arbitrators are doing well too. The fees they earn for deciding cases, which range from $425 to $1,150 per case, have added up. They earned $885 million from 2022 to 2024.

The chart shows that doctors get smarter every year:

How does it function in practice?

In arbitration, doctors and insurers each propose a price for the care, along with arguments for why it is appropriate. An arbitrator must pick one of the two numbers, and there is no opportunity to appeal the decision.

A neurosurgery practice outside of Philadelphia went to arbitration after the health plan Highmark offered its standard payment of $2,660 for a diagnostic procedure to measure blood flow to the brain. An arbitrator awarded it $333,000 instead.

(Let’s say that the “diagnostic procedure” is done with an MRI machine, which I think is the most expensive machine used in medicine. So the single procedure, which takes less than one hour, paid 100% of the cost of a refurbished machine or about one third of the cost of a new machine.)

Some practices are using the law to obtain high payments for routine medical care, including gynecologists who have won fees 600 times higher than usual rates for placing intrauterine contraceptive devices, or I.U.D.s.

Health policy experts have been surprised to see such lopsided results that favor doctors. Some argue that because the arbitrators are paid per case, they may have an incentive to render decisions that keep doctors coming back.

Just like Family Court! Divorce litigation that keeps everyone busy and highly paid is rare in jurisdictions where divorce litigation isn’t lucrative.

The first doctor profiled seems to have a lot of fun:

Dr. Rowe has practiced for decades on New York City’s Park Avenue and in New Jersey. Last winter, he opened an office in Palm Beach, a few miles from President Trump’s Mar-a-Lago resort. Just before the inauguration, he told The New York Post the office had been overrun with clients who wanted to look good when they “have face time with the leader of the free world.”

Dr. Rowe did not respond to multiple requests for comment from The Times.

On social media, he flaunts a lavish lifestyle. An Instagram post in February detailing his 60th birthday party featured a performance from the rapper 50 Cent and a custom-cake recreation of his 1950s vintage Porsche.

Sometimes the best paperwork is no paperwork:

Before the No Surprises Act, Dr. Rowe’s practice was out of network with EmblemHealth, but he accepted fees $30,000 or lower for hundreds of breast reduction surgeries, the lawsuit claims.

In 2024, the lawsuit says, he started routinely performing surgeries on EmblemHealth patients in hospitals that accepted the insurer’s in-network payments, though he still did not.

Under the No Surprises Act, doctors in such situations can provide patients with a waiver that warns of additional costs. If patients sign that form, the doctor has permission to bill them directly.

Dr. Rowe does not hand out that waiver. That allows him to take his payment disputes to arbitration.

He and his practice have filed more than 6,000 arbitration claims, according to an analysis of public filings from the Georgetown University Center on Health Insurance Reforms. He has won more than 85 percent of his cases.

What do our esteemed politicians have to say about this massive siphoning of GDP?

“My focus is on ensuring everyone can get the care they need without worrying about the cost,” said Patty Murray, Democrat of Washington, who helped craft the bill.

What’s incredible to me is that the U.S. economy survives our health care system!

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How were race-based congressional districts supposed to work in our open-borders age?

by philg

The Supreme Court recently ruled against a race-based congressional district in Louisiana. It was developed under the Voting Rights Act of 1965 (VRA) in order to give Black voters a chance to elect a candidate of their choice. 1965 was the same year that we opened our borders via Hart-Celler. I’m curious to know how the laws were ever supposed to work together. It seems that the VRA envisioned a majority-minority split between just two groups: white and Black. After Hart-Celler, though, a state could easily have the following:

  • a white minority (under 50%)
  • an Asian-American minority (we’re informed that all varieties of Asians, including Indians and Samoans, can be lumped together under AANHPI, Asian American and Native Hawaiians/Pacific Islander) that wants to elect a fellow Asian-American, such as the noble Ted Lieu (proof that not everyone from Taiwan believes in a government that spends only 18% of GDP, including state/local)
  • a Black minority that wants to elect someone like Kamala Harris
  • a Hispanic minority that wants to elect someone Hispanic
  • an Arab minority that wants to elect a fellow Muslim Arab (BBC: “This month, the Midwestern city of 28,000 has reached a milestone. Hamtramck has elected an all-Muslim City Council and a Muslim mayor, becoming the first in the US to have a Muslim-American government. Once faced with discrimination, Muslim residents have become integral to this multicultural city, and now make up more than half its population.”)

If the VRA isn’t specifically limited to one racial group, which it doesn’t seem to be, who decides which of the above minorities will get its own district and which will see its votes diluted and its dreams denied?

Loosely related, in the Department of Diversity is Our Strength:

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