For Richer & Poorer

September goes out with a rock-‘em sock-‘em week. The numbers below tell most of the story. I spent more money on inventory this month than in any previous (non-Christmas) month. None of my new merchandise is doing much yet, but that’s to be expected. It takes time for the Internet to absorb a new product page.

Panther Vision forced my hand by rolling out a third-generation cap, available (so far) only in black. I combined a case of those with a reorder of other colors in the “old” style. A couple of days later Panther unexpectedly landed a container of Power Caps in several more colors, rendering most of my $1,000 reorder obsolete before it even arrived. By way of apology, Panther let me place a small order for the new-style caps at their big-order price, but it still put the kibosh on my new-product acquisition plans for now. I have paused to catch my breath.

Are you here to read more of my health insurance soap opera? Well, I fiddled with it a little bit. The first step in determining whether we can get state subsidies is figuring out our annual income, which is bloody hard to do. Anne was employed for a month. There was a check for unused vacation time. Then she got unemployment checks, but not every week; she had to skip checks in weeks that she reported freelance income. I have kept track of the estimated taxes due on her freelance income, but not the income itself, so I had to guess at that for Q1 and Q2. Did I remember to include her parttime teaching salary? Half of my Kraken Enterprises salary won’t be earned until Q4, so I have to guess at that, too. Whatever profit Kraken reports at the end of the year also counts as personal income. The number that I finally came up with for our combined gross income is only accurate to within 15- 20%. We should earn about half of what we made last year.

The “good news” is that we might be in the sweet spot…poor enough to qualify for subsidies, but not so poor as to actually be, you know, poor. I might have time to explore Commonwealth Care later today…or it might slip into next week.

Last Tuesday I came into a little money from an auto insurance refund. I deposited that check on Wednesday, intending to apply it toward debt. On Thursday a collection agency dunned me for a medical bill that I never intended to pay (some faceless clinic doctor that I’ll probably never encounter again)...but since the bill was almost exactly the same amount as my windfall, I figured I might as well buy peace. This morning I wrote the check and sealed the envelope, relieved to be fully paid up at last. An hour later the mailman brought us another medical bill. The hospital charged Blue Cross Blue Shield $617 for an X-ray. The hospital settled for the $270.85 that BCBS allowed for the procedure. As it happens, our deductible reset on Sept. 1. With the copay, we are responsible for $270. BCBS paid the remaining 85 cents.

For this coverage, we pay $925 a month. What’s really funny is that they really should not have even covered the 85 cents. Our deductible doubled this month.

So now I have another unpayable medical bill on my desk, twice as large as the last one. Oh well, it won’t go to collection for at least a few months.

Enough of this depressing health care crap. Here are the rosy September numbers:

Total income: +72.5%
Total COGS: +42.2%
Payroll: +108.3%
Net Income (Profit): +1,076.9%

Year-to-date:

Total income: +18.6%
Total COGS: +15.5%
Payroll: +25.0%
Net Income (Profit): -36.7%

I'm still far below my ultimate goal of earning minimum wage, but do you know anyone else who’s making 25% more than LY?

Less Coverage, Bigger Bills

After I posted last week’s health insurance essay I told Firefox to stop blocking ads on this page, just so that I could see what Google’s serving up. As I suspected, all the ads are for health insurance now. Well, what the heck? I get a few cents whenever somebody clicks one (hint, hint). Clicking ads on your own site is considered click fraud (as is imploring readers to click them, hint hint), but I’m legitimately interested in the products. I even filled out some forms and got a couple of phone calls. I’m still avoiding doing real legwork, though. Neither Anne nor I wants to go through the hassle of changing insurers, and we’re still hoping that she might get a job offer any day now. And so I procrastinated for another week.

We downgraded our COBRA policy to offset the recent rate increase (the monthly payment rose by $96, the deductible doubled, and the copays increased by 50%). Instead of a 90/70 plan with a $500 deductible, we now have an 80/60 plan with a $750 deductible for $150 per month less. I don’t understand what those numbers mean, but since we can’t afford to use our insurance anyway it hardly matters.

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My HP Deskjet 6980 crapped out on me after four years of daily service. Printing suddenly slowed to a crawl and the clarity degraded. Hours of troubleshooting failed to shoot the trouble. In our throwaway society it’s cheaper and easier to replace it than to repair it…and it always had some annoying quirks (WiFi was very difficult to set up, and it balked at using third-party cartridges). So I bought a wireless HP Officejet 6000 for $90, delivered. It’s supposed to be a simple, reliable, and above all economical printer. It will be at least the fourth HP inkjet that I’ve owned. That’s $90 that I’d like to have spent on something more productive, of course, but…what can you do?

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Hey, I’ve got two Facebook fans that I don’t know. Actual fans! I wish I could afford to spend more time figuring out how to pimp my Facebook page. I’ve given up on Twitter. I simply don’t see any point to it.

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Sales have been very good for the past couple of weeks. Three institutional sales (all via telephone and one of them quite huge) have already put September ahead of plan and way over LY – with over a week left to go! Today I finally earned a big enough paycheck to dig out of the personal financial hole that summer vacation dug for me.

Oh, and one other thing: Citizens Bank approved my Mastercard application, so I should soon have my customary credit line restored. After all the years that banks showered applications upon nonexistent household members, who would have guessed that getting a credit card would ever become difficult?

OK: Next week I shall grapple with the health insurance bugbear. I’ve been ordering new merchandise like crazy, but I'm finally scraping the bottom of the budget and I sure don't want to start that new Mastercard off with a balance.

We're Going to Need a Bigger Band-Aid

The dire health insurance situation that I outlined last week just got direr. The already-stratospheric price of our COBRA coverage has attained orbit – it’s going up by $96 a month, retroactive to Sept. 1. Our deductible is doubling, from $250 to $500 per person. Generic drugs are going from $10 to $15. Name-brand drugs were already out of reach, so that price hike doesn’t affect us -- we simply can’t fill prescriptions that don’t have generic versions.

If worse comes to worst and I can’t find something better than our COBRA Blue Cross/Blue Shield insurance, I can step down to a lower-quality BCBS policy that carries a $750 deductible and pays a lower percentage of medical charges, but costs $150 per month less. Since we can’t actually afford to get health care under either plan, we might as well go with the cheaper monthly payment. ("Cheaper" being a decidedly relative term).

Naturally, this gets dumped on me just as I’m ramping up for Christmas. I’ve already placed $1400 worth of orders so far this month, two of them with new vendors (take a look at Funkeyboards. Nifty, huh?). I've got a few hundred dollars left that I need to deploy quickly and intelligently. These things take time and at least a little brainpower -- I'm not filing TPS reports here. Last week’s sales were the strongest since last March. Although this week's business fell off again, I’m too fracking busy for this idiotic distraction. Seriously, who wants to shop for health insurance?

Well. It’s not like I have a choice. My wife just came back from CVS shell-shocked by the 50% increase in her prescription copays -- the crisis is happening now. I need to explore Commonwealth Care and find out what’s available through the Massachusetts Business Council or Small Business Association or some other similarly-named organization. I'm sure that Kraken Enterprises would have to pay a membership fee to access those.

In case last week’s post gave you the impression that I’m anti-capitalist, let me say clearly that I appreciate the power of the market economy. Letting individuals pursue their own best interest is the most powerful social force there is to maximize wealth and happiness. When the aggregate of self-interest contradicts our collective interest, though, government has a duty to step in. Sometimes that just means nudging the market with tweaks to the tax code. Sometimes it means setting firm rules through legislation. When the market fails to deliver a vital service at all, or bungles it badly enough, government must fill the gap directly. Who else can?

Our medical payment system breakdown is waaaaay beyond tax tweaks. Congress's will to impose new rules on the existing market system appears to be weakening by the day (unless Obama’s speech this week revives it). So I had to conclude that the for-profit health insurance system should be replaced with a nonprofit payment mechanism. I don’t care whether that’s directly government-run or administered through government-chartered private coops. I am not an ideologue. I only care about what works. Show me a for-profit medical payment system – anywhere in the world -- that works better than a nonprofit monopoly, and I’ll reconsider.

Maybe Congress will buy us some time by extending the COBRA subsidy for another nine months, but I don’t think that that’s even on the table right now. We can't hope for a last-minute saving throw. Unfortunately, this saga will continue in future posts.

Just Put a Band-Aid On It

As an economic flyspeck, Curio City doesn’t give me any special insights into the effects of health care reform on small businesses. So I’m coming at this from the personal, demand side.

Some people assume that I’m conservative because I’m a small business owner, so let’s get this straight up front: I’m not much of a capitalist. I’ve never been a money-driven person. In my youth I was a hippie communist (in principle, at least; in reality I enjoyed the fruits of middle-class materialism). My politics have ranged widely since then, but I’ve consistently been socially liberal and financially conservative.

When my wife lost her job in February and we had to start buying health insurance out of pocket, I drifted back toward liberalism (without the embarrassing youthful naiveté this time). To do otherwise would be hypocritical. Praise Obama that the federal government is subsidizing our COBRA coverage, and praise Kennedy that COBRA exists at all. Without those two social programs I’d have had to fold Kraken Enterprises months ago to beg for some degrading minimum wage job. And I'd probably not even have found one.

COBRA lets you keep your previous coverage at the employer’s group rate for 18 months after the layoff. Although it’s less expensive than equivalent coverage would be for individuals, the price is still ruinous. Imagine getting a new bill that’s more than your monthly mortgage payment, at a time when you’re scraping by on unemployment checks, self-employment income, and a pittance from your moribund home business.

The federal government has been paying 65% of our COBRA bill since March. Anne’s cheap-ass former employer only ever subsidized 50% of the price, so we actually pay less for insurance now than we did while she was employed. This subsidy has kept our household budget liquid so far this year.

The COBRA subsidy expires in November. I haven’t heard a peep about extending it. We will face a major budget crisis if Anne’s still unemployed when those federal dollars run out. (After being out of the mainstream workforce for five years, and with no education to speak of, and with the job market dead, I’m unemployable).

The obvious remedy is to join the ever-growing legions of the uninsured. But Massachusetts state law requires us to carry health insurance (federal reform will duplicate this mandate). Even if we choose to pay the penalty instead of insurance bills, letting your coverage lapse for more than three months gives future insurers the right to require a physical exam and exclude pre-existing conditions. By age 52 virtually everything that can befall a body is a pre-existing condition, so going uninsured would effectively make us uninsurable in the future. (Federal reform would forbid insurers from excluding the sick and the old).

We need subsidized, group-rate insurance – without an employer -- in a system that’s based upon employment. None of Anne’s professional associations provide insurance in our state, nor does the AARP (yes, we’re card-carrying fogies). Sure, Kraken Enterprises is technically an employer…but the insurance moguls don’t offer a one-man, chump-change corporation the same deals that the big players get. (Federal reform would enable small businesses to band together for leverage).

Fortunately, Massachusetts has a “public option” of the sort that makes conservatives froth at the mouth. It works like this: Commonwealth Care negotiates group rates with private insurers who offer a range of health plans. The state subsidizes premiums for those of us whose income is low enough. Thanks to our state’s health insurance reform, we will not be left twisting in the wind. The “public option” is insurance of last resort. It keeps us legally insured without going bankrupt (while providing only the most rudimentary coverage, of course). I’ll need to look into the details of Commonwealth Care if Anne’s still unemployed late this month. If it comes to that, I’ll post a follow-up. Here’s a Boston Globe article summing up the results of our three-year-old reforms if you’d like to know more.

High co-pays and deductibles make it too expensive for us to actually use our pricey COBRA insurance plan. We already have a pile of medical bills worth thousands of dollars, all of them due to billing errors. Anne has spent hours making phone calls and writing letters to set things right. And yet, the same providers that screwed up their billing are now turning us over for collection. This would not happen anywhere else in the civilized world.

Only government can fix an overpriced system that rations rudimentary care at badly inflated prices, and then screws up the accounting. The status quo is clearly unacceptable. Everyone should be able to agree on that much. Don’t feel too smug about your affordable job-based health plan. One serious illness or defective child could ruin you. Medical bills cause the majority of personal bankruptcies.

I haven’t read the Byzantine bill currently being shaped by Congress. I wouldn’t understand most of it if I tried. But from what little I do understand, it merely tinkers around the edges of our capitalist system without addressing its inherent flaws…and it gets more watered-down every time Obama tries to compromise. Congress is too timid to enact the real reforms that we need and the president is too conciliatory.

First: Health insurance must be separated from employment. We could eke out survival on our self-employment income if health insurance didn’t compel one of us to hold a conventional job. Nobody should be trapped in a job just because of health insurance. And, as an employer, why should I be in the insurance business at all?

Second: Health insurance should not be a for-profit industry. The profit imperative conflicts with granting payouts and the marketplace can’t work when consumers don’t see the prices, don’t pay them directly, and lack the knowledge needed to comparison shop. Health care is a service that everybody needs and nobody can afford, and therefore the payment mechanism should be a public utility with a bias toward payment, not denial. Let’s get capitalism out of the health insurance sector entirely.

OH NOZ!!! Socialism!!!! Yup. So what? Capitalism has failed an estimated 50 million Americans. Can government really do worse? The success and popularity of Medicare suggest that government is not as incompetent and inefficient as the capitalists want you to believe.

But Congress is not addressing either of these core flaws. Is their tepid tinkering better than doing nothing? Not if token reform props up the old wobbly system and kills the momentum for revolutionary reform. Maybe it’s better to let the whole system fail catastrophically.