The Health Care Mess Gets Murkier

Did you cheer or jeer when President Obama and his fractious band of Democrats overcame strident opposition to define medical care as a right for all Americans?

Since I’ve written before about our personal struggle to afford medical insurance (read my posts tagged “health insurance” from oldest to newest if you’re interested in our ordeal), Curious Business will tackle the same topic as every other blog in the US this week. “Obamacare” – a first step toward bringing the US health care system up to par with the rest of the civilized world -- is a weaker version of the “Romneycare” reforms that Massachusetts implemented four years ago. (That’s right: This Socialist apocalypse was born as a Republican plan.) Being a Massachusetts business gives me a perspective that you won’t find from shriller commentators.

That’s my angle, anyway.

The background: Our self-employment income plus unemployment benefits exceed 3x the federal poverty level, so we don't qualify for individual insurance subsidies through the Commonwealth Connector. Kraken Enterprises can't afford to subsidize me as an employee, so the small business rates are unattainable. The state says that (because we’re below 4x the poverty line) we’re too poor to afford any of the plans offered through the Connector. Our prize for falling into that gray zone was a get-out-of-insurance free card: They won’t fine us if we choose to go uninsured. Obamacare will provide subsidies up to 4x the poverty line, so we would qualify for help under federal reform. Unfortunately, that part of the bill doesn’t kick in until 2014 and we've only got four months to solve this.

Anne and I rely upon COBRA, the 65% federal COBRA subsidy, and the state’s Medical Security Program (MSP).

• COBRA is the federal law that lets us keep our Blue Cross/Blue Shield plan from Anne’s previous job at the employer’s group rate.

• The federal government has subsidized 65% of our COBRA premiums, off and on, since shortly after Anne was laid off. That’s kept us solvent this whole time. But because Congress only extends the subsidy for a few months at a time and Republicans constantly threaten to interrupt it, it's a chronic source of anxiety.

• MSP theoretically reimburses us 80% of our remaining insurance payment. We were accepted into the program last October, yet we are still waiting for our first check. Every time we mail some new paperwork into the bureaucracy, they set the processing clock back by eight weeks, then eventually ask for more new paperwork. The MSP is a poster child for bad government. But since the real help comes from the on-again, off-again COBRA subsidy, the MSP is a financial footnote. And because it predates our universal coverage law, it's an orphaned program anyway. Before the economy collapsed it only served 4,000 people. Now it tries to serve more than 40,000 with the same resources.
  

If Anne doesn’t find a job first, our status quo should keep lurching along until COBRA expires in August. At that time we will lose both the federal COBRA subsidy and her former employer’s subsidized rate, and we’ll have to pay the full retail price of our marginal Blue Cross/Blue Shield plan. Our monthly premium will rise from $270 to something over $1,000.

The new law won't rescue us, so we’ll go back to the Mass. Connector again. We can enroll in a state-sanctioned insurance plan for around $800 a month, and if we're below 3x poverty by then we'll draw at least a small subsidy. Theoretically, MSP will continue to reimburse 80% of our premiums, but I’m obviously not counting on that.

Where’s the small business angle that I promised? Massachusetts offers “Business Express”, a new group health insurance plan for small employers provided through the Health Connector. Right now, Kraken Enterprises can't afford to subsidize my health insurance, so it wouldn't work out even with federal subsidies. And Business Express was launched just weeks before federal reform changed all of the ground rules.

Leaving aside state programs, let's look to the feds again. From 2010-2013, they will provide a tax credit for 35% of its contribution if Kraken Enterprises pays at least 50% of our health insurance premium. In 2014, that subsidy goes up to 50%. Sounds great! How exactly would it work? S Corporations don’t pay income tax; they distribute their profits to the stockholders who owe the taxes. Does the tax credit get passed through to stockholders as well? Or does it reduce payroll taxes rather than income tax? One source that I read mentioned that the tax credit is only good for two years; is that really so? I need answers.

Bottom line: Four years from now, Kraken’s cash flow might enable my company to offer me health insurance through the state's Connector. The Obamacare tax credit would certainly tip the balance in favor of doing that. For now, it’s cast some doubt upon existing state programs that I understood imperfectly in the first place.

I can’t speak to its effect on big corporations. But Obamacare looks like a winner for small businesses. Eventually. Potentially.

Final footnore: If this is the greatest social advance since Medicare, don’t you think it deserves a snappier name than “health care reform” or “Obamacare”?

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In the end I decided to blow off the Cavalcade of Crap this year. The cellar flood drowned my open to buy budget, my ankle was still swollen and tender a week after I sprained it, and the weather was raw. Crapfest just plain wasn’t worth the effort. I feel mildly guilty, but I’ll get over it.

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My second chargeback was reversed and another $149.43 was restored to my checking account. Hooray! That blunts the flood expenses a little. I’m not entirely confident that the bank won’t snatch that money back again; I keep getting emails saying that my chargeback status has been updated. The online status report tells me nothing. I approach each morning’s bank deposit report warily.

When the plumbers installing our new water heater wanted to point out some work detail to me, I switched on my lighted cap to have a better look. That had exactly the effect that I intended: They wanted to know where they could get one. I traded them five caps for knocking $100 off the installation. Writing those caps off instead of selling them is an accounting no-no, but Kraken Enterprises certainly benefits from having hot water and should justifiably contribute toward that home repair.

Drowning In a Cavalcade of Crap

A Nor’easter that churned off the New England coast for three days dumped 10 inches of wind-driven rain on Boston. By Monday afternoon Curio City’s warehouse was flooded to a depth of 4” and rising. The water crested at about 5” before we found someone to pump it out (no way I could do it with the shop vac this time!). It’s being called a 50-year flood. I hope that’s true. Some say that 50-year floods will come every 10-15 years as the oceans rise and storms grow more energetic.

Our cellar – a dark, unfinished space with no floor drain or sink – has gotten wet before. Once, the washing machine hose cracked. Once, the water heater ruptured. Once, heavy spring rains opened a hole in our fieldstone foundation. Periodically, our 20-year-old washing machine vomits up a load of soapy water. Our forced-water heating system used to trickle a few gallons onto the floor at random times.

This soggy history had already moved me to raise most of Curio City’s merchandise at least a couple of inches off the floor. Bird kites in their long shipping tubes were the only thing that I couldn’t put up. I wrote off $150 worth outright and marked 37 more down to cost (these are a major bargain, folks). I didn’t have enough room to elevate my shipping cartons and packing material, either, so the recycling truck swallowed several hundred dollars worth of cardboard cartons this morning. There are more odds and ends to find and liquidate (hah!). This will be another big blow to this year’s bottom line.

To add injury to insult, I lost my footing while wearing oversized yellow rubber boots and tumbled down the concrete bulkhead steps with an armload of soaked cardboard. My ankle buckled with an audible crunch and I smacked my head on the bulkhead frame on the way down. Five days later I am still limping, and I still have a headache.

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The dread Cavalcade of Crap (a.k.a. Boston Gift Show) returns next week. This year they moved the usual Saturday opening to Sunday. My weekly beer run is my only routine Saturday obligation, so attending the Cavalcade of Crap just required going to the packy on Friday instead. Sunday, OTOH, is the most intense day of my week: Grocery Day. It takes hours to clip and file coupons, plan the week’s menu, make the shopping list, return bottles, do the marketing, put the groceries away, make dinner, and clean up afterwards. I also process Curio City’s weekend orders on Sunday afternoons. The Cavalcade (hereafter shortened to Crapfest) is not worth the serious business of disrupting Grocery Day.

Crapfest doesn’t shower swag on early birds, so there’s no reason to be there on Sunday. But going into downtown Boston on a Monday means commuting with Normals. After working for pennies in a closet for five years I can no longer blend in with people who have clothes and haircuts and dentistry and all the other luxuries of the employed. My best clothes are six years old and don’t fit. My only pair of jeans has holes, and not the fashionable kind. I haven’t had a haircut since November. My eyeglasses are crooked and my right eye doesn’t focus anymore. I can easily pass for homeless. Mingling with Normals makes me self-conscious.

Should I go at all? Most vendors show mass-market consumer crap, interchangeable souvenirs, and arsty-craftsy folkjunk. In earlier years I found a few good vendors there (e.g., Switchables, Enjoy Life, Pursehooks), but every year the show shrinks a little more. OTOH, finding even one good new product line would make it worthwhile, and all it costs me to attend is $15 worth of T fare and lunch (for some bizarre reason, my CPA always disallows it as a business expense or makes me claim it as personal income…I’ve never been able to unravel the Byzantine accounting behind that $15).

My open-to-buy says that I can spend $175. Replacing the flood damage will cost four times that much. Maybe I’ll go to Crapfest on Monday if the weather’s nice. I feel like I ought to. Given the physical and financial mess in my cellar, though, I probably won’t waste the time this year. Maybe I’ll leave it up to my swollen ankle. Taking the T entails walking three miles just to get to and from the convention center, and the showroom floor adds another mile of aisles. Theoretically, I could ask Anne to drive me…but driving is for pussies and she's probably too busy anyway. What am I, a crippled old man?

Don’t answer that.

Theoretically, I could go on Tuesday or even Wednesday. But I would be the only buyer left on the floor by then, and vendors would mug me. Or have me arrested as a homeless guy.

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Reversal of fortune and new misfortune: Chargeback #1 ($105.73) was refunded on appeal! Apparently there is some justice in the financial world after all. Chargeback #2 ($70.56) is still in limbo because Discover apparently takes longer than real credit cards. Chargeback #3 ($149.43) was stolen from my checking account on Wednesday. Since these all came from the same thief, and since I have the same documentation for all three orders, I hope that the last two will break in my favor as the first one did.

Incidentally, our six-year-old water heater died after being submerged. I could light the pilot, but the burner refused to ignite. After three days without hot water, a plumber refused to repair it. We were soaked for $1,245 to replace it. An expense of that size makes even Normals blink; it's a huge sum for us.

The "You Don't Suck" Award, and Evidence to the Contrary

OMG, Curio City is a Constant Contact All Star! It's a dream come true! I’d like to thank all the little people that I stepped on to get where I am today.

A “2009 Constant Contact All Star” is an email marketer who followed industry best practices. Specifically, my newsletter met these standards in 2009:

• Averaged a bounce rate less than or equal to 15% (bounces are undeliverable emails, common when using purchased lists; I’m always under 1%)
• Averaged an open rate of 20% or higher (how many recipients clicked on the email; I usually see 25-30%)
• Averaged a click through rate of 2% or higher (how many people who opened the email clicked a link; I expect 15-25%)
• Received no compliance related complaints (spam reports).

In other words, I’m not a spammer. Yay me! My newsletter is my #6 source of visits, incidentally, having brought in 53 shoppers last month. If you aren't subscribed, use the box in the right-hand column to join my list (Facebook readers, click the Join My List tab on my FB page). It's OK; I'm an All Star!

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And now the evidence that I do, in fact, suck: After five years in business, I got my first chargebacks this week. That’s when a credit card issuer takes back money that they had previously paid me for an approved transaction, usually because the cardholder disputed the transaction. I found out that I’d been ripped off for $105.73 after I couldn’t make my deposits add up one morning. Two days later, I got hit for $70.56 more (this hasn't actually been debited yet). I knew immediately whom to blame.

I suspected credit card laundering when someone made three declined credit card transactions before getting one approved. Declined transactions are fairly common, but this customer had used four different cards. Worse, s/he was a foreigner. Two days later the customer (or thief) placed a second order with a fifth credit card. Suspicious, I waited a few days to see if the charges would bounce. They didn’t. I went ahead and shipped.

Here I compounded my judgment error with a good old-fashioned boneheaded mistake. Thinking that the country code “MY” meant Myanmar, that’s where I shipped both packages. When they came back undeliverable five weeks later, I consulted my region table…Myanmar is “MM”; ”MY” is Malaysia. I immediately reshipped at my expense – after all, five weeks after the initial order the payments were still valid.

The same customer/thief placed a third order on 2/24. Was she laundering another credit card, or simply buying more stuff after receiving her long-delayed shipment? By now more than six weeks had elapsed since that first order; surely it must be legitimate. I filled this one right away.

If she’s the thief that I suspected all along, then there is a third chargeback for $144.54 in my future. If she canceled her payment while her merchandise was traveling to the wrong country, then proof of delivery might restore my money. I faxed in the dispute forms and supporting doco this morning; the bank has two weeks to rule on it. If they were stolen credit cards then I’m just hosed – somebody has to pay for that, and it sure isn’t going to be the bank.

This lesson will probably cost me $350. They might slap some penalty fees on chargebacks, too. From now on I’m simply going to cancel foreign transactions that smell bad to me.

Despite that hit, this week is still running flat with LY. Sales were fairly decent for a nothingburger week in March.

Curse You, Facebook

March sales came in like a lamb. Maybe I can use my Facebook page to lionize the month now that my blog, my newsletter, and my store are all integrated. Let’s cash in the $25 advertising credit that I’ve been holding since December.

Shall I advertise my FB page itself (Curio City in general) or an outside web page (a specific product)? Product advertising works much better than generic store advertising. But FB might be different. Making new fans might be a better goal than making sales. My fan base is stalled at about 65 – people join and leave at about the same rate, and a lot of my fans have probably put me on Hide (I don’t blame them; I’ve hidden many of my personal FB “friends” and all of my business/group contacts).

I decided to spend my $25 credit on a generic store ad with the goal of recruiting 25 new fans. I bid $0.20 per click with a $5 per day maximum spend (25 clicks per day). To get 25 new fans for a buck apiece, I’d need to convert a whopping 20% of my clicks. That’s an outrageous rate if you’re trying to sell something…but fandom is free. I can imagine that 1/5 of those who will click an ad in the first place might want to see more. After all, they can easily Hide or remove me later on.

With that decision made I wrote my ad, targeted an audience, defined my bids, entered my credit card number, entered the coupon code, and clicked Place Order. Ta-daa!

“There was an error: The promotion this coupon code is linked to has ended.”

Bastards. Why didn’t they put an expiration date in the email? I googled up half a dozen other coupon codes, all of them expired. Disgusted with their bait-and-switch, I decided to bail before this ship even set sail. Eventually either a new coupon will come along or my curiosity will overcome my anger.

So I decide to delete my credit card, and I can’t unless I close the account. So I decide to close the account, and it threatens to lock me out of ever advertising again. So I decide to create a fake credit card and delete my real one, and the “create a card” app won’t load. So I load the page in IE, and I get “you must create an ad before you can add a credit card or coupon.”

Curse you, Facebook! Oh well, as much as I hate leaving my credit card number in their system, there doesn’t seem to be anything they can charge me for. It’s hard to be 100% sure since their interface sucks so mightily.

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A few weeks ago I figured out how to add custom fields to my checkout page, so I added a “How did you find us?” dropdown list. The 60 customers who were kind enough to respond break down like this:

41 - Searching for something on Google
6 – Searching for something on yahoo
4 – Searching for something on Bing or Other
3 – Referred by a friend
2 – Saw you mentioned in a print article
3 – I don’t know; I just woke up and here I was
1 – I shop here all the time

Remind me again why I still advertise on Yahoo. Actually, I’m only running ads for a few products there and I only activate them when business slows down. Maybe their merger with Bing will eventually enliven things.

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My last post overstated February’s numbers because I neglected to record a $456 tax payment. Yeah, $456 makes quite a difference. I’m not going to back up to correct that. It will just show up in March’s YTD numbers.