While I Was Away (and July Numbers)

Even with all of my advertising shut down and vacation warnings posted on my home page and News page, 21 people placed orders. Two of them canceled after getting my followup emails. One of those was a nice juicy $200 sale (ouch!). Even without that, this was my best “closed” week ever. Google Analytics says that 69-87 visitors arrived daily without any paid inducement. Curio City’s grown to the point where “soft closing” is becoming impractical.

My developer upgraded Sunshop from version 4.2.2 to 4.2.4 without a hitch. The changes were all minor, but it supposedly fixed the longstanding PayPal checkout loop bug. Unfortunately a customer reported encountering it just yesterday, so it seems that this upgrade was entirely pointless.

Anne accepted a job, ending our drawn-out health insurance crisis just days before I would’ve had to commit to a $1,114 monthly individual policy. We will be uninsured for one day. The takeaway lesson from all of my agonized research: There are no decent health care coverage options for people who are frozen out of traditional employment, and that fact was all that kept us from succeeding as two self-employed people. The situation will improve somewhat when federal reform takes effect in 2014, but the core problem – linking health insurance to employment -- won’t change. At least I can finally drop the subject as far as my blog is concerned.

Senate Democrats overcame Republican obstructionism and renewed benefits for the long-term unemployed. Even though the payments are retroactive to our July 4 cutoff date, there’s a wrinkle that might leave us twisting in the wind. When Anne’s claim expired the DUA opened a new claim against her part-time teaching job. We received conflicting paperwork about that just as we were walking out the door and have not yet resolved it. Because the Medical Security Program is slaved to unemployment benefits, there’s a lot of money on the line. As grateful as I am that these programs exist, not having to deal with the DUA or the MSP anymore will be an enormous relief.

Business jumped right back to normal within hours of reactivating my ad campaigns. What had better be the two slowest weeks of the year – and my smallest paycheck – are now behind me. Yay, I guess. Even though I had to work at least a little bit on each day of my vacation, and I went home to a heavy workload, I greatly enjoyed the getaway.

Unfortunately, I got wicked sick a couple of days after getting home. I could barely keep up with my orders and am still dragging myself through the day.

Thanks to the Vacation Week That Wasn’t, July ended up pretty good. The month-over-month increase dragged the YTD rate down slightly, but it’s still comfortably over my planned 15% increase.

Total income: +23.5%
Total COGS: +30.8%
Payroll: +59.3%
Net Income (Profit): -71.1%


Year to Date:

Total income: +33.8%
Total COGS: +49.7%
Payroll: +41%
Net Income (Profit): -129.2%

The YTD bottom line isn't scary when you know that it only represents $247.

Today I've been battling an apparent fraud attack. At the same time, I changed our Internet service after 14 years with Earthlink. And, as I mentioned, I'm still sick. I'll follow up on these topics next week. Right now I need a nap.

35 Days Hath July, September and -- What?

I don’t know how I started using the week as my basic accounting time. Four-week months have 28 days. Five-week months have 35 days. That’s unnatural (as you would expect from an arbitrary calendar convention with no astronomical basis). I must have learned the convention from some managerial job in my distant past.

As I’ve said, “calendar creep” routinely bumps a week from one month to another, and that screws up month-to-month comparisons. No mnemonic or knuckle-counting can help me.

And yet, I finally decided not to convert my Excel accounting spreadsheet from weeks to calendar months. I find week-to-week comparisons very helpful. Since Quickbooks automatically minds the months for me, why not preserve Excel’s different perspective?

This compelling topic shows you what a dull week it was. I’ve been writing orders and creating product pages for new Fall merchandise, but most of the products won’t stagger in until September and October. I’ve found a lot of things that should sell a few units and nothing with bestseller potential. Selling two pieces of 100 different items is much more work than selling 200 pieces of one item…but I’m content if the dollars add up the same way.

There will be no blog posts for the next two Fridays due to vacation.

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It was a more intense week on the personal front. To briefly update my lament from two weeks ago:

Anne’s unemployment benefits are exhausted. Convoluted rules about freelance income (why didn’t I listen to her cronies who warned her not to report her earnings?) might prevent her from reopening her claim even after the Senate passes the rescue money. So the checks that were supposed to keep coming through November suddenly stopped, probably forever. That was our only reliable income.

The Medical Security Program was linked to unemployment benefits, so those reimbursements (which have been unreliable right from the start) end just as suddenly.

Our COBRA health insurance expires in a couple of weeks. The circumstances above have derailed my replacement plan. How do you cover a bill that’s bigger than your mortgage at the same time that you lose your primary source of income? If I do nothing, we will be uninsured as of August 1. Anne refuses to gamble on good health for even one month, so I’ve got to do something…but what?

I know! We’ll go on vacation! The timing couldn’t be much worse. But since our major expenses are paid in advance and nonrefundable, we are committed.

Meanwhile, Anne’s anticipating up to four job offers by the end of July. One is an excellent job that would return us to the middle class. Two of them are acceptable jobs that would provide insurance and replace her lost unemployment checks. Let’s not talk about the fourth emergency-backup job yet. Any one of them would end the financial road to ruin that we're on now.

Two Realities (June Numbers)

If Only Real Life Were Like This

I love to count my money after a lucrative month. My wacky accounting calendar defines “June” as May 30–June 26 this year, so the month ends tomorrow. My spreadsheet uses 7-day blocks to facilitate weekly comparisons. But calendar drift eventually moves a week from one month to the next. When a four-week month becomes a five-week month my comparisons suffer.

I really ought to beat my spreadsheet into compliance with calendar accounting. Doing so would invalidate monthly comparisons between 2011 and previous years, but eliminate calendar creep in future years. Nobody cares about any of this except me, of course. But since I’m 100% of the staff, it’s a burning issue in Curio City...and that's what this blog is about, right?

June finished phenomenally after May’s mediocrity. Whisky Stones did great for Fathers Day…bird kites have been selling steadily across the board…and two large Business Card Briefcase orders really kicked it over the top. I have temporarily shelved my plan to move bird kites to their own top-level category on the “If it ain’t broke” principle.

Here are June’s numbers, followed by explanations.

Total income: +48%
Total COGS: +56%
Payroll: +28.8%
Net Income (Profit): +189.2%


Year to Date:

Total income: +32.7%
Total COGS: +48.9%
Payroll: +49.7%
Net Income (Profit): -2,258.3%

The YTD bottom line looks incredibly scary, but it only represents $472. Last year I was very slightly in the black; this year I’m still a few hundred bucks in the red. Closing the gap won't be trivial, but neither is it impossible. Remember that for all the dramatic percentage moves, there still aren't that many dollars flowing through this company.

I must have explained what these numbers mean at some point over the years, but here’s a refresher course for newcomers and the forgetful.

• Total income: Very simply, the top line dollars coming in over the transom.
• Total COGS: Cost of Goods Sold should rise in lockstep with Total Income. Lower is good, higher is bad.
• Payroll: Dollars in my pocket. More is nice for obvious reasons, but bad to the extent that it reduces my year-end profit payout and increases my personal payroll taxes paid. This number ought to track Total Income, plus a bit for the raise I gave myself at the end of last year.
• Net Income: Earnings before interest, taxes, depreciation, and amortization (ebitda) – the first draft of the accountant’s bottom line. Naturally, I want this number as high as possible. As an S corporation, Kraken Enterprises is obliged to pay its profit to its stockholders each year. I actually only take out 75% of it and leave 25% as retained earnings for company growth, even though I’m responsible for 100% of the taxes due. Ideally I’d take all of my compensation this way and screw the paychecks, because one doesn’t pay social security or medicare taxes on dividend income. But the IRS can smite me if I don’t take a “reasonable” salary, and I obviously need beer money.

Anyway, Payroll + Net Income = my total compensation, more or less. Theoretically both of those numbers should rise in lockstep with the top line. The YTD numbers show that I'm getting nicer paychecks this year but the year-end bonus is in some doubt.

Now we come to July, the low point of the year. I’ll be shutting down for 10 days as usual. Making plan should be easy, but if there’s one month when it doesn’t matter, July’s the one.



Unfortunately, Real Life Is Like This

Republicans once again blocked unemployment benefit extensions. Yesterday Senate Democrats gave up (after multiple votes over eight weeks) and walked away from the table. When Anne’s current benefit tier runs out, we will lose our only regular monthly income. And because Medical Security Program reimbursements are restricted to unemployment benefit recipients, we will have to pay the full cost of health insurance. If Republican obstructionism isn’t overcome soon, we will finally fall off the cliff after 17 months of dancing on the edge. Repeatedly closing and re-opening Anne’s claim to report her freelance income makes it impossible to know exactly when her current benefit tier expires, but it’s coming up soon.

Oh, and the state’s denial of double-digit rate increases on individual health insurance plans was overturned yesterday. That $990 Fallon plan that I had my eye on is likely to top $1,200 a month if Fallon’s appeal is also upheld. I don’t know what to do now. How are we supposed to pay for that without unemployment checks? Our health insurance crisis is back on the front burner. Thanks, Republicans!

Despite this, we’re going on vacation in three weeks. A dumb financial decision, to be sure, but it’s a needed psychological balm. My beautiful blonde tresses are literally turning gray from the past year’s chronic money stress. (Or maybe I'm just nearing my expiration date).

The 12 job applications that Anne sent out a couple of weeks ago got seven responses, five of which led to interviews. One of those jobs is an excellent opportunity (the others all have serious drawbacks). She passed the phone interview and has a 2.5-hour follow-up with four interlocutors next Thursday. She could potentially land a near-perfect job just as our house of governmental cards blows away.

If you’re the praying sort, get down on your knees. Either delivering this job or destroying the Republican Party would be a satisfactory miracle. (Sorry, I'm just venting frustration...I can think of a few objections to letting Democrats frolic at peace. It's just that every time I think I've got things under control....).

Homing In on Health Insurance

For those who haven’t read my posts tagged “health insurance,” here’s the condensed history:

Anne and I are both self-employed full time. She makes far more money than I do, but my business has more long-term potential as an asset. Because we stopped saving money years ago and dug a deep debt hole, selling Curio City will be our only chance at retiring. Even though my paychecks are meager now, if I keep making my targets I’ll have a valuable asset providing a livable income 10 years from now.

Coddling Curio City worked for as long as Anne had a payroll job with benefits. That foundation failed in February 2009. Our combined self-employment income covers our bills except for that 900-pound gorilla, health insurance. We’ve been able to keep her former employer’s group rate (albeit without their contribution, of course) thanks to the federal COBRA law. When Anne’s paychecks went away our insurance bill rocketed to $900 monthly (later cut to $770 by reducing our coverage). Her severance pay plus Massachusetts’ generous unemployment benefits enabled us to just barely meet this obscene new burden for a few months. And then Congress, gods love ‘em, put a 65% COBRA subsidy into the economic stimulus package. When I got us accepted into the state’s Medical Security Program, which reimburses 80% of unemployed residents’ health insurance premiums, it looked like our crisis was over. Surely Anne would find a job before this patchwork of government support dried up.

Sixteen months later it’s unraveling. On Monday – unless Congress acts -- the COBRA subsidy expires and our premium jumps from $267 to the full $770. On August 1, COBRA itself runs out and the premium on our current shoddy insurance plan will jump to its full market price (probably around $1,000). Financial Armageddon is coming right around Christmas time: Anne’s unemployment checks will finally run out and the MSP will end.

So I need a long-term solution in a system that’s predicated upon conventional employment. Self-employed workers are among the 800,000 Massholes who are frozen out of the group-rate, employer-subsidized mainstream. Because we also have the misfortune of being old, our rates are near the top of the scale. Federal health care reform comes too late to help us through this crisis and we’re still 12 years away from the holy grail of Medicare.

The Fallon individual plan offered through the Commonwealth Connector at $990 a month (subject to increase under appeal) is probably the best we can do. This week we made a major breakthrough: after three re-submissions, the Medical Security Program finally approved our claim from last October through December! We expect a large reimbursement check next week, and now that we’ve finally destroyed their blowout preventer the MSP should keep gushing dollars for a few months. We’ll only have to pay 20% of that $990 premium until the state and federal governments cut us loose in December.

Enrolling Kraken Enterprises in the Health Connector’s Business Express program almost works. The total premium for insurance comparable to the Fallon plan described above is “only” $858. Kraken would have to contribute 33% of the monthly premium. At $285 per month that’s not a complete deal-breaker; Kraken’s pocket and mine are ultimately one and the same anyway. As I learned last week, IRS rules lock Kraken out of the 35% federal tax credit, so there’s no help there. But the deal-breaker is that Business Express only has two participating carriers -- CeltiCare and Neighborhood Health Plan – and our doctor doesn’t accept either. Neither of us is willing to change doctors, so this option isn’t an option. Maybe someday more insurance companies will join Business Express and I can look at it again.

I still need to rule out joining the Randolph Chamber of Commerce, but that’s a very long shot. No other local Chambers offer health insurance, and the Randolph site has no details. I’m not a Randolph business anyway. I emailed them. They didn’t answer.

Based on the comments to last week’s post, I’m adding one more option: I could get a part-time job. A few employers (e.g., Starbucks) offer benefits if one works at least 20 hours a week in a menial job. Superficially, this idea is pretty attractive. The paychecks would supplement the pittance that Curio City pays me during the summer. If the coverage is decent, and the premium is affordable, and our doctor accepts their carrier, then it’s hard to argue that my time’s better spent prodding Curio City for pennies.

The biggest argument against it: Curio City is very much a full-time job from Halloween through the end of January, and in fact I work far more than fulltime during November and December. Even if I did find a job that provides affordable health insurance, I couldn’t keep it year-round.

The second argument against it: Being away from my office for 20+ hours a week would cost me some business even during the slow months, when Curio City’s schedule is relaxed. Most of my large B2B sales come in over the telephone, so it pays to be here when it rings. My business’s growth rate would slow somewhat if I weren’t nudging it year-round, and that would set back my long-range goals.

The third argument against it: I haven’t worked a conventional job in more than five years. Being over 50 years old and out of the workforce, I’m probably not employable anywhere, in any capacity.

Still, I’m not ruling it out entirely. If our December budget meltdown happens as I envision, I won’t have much choice. The need for health insurance might kill Curio City.

Aside from invalidating everything I’ve done for the past five years, it would be a shame to throw in the towel while I'm meeting my growth targets.

May Numbers

Total income: +13%
Total COGS: +22.4%
Payroll: +142.1%
Net Income (Profit): -404.7%


Year to Date:

Total income: +30.8%
Total COGS: +49.4%
Payroll: +50.2%
Net Income (Profit): -311.6%

Business was perking right along until it hit the wall on Tuesday. I don’t know why. Quickbooks says that I’m a wee bit ahead of LY; Excel says that I’m behind. It’s shaping up to be my worst week since August 2009. YTD, though, I’m still doubling my planned increase, so I’m not especially worried about this blip.

Health Insurance: From Grim to Absurd

I’m grappling with the health insurance monster again. I still don’t know what Anne and I are going to do once her COBRA benefit expires on July 31. The options range from grim to absurd, yet I need to choose one by July 1. The only thing that's changed since the last time I fell down the rabbit hole is my sense of urgency.

OPTION 1: Keep our current Blue Cross Blue Shield of California plan. I don’t know how much the price will rise when we lose her former employer’s group rate. I assume it will go from $770 to something over $1,000 per month. Our coverage is rudimentary and we dislike the company, but keeping it would be the path of least resistance. I expect that it will also be the most expensive.

OPTION 2: Kraken to the rescue! I’d hoped that my company might be able to subsidize our premium and then recoup 35% of that from the new federal small business tax credit. But alas, the IRS says:

(1) Q: If an owner of a business also provides services to it, does the owner count as an employee?

A: Generally, no. A shareholder owning more than 2% of an S corporation is not considered an employee for purposes of the tax credit.

(2) Q: Can an employer claim the credit if it has no taxable income for the year?
A: Generally, no. The credit for a year offsets only an employer’s actual income tax liability.

Since S corporations don’t pay income tax, I have no idea how the credit works. I’ll ask my CPA if it seems to matter, but I’m pretty sure that point 1 makes point 2 moot anyway.

OPTION 3: Kraken to the rescue again! Anne thinks that joining the Randolph Chamber of Commerce would give me access to group insurance plans, so I need to investigate that. I should also see if the Commonwealth Connector offers a group rate to Kraken, even without subsidies. Kraken can’t afford to buy me benefits; the price of insurance exceeds my gross income. But I might be able to arrange some fiction where I funnel my own money through my company. I suck at figuring out mendacious machinations like this.

OPTION 4: The government to the rescue! Commonwealth Connector has an individual Fallon plan that our primary care doc accepts…and that includes dental coverage (bonus! We haven’t had any dental care in nearly two years). Its $900 monthly premium – $130 higher than the COBRA payment that we already can’t afford -- is being appealed and might be raised retroactively. Our current dentist doesn’t accept it, but he’s a bozo anyway. So far, this is our best option…if I can figure out how to afford a monthly bill that’s higher than our mortgage payment.

Commonwealth Care subsidies max out at $43,716 annual income for a family of two. We should fall to that level after Anne’s unemployment checks go away in December. Our current income is low enough to get subsidies under federal rules, but those are still four years out.

In theory, the Medical Security Program is reimbursing 80% of our monthly premiums for as long as Anne collects unemployment. In reality, they have twice denied (on technicalities) our initial claim from last September through November. A patchwork of COBRA subsidies and overpayments covered us from December through April, but the bills started landing again this month. I obviously can’t plan on our claims ever being paid.

OPTION 5: We can go commando. The state’s affordability table says that our maximum monthly premium should be $589. We qualify for a Certificate of Exemption because there are no Minimum Creditable Coverage policies available for under $800. Hooray! That means that we’re exempt from the state’s coverage mandate. Going uninsured is the financially responsible thing to do, and if we were in our 20s I wouldn't hesitate. But the risk for a couple in our 50s is obvious. Worst of all, prospective insurers can require physical exams and exclude pre-existing conditions if you go 63 continuous days without creditable coverage. That will become illegal under federal form…but we need a solution by July 1, not four years from now.

OPTION 6: Anne could get a job. After being unemployed for 16 months now, and with her industry (journalism/publishing) in ashes, landing something just in the nick of time seems like a pipe dream. OTOH, Massachusetts added nearly 20,000 jobs in April, the third consecutive monthly increase and the biggest gain since April 1993. The unemployment rate fell to 9.2%. While I’m sure that none of those jobs went to writers and editors, the labor market as a whole is expected to grow robustly through the summer and fall as the economic boom continues to gain steam.

The bottom line is unchanged: The US healthcare system is employer-based – that’s the core flaw that federal reform doesn't even try to fix -- so there are simply no affordable insurance options for those without jobs.

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Remember that last week’s sales were running nip-and-tuck with LY? Well, I would have just barely beaten it had not that stupid Discover chargeback from January arisen from its slumber. I’d hoped that it might die of old age, but alas: They took away $70.56 and fined me another $25. In the end, the thief got away with $325.72 and my bank stole $150. That’s what it cost to learn two lessons: Don’t fill suspicious orders, and never, ever dispute a chargeback, because the process is structured so that a merchant cannot win.

The Outlook problem that I complained of in last week’s somniferous post turned out to be Ad-Aware’s email scanner running amok. All is well since I uninstalled it.

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.

Not My Cup of Tea

I couldn’t sleep Tuesday night after Republican Scott Brown won Ted Kennedy’s Senate seat. The ground trembled as hell froze over and poor Teddy spun in his grave, and the wailing of the damned echoed all night. Wednesday morning I cowered indoors like the other survivors, peering fearfully out my window at the shattered political landscape. Zombie Democrats staggered blindly through the rubble, searching in vain for brains (having long since depleted those of the Coakley campaign). Mutant Republicans emerged from dark burrows, blinking their little pig eyes and cackling with joy at condemning 30 million uninsured Americans to early deaths.

OK, maybe it wasn’t quite like that. On Wednesday morning the sun rose in the east. The Boston Globe waited on my front porch, crammed with verbiage trying to make sense of the apocalypse. The electricity was still on, the furnace worked, water still flowed. My cat had his breakfast and then went out. I had coffee.

Coffee always helps.

Don’t worry; you didn’t stumble into a political blog. I’m taking this detour because I’ve written about our health insurance struggles before (use the subject tags to see those posts), and because Curio City went to sleep as everyone’s Christmas credit card bills came due last week. Last year’s numbers were fattened up by a single $1,200 sale; without a comparable lightning strike this year, January probably won’t reach LY’s numbers -- forget about my 15% planned increase. 2010 is not off to a promising start. But one big sale can always turn it around, and that sale could materialize at any moment. (While I was finishing this post a $120 order from France arrived; a few more like that would save my bacon).

So this week I’ll explore why Massachusetts fell for a Republican who’s sworn to use Ted’s seat to kill the cause of his life.

Voter turnout was heavy in the wealthy suburbs. Independents went overwhelmingly for Brown, who favors extending the Bush tax cuts for millionaires. These people with big incomes and generous health insurance plans and investment portfolios and fat retirement accounts feel threatened by the Democratic agenda. Turnout in the urban Democrat strongholds, OTOH, was weak as the machine failed to rally the lower-class faithful behind their deeply flawed candidate.

These rich suburbanites were seduced by something called tea baggers. Besides its sexual meaning (Google it if you dare), “tea bagger” is also an unfortunate name for a populist political movement. The so-called Tea Party is an anti-Democrat movement disguised as tax rebellion -- not really a party at all, but a loose confederation of libertarians, Republicans, and mad-as-hell conservatives who oppose Obama and progressive society. We paid them no heed here, thinking that these right-wing nutjobs couldn’t breach our liberal stronghold. Underestimating the enemy within was the Democrats’ first mistake.

Things are bad in Massachusetts. The unemployment rate rose 0.7% in December to its highest level since 1976. The Democrats raised our sales tax last year and extended it to alcohol for the first time. Beer is all I've got! Things are not getting better; in fact, with federal stimulus money drying up and the state’s rainy day fund gone, they’re about to get worse. There is a lot of unfocused anger and anxiety that naturally gravitates to whomever’s in charge. When the Democrats put forth an arrogant, dull candidate whose campaign strategy was to run out the clock and claim what was rightfully hers, they gave conservatives an opening. Many people think that Martha Coakley’s career as a prosecutor showed a knack for doing evil, too. (I voted against her in the primary and did not intend to support her in the general election until the seat was actually threatened). Martha Coakley was their second mistake.

We are not accustomed to competitive elections in Massachusetts. The Democrats didn’t know how to react, so they didn’t. Coakley came out of the chute too late with a barrage of mean-spirited attack ads and robo-calls – the same vicious tactics that cost Kerry Healey the governor’s mansion in 2006. Being obnoxious was their third mistake.

For their part, the Republicans had a charismatic candidate with a well-organized campaign and a populist image. They also attracted a crapload of outside money in the final week of the campaign. His main message – I’ll kill health care reform – was exactly what the teabaggers wanted to hear. If they can kill insurance reform, they can cripple Obama and bring down his whole presidency…presumably so that we can return to the halcyon days of the Cheney administration.

How Americans can think this is a good idea eludes me.

Somehow they turned the election into a referendum on the federal health care bill. That shouldn’t have been possible. Massachusetts enacted stronger reforms and achieved universal coverage four years ago. We had very little stake in so-called “ObamaCare”. Some liberals oppose it for being too weak – an expensive giveaway to the very insurance companies that we ought to be dissolving. But in terms of state and local issues, it should have been a sideshow.

OK, so what?

A year ago I might have joined the Brown bandwagon. I’m not a Democrat and Coakley makes my skin crawl, even though her politics line up with mine pretty closely. I have a long history of backing underdogs and political insurgents. I do, however, support Obama’s progressive agenda – remember that he was the underdog just 18 months ago. The health care bill wouldn’t affect me much, but it was a first step in an ambitious agenda that will reduce our oil dependence, fight global warming, lessen income inequality, and address a whole roster of social-justice issues that get conservatives lathered up. After the disastrous Bush-Cheney presidency, and under the spell of Sarah Palin, Republicans should’ve been locked out of power for a generation.

A year of unemployment and dependence on government programs have partly resuscitated my 1970s-vintage inner socialist, purely as a matter of self-preservation. I want unemployment benefits and COBRA subsidies to be extended for as long as the economy remains in the crapper, even if that’s years more. I wish that other Americans had a federal equivalent of the Medical Security Program that will reimburse 80% of our health insurance premiums for as long as Anne’s unemployment benefits continue. Without these liberal programs, we’d have severely cut our standard of living and spent down our retirement accounts. I would’ve had to fold Curio City to beg for a minimum wage job. I’m no hypocrite; I have to support the party that’s supporting us during these hard times. If that makes me a reluctant Democrat for the time being, then that’s what I’ll have to be.

What have the Democrats done for me lately? Congress extended the 65% COBRA subsidy by six months, retroactive to last November. We are expecting our first reimbursement check from the Medical Security Program any day now; our mortgage payment this month depends on it. Anne’s unemployment bennies were renewed through the middle of March. We’re solvent into April, and possibly even as far as June. But take heart, teabaggers: Our COBRA eligibility expires in August. The MSP will drop us when Anne’s unemployment benefits run out this spring. By then we’ll be suffering the way we deserve to suffer.

Maybe Anne will find a job before it comes to that. Never mind that Massachusetts employers destroyed another 8,400 jobs last month and drove the state unemployment rate to its highest level since 1976. Maybe the Democrats will come through in time with another rescue plan. The Republican now moving into Ted Kennedy’s chair makes that a little less likely.

In spite of our insecurity and my misgivings about Scott Brown, I’m taking a wait-and-see attitude. What else can I do -- move to a more liberal state? Perhaps some good will come of this. Perhaps strengthening the moderate, secular wing of the Republican Party will weaken the evil religious wingnuts. Perhaps the Democrats will focus on jobs and the economy before they take an even weaker stab at health insurance reform. Perhaps Democrats at the state level will straighten up and fly right. Perhaps having a friendly new Republican in Congress will blunt their "Party of NO" tactic of kneejerk opposition to every Democratic initiative.

Leaving all of that aside, a Senator’s primary responsibility is to bring home federal tax dollars. Taking out more than you paid in is all that really matters in the end. Kennedy was a master of pork; no conceivable successor could fill out his money belt (although Coakley might be ruthless enough to have made a good show of it). Some pundits say that having one foot in the enemy camp might open the federal spigot a wee bit more for us. I’m not sophisticated enough to understand how that’s supposed to work, but the idea’s out there.

Measuring the Days

A late surge saved last week from the disaster that I prematurely reported in my last post. It was still behind LY, but not dramatically so. Thank you, customers, for playing the cavalry. Don’t scare me like that again.

Last week I reluctantly stopped advertising DayClocks because bottom-feeders have driven the price into the ground. The very next day, DayClocks announced their first new model in years – a smaller version of the Oak Contemporary. The day after that, I actually sold my first DayClock in over a month, followed by another one the very next day. I’d like to wait 10 days to see if the discounters will ruin the new clock, too, but I can’t waste valuable Christmas days on indecision. So I spent the $200 price of admission, even though my open to buy is $2,600 in the red and the old Contemporary DayClock never sold well.

But last week is ancient history. This week began with an uphill slog when one of last week’s customers canceled a $116 order that she had placed in error. Watching a day struggle to reach zero is depressing, but these things happen. Right now it’s a nail-biter whether the week will achieve LY or not. Forget about plan. Merchandise shortages are appearing. Manufacturers were conservative this year, so supplies of the most popular stuff are spotty. Retailers would rather miss incremental sales than mark down leftover inventory, so stock levels are light. Virtually everybody is understaffed from job-cutting – yesterday I gave up trying to reorder Temperature Controlled Faucet Lights when the manufacturer’s phone went unanswered. And because companies fired their oldest, most experienced workers, the overworked cheap youngsters who are left can't meet the pace. If you're one of those shoppers who waits for last-minute markdowns, you’re only going to find crap this year.

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Several months ago I read a news report about the Mass. Medical Security Program running out of money. Enrollment had spiked from 3,800 to 27,000 people as of August. The state had sent us information about this program when Anne was first laid off, but there was no way we could qualify at the time. I trashed the paperwork and forgot about it. Six months later, with her salary a distant memory, our circumstances were sufficiently reduced to give it another try.

Yesterday we were accepted! The state’s 80% reimbursement will reduce our stifling $770 monthly health insurance premium to a manageable $154 for as long as Anne’s unemployment checks hold out, surpassing the expired federal COBRA subsidy. This is not the first time I’ve thanked the gods that we live in the most liberal state in the US. Saved by socialism! I don't know how people in miserly red states survive without lifelines like this. They just suffer, I guess.

Now I can cheerfully mothball the health insurance topic until the next threat comes along. It looks like we’ll be OK until COBRA expires next August. I think Anne’s unemployment checks will continue into Fall 2010, although the DUA seems to be unable to tell her when her claim extensions will all be exhausted. Maybe the national economy will take another plunge and Congress will keep extending benefits forever.

Shop Your Way to a Greener World

Environmentally-friendly practices usually coincide with sensible economics. Curio City reuses every possible shipping carton primarily because a virgin box costs $0.50 or more. I reuse 90% of the packing material that comes my way, and I wad up the Braintree Forum when I need more. Most of the little trash that I do generate goes to curbside recycling, so virtually nothing ever reaches the SEMASS trash-to-energy plant. I use USPS carrier pickup not just to save me a trip, but also to avoid standing in line with international shipments. Two of the three light bulbs in my “warehouse” are CFLs. (I keep whacking my head and breaking the third one, so I went back to a cheaper incandescent there.) I turn off the lights and my computer at night not out of altruism, but to cut the electric bill. It’s sensible and easy for a tiny home business to be “green”.

Mega-conglomerates have a tougher row to hoe in their quest to appear green.

My bank, RBS Citizens, has the Greensense program. In exchange for accepting electronic statements instead of paper, I get a debit card with a picture of a tree on it. The core of the card is made from cornstarch instead of plastic (the skin is obviously still plastic, and corn is an environmentally destructive crop, but let’s not dig too far beneath that nice tree). They pay me 10 cents every time I use my debit card if I make the minimum 10 monthly transactions (I usually don’t). I don’t understand how swiping my debit card is “greener” than using cash money or my credit card, but I suppose I must be spending my way to a better world. Otherwise there wouldn’t be a tree on my card, would there?

Now UPS is “Introducing a greener way to ship!”. Well, that’s nice. UPS's enormous fleet of trucks and airplanes is probably among the biggest carbon emitters on the planet. They must be using alternative fuels or electric vehicles, right?

Uh, no. They are voluntarily buying carbon offsets before cap-and-trade legislation compels them do to so, because “shipping your packages produces emissions that many believe contribute to global climate change.” (Notice the care not to offend global warming deniers). Cap’n Trade is the dubious practice of paying companies that don’t pollute for the right to do so yourself, on the theory that the overall cap will reduce aggregate emissions. To be fair, UPS didn’t invent that questionable scheme. Arguably, they deserve congratulations for doing it before they’re legally compelled.

Here’s the fun part: For “as little as” 5 cents per package, anyone can “ship carbon-neutral”. That’s right: They’re asking their customers to pick up the cost of the carbon offsets. If I tick a box to pay their premium, UPS will add a logo to my customers’ tracking emails showing them what swell companies we are. And, for a limited time only, UPS will match the first $1 million in contributions that their shippers make. That’s right: They will graciously chip in toward their own offsets. Gosh, what a great company!

What’s really sad is that I’m actually tempted to pay for their emblem. Consumers are easily hoodwinked into thinking that they can shop their way to a brighter future. And so we have this week’s new reason to hate UPS. Here’s their page if you want to see their side of the story, complete with hummingbirds and rainbows.


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Remember a few weeks ago I said that all of my medical bills are paid in full and the bill collectors have all been caged? It started with a colonoscopy in November 2008. Before I scheduled the procedure Blue Cross assured us that as long as I’m over 50 and my doc recommended it, it’s 100% covered. Unfortunately, the clinic entered my insurance number wrong. Just as a paperwork mishap in Terry Gilliam’s Brazil led Mr Archibald Buttle to suffer for the sins of arch-terrorist Archibald Tuttle, we’ve been fighting the system ever since.

To date, I’ve paid $489.36 to four separate companies for assorted deductibles and copays. Today I got a new bill for $105 for “unpaid copays”. None of these bills ever come with itemized explanations, of course, so each new bill requires another call to Blue Cross – an ordeal in itself. I wonder if they can explain how our supposed $20 copay got to $105.

So the insurance struggle resumes. I swear two things: First, I will die before I ever consent to another diagnostic procedure of any kind. And second, the conservatives who oppose health care reform are gibbering idiots. I want to see the insurance companies dissolved and all their executives hanged.

Paper Poverty

I first looked into the Medical Security Program (see last week’s post) right after Anne was laid off. Our income during their six-month lookback was too high then. Now it’s eight months later. Our COBRA subsidy is expiring, I’ve ruled out Commonwealth Care as a lifeline, and Anne’s January employment income no longer counts. The MSP is nearly out of money; I need to try for a piece of it before it dries up.

It’s going to be tight, but we’re pretty close to the state’s income cap (4x the poverty line). That's the sweet spot that everyone wants in this economy: Poor enough to tap some of the vast pools of government money sloshing around, but not so poor as to be seriously deprived. As soon as Anne fills in a couple of blanks and exhumes some documentation, I can mail in the application. I’m nervous about showing them exactly how much freelance income she’s earned, but we have honestly reported it and forfeited unemployment checks every time she bills a client. I do not intend to deceive or cheat anyone.

While I was researching all of this I learned that only businesses with six or more employees are subject to the unemployment tax that funds the MSP. Kraken Enterprises will be spared next year’s 40% increase in that tax, so I can afford to raise my payroll percentage from 18.75 to 19% (incidentally paying a smidgeon more in employment taxes, too). That’s right: effectively immediately, I’m giving myself another tiny raise! It diverts roughly $150 a year from my profits to my paychecks -- three bucks a week, woohoo!. It also takes me a small step closer to my long-time goal of devoting 20% of sales to payroll (I started at 15%, IIRC).

In semi-related personal news, Anne finally straightened out a medical billing error from last November. Everybody’s paid off, all of our copays and deductibles are met, and the bill collectors have stopped harassing us. Remember the story I told you about Blue Cross paying 85 cents of a $270.85 bill? Well, Anne shamed them into waiving the deductible even though we really did owe it. That’s right; she appealed for mercy on humanitarian grounds and won! How astonishing is that?

Curio City’s sales drooped early this week. As an experiment, I’m letting Google’s automatic “conversion optimizer” override my manual keyword bids. Their algorithm sets per-click bids based on my historical cost per conversion and each keyword’s conversion percentage -- basically replacing my intuition with their formula. Of course it’s designed to maximize Google’s revenue, so I’m watching costs closely. My daily spend has indeed risen. The jury is out on whether sales will go up commensurately. I'll reserve judgment for a week.

Now it's time to violate my open-to-buy budget for Christmas inventory. I’m already $350 in the red. I have three big new-product orders that I'd like to place ASAP and another huge one coming up in mid November; this is beyond routine reorders. I’ve said before that I’m more of a manager than an entrepreneur -- I’m most comfortable following budgets and keeping numbers in the black. But to succeed I need to break out of my comfort zone. It’s time to place bets on holiday hits, use the credit card float, and hope that new products start selling before the bills potentially expose me to usurious credit card interest rates. This high-stakes juggling would be fun if my own money weren’t on the line.

You Can Go Crazy Being Public Spirited

I needed to write a Whisky Stones ad for Google AdWords. I came up with:

“Chill your wine or spirits without
ruining the flavor with melting ice”

The “without…with” construction offends my inner grammarian, but it fits the template. Except that Google forbids the word “spirits.” I placated the software by changing “spirits” to “liquor” (apparently less objectionable). Yet, they approved the ad that I'd written just minutes before:

“Whiskey Stones are soapstone cubes
To cool your spirits without water”

Go figure. Maybe "wine and spirits" was the formulation that got their panties in a bunch.

I’ve never been able to advertise the Crazy Clock on Google, either, because “crazy” is a forbidden word. I wonder if I could rechristen the product "Insane Clock".

Incidentally, Whiskey Stones are going to be a hit this Christmas. I’ve sold 3 out of 12 in the first week. One of my customers suggested the product some months ago.


Health Insurance: The Topic That Makes Me Sick

Our coverage downgrade finally went through. Yay! Our premium fell from $924 to $770 per month, which is below any retail price that I’ve seen anywhere, including the Mass. Connector. With a higher deductible and copays and lower reimbursements, we can’t afford to actually see our doctor or fill our prescriptions…but we couldn’t afford to use our earlier plan, either, so the $150/month saved up front trumps the out-of-pocket expenses that we can’t pay in either case. We’d have to cut our coverage to near-nothing and give up our doctor to save any more money.

Two potential game-changers remain: (1) Congress looks increasingly likely to renew the federal COBRA subsidy that’s kept us going for the past nine months; and (2) today’s Boston Globe says that the state’s Medical Security Program for laid-off workers is nearly out of money. This state equivalent to the COBRA subsidy -- separate from the Commonwealth Care that I explored earlier – is news to me. From what this story says, it could reduce our insurance costs to nearly nothing, if I can get in. Here’s the money quote:

The health insurance program, which is funded solely by a tax on employers, helps middle-income people who make too much money to qualify for Medicaid and other state-subsidized health care programs designed for the poor. Since January, enrollment in the program has doubled, the state said, to roughly 34,000 people.

Traditionally, the state program has paid 80 percent of a laid-off worker’s monthly health insurance premium for as long as the worker is collecting unemployment benefits. But the federal government designated stimulus money earlier this year to reimburse some of the health insurance costs of the unemployed, so most recipients are now paying about 9 percent of their monthly premiums.

Why, that would be us! I obviously need to investigate that this afternoon. Of course, what’s good for workers is bad for employers:

The unrelenting rise in unemployment will also trigger an automatic 40 percent increase in the tax businesses are required to contribute for unemployment benefits. In January, the tax will increase from an average of $594 per employee to $832.

Crap. I was planning to raise my payroll percentage by another quarter-point next month, but not if my unemployment tax bill is going up by 40%. I wonder if falling unemployment will eventually trigger an automatic decrease. Hah!

At the risk of turning this blog into a soap opera about my personal life, I’ll run with the tangent. My wife’s unemployment checks were interrupted when she exhausted her initial 26 weeks. Next week we’ll get a token check for the 27th week of partial benefits that Massachusetts adds automatically. Then a 50-week federal extension kicks in. Obama is talking about tacking 26 more weeks onto that. Thanks to that interrupted unemployment checks and the expiring COBRA subsidy, October’s budget is perilous. But it looks like we’ll have an income floor for almost a year after that, and perhaps even longer. Maybe the moribund journalism/publishing job market will revive by then.

Did you know that there are 6.7 unemployed Americans for every job opening? That’s the worst ratio since they started keeping track, and it doesn’t include the underemployed or those who are trapped in bad jobs. Most of those job openings are in highly skilled, specialized areas like health care and biotech. The ratio of unemployed writers to available publishing jobs would be a frightening number indeed.

OK, back to Curious Business: Sales are still booming and Curio City is generating much larger paychecks than expected. Today's pay works out to $6.61 per hour based on two 40-hour weeks, or $7.56/hr using the 35-hour weeks that I really work. That’s very near my longstanding goal of earning minimum wage (currently $8.00 in Massachusetts and $7.25 in the hinterlands). Ordinarily I only see those big bucks for three weeks in December.

Generating a substantial paycheck from my own business, without an employer, feels really good. Kraken Enterprises could still fail, but I can't be laid off! The sales surge that I’ve enjoyed for the past month depends almost entirely on the phase-out of Panther Vision’s 2-LED caps. Once those are gone, things will drop back to normal. But since “normal” is now getting into Christmas-normal, I can expect a non-trivial income for the rest of this year.

Christmas in October

I blew off the health insurance quest this week. Business is booming and I couldn’t waste time on a pointless pursuit. Maybe I’ll come back to it next week if the pace dies down.

After Christmas, when my Kraken Enterprises paychecks fall back to nothing, I’m going to have to look for a job with health insurance. If I can’t find work with benefits – I've been out of the conventional workforce for over five years and the job market isn't exactly promising -- I might still try to pick up a few hours a week doing something menial to supplement my meager business income. With the COBRA subsidy gone our household budget has tipped into major, chronic deficit.

I haven’t eviscerated our budget yet pending two rays of hope: Obama has talked to Congressional leaders about extending unemployment benefits and “the COBRA tax credit”, by which I hope they mean the COBRA subsidy. That would keep us afloat for another six or nine months. And, my wife got a strong tip on an excellent potential job today. She’s well qualified and two of her references work for the company, but competition will be brutal. Do you know how many journalists are out of work these days? Catching either one of these breaks really would be like Christmas in October.

Wait. Back up. Did I say business is booming? Yeah, let’s talk about that….

First, I raised my 25-cent-per-click ceiling to 30 cents and increased my daily spending limit at Google AdWords. I’ve also been chipping away at a radical overhaul of Yahoo Search Marketing, which I will use through the Christmas season. Spending more on advertising has (so far) come with a proportional increase in sales. I’m unsure how strong the cause/effect relationship is.

Second, Christmas started in September this year. I am looking forward to a good holiday season. At this time last year, the economy was just starting its freefall. This year, it’s just starting to claw its way back up.

Third, and biggest of all, is the Panther Vision product changeover. The old 2-LED caps are blowing out of here at two bucks off; America loves a bargain. The new 3-LED caps are starting to move, if unspectacularly. This situation can only last as long as Panther’s inventory of old caps does, and the most popular colors are already extinct. I had to delay my reorder for several valuable days while I waited for a customer to make up his mind about a potential large purchase. I phoned in my order this morning (driving my open-to-buy back into deep red ink) as soon as he told me that he’s deferring his decision until next week. But I was too late to beat the three-day weekend. Curse you, Columbus Day!

A Fistful of Failures

I gritted my teeth and wasted six hours this week trying to beat the health insurance system.

Commonwealth Care’s online worksheet makes it official: We legally can’t afford health insurance. The state figures that we should be able to pay about $500 a month for insurance, and there’s nothing available that cheap. Massachusetts will graciously exempt us from being fined if we choose not to buy insurance, but they won’t help us pay because we make more than three times the poverty rate. Although it's nice to know that it's legal, going uninsured is a last resort. FAIL

Commonwealth Choice is the state’s insurance clearinghouse. Their website offered 21 plans ranging in price from $732 to $2,071 per month. We currently pay about $925 for Blue Cross Blue Shield of California. A comparable BCBS plan through Commonwealth Choice is $1,112 – about what we’ll pay for our current plan after COBRA expires. The only option that really saves us any money is the $732 Neighborhood Health Plan. It carries a $2,000/$4,000 deductible (vs. our current $500 deductible)...and our doctor doesn’t accept it. Changing doctors is a nonstarter. FAIL

All righty then, what about getting a group rate through some club or association?

Sadly, AARP group insurance (via Aetna) is still not available in Massachusetts. FAIL

AAA offers dental, life, homeowners, auto, long-term care, accident, and travel medical…but no general medical insurance. FAIL

The American Society of Journalists & Authors has nothing for Massachusetts. FAIL

Anne doesn’t qualify for membership in the Author’s Guild. FAIL

The Editorial Freelancers Association has nothing at all. FAIL

Health Service Administrators (HSAmembership.com, formerly the Mass. Business Council) is wicked confusing. All I could find were a bunch of links to insurance company websites with no information about pricing. I need to spend a couple more hours examining all of those links. Provisional FAIL.

The cheapest Fallon Community Health Plan that our doctor accepts is $942/mo with a $2,000 deductible. It does include dental, which we currently lack, so in that way it’s better than our current BCBS plan. FAIL for now, but I might come back to this one after COBRA runs out.

Various online quote finders are really just trolling for my phone number -- they don’t really show quotes online. The two agents who tried to sell me cut-rate coverage were both peddling Mid-West National Life, which Google tells me is the object of numerous complaints and lawsuits. FAIL. We already have enough problems with Blue Cross. (In fact, the next item on today’s agenda after posting this essay is calling a collection agency that’s dunning me over a wrongly-denied medical bill).

Speaking of problems with Blue Cross, here’s a funny story: South Shore Hospital billed BCBS $691 for an X-ray that Anne needed. The hospital settled for the $270.85 that BCBS said was the covered amount. But they raised our deductible last month from $250 to $500, and there was a $20 copay. Bottom line? BCBS paid 85 cents. We got billed for $270.

For this, we pay $925 a month?

CONCLUSION: It is difficult to get a group health insurance rate and impossible to get a subsidy without either having a job or being truly impoverished. Unemployed individuals have no alternatives to paying retail, and Massachusetts has the highest health insurance costs in the US.

So I’m going to have to be creative.

Kraken Enterprises could establish a Section 125 Voluntary Plan and designate Commonwealth Choice as an available health insurance option. (A Voluntary Plan is one to which the employer does not contribute.) I’d then set up an account with the Health Connector (which represents six carriers). My employees – i.e., me – can then enroll in a Commonwealth Choice plan through the Health Connector. Kraken Enterprises would collect my insurance payments via payroll deduction on a pre-tax basis. Kraken is then billed for my health insurance premium on the 15th of every month. Any shortfall is the responsibility of the employee – i.e., me.

The monthly insurance premium is triple my gross monthly salary, so payroll withholding is a joke. But wait. What if Anne’s freelance business became a Kraken enterprise? She’d become an employee of my company and her revenues would filter through my corporate accounting. The accounting would be a nightmare – I’d need to manage a separate operating company. I would need to consult my CPA and probably a lawyer as well. It would certainly complicate our already-Byzantine tax situation. After all of that, I have no idea whether this would actually save us any money. As far as I can tell, the only advantage is paying in pre-tax dollars. I’d need to actually create the Section 125 thingie and get an employer number before I can see the employee pricing – I assume it would offer me the same 21 plans that I saw as an individual, and probably at the same prices. Although I'm reluctant to draw the state's attention, maybe I’ll do that next week.

Having two employees would magically qualify Kraken Enterprises to purchase group-rate insurance outside of the Commonwealth Choice umbrella. (The insurance industry defines a “small business” as 2-19 employees). Creating this legal fiction might get us around the assumptions that are limiting us to individual/family coverage. However, being married might screw that up. Insurers want two potential enrollees. I wonder how we’d make out if we got divorced and bought two individual plans? We are both willing to divorce if it will save us enough money on health insurance.

Next week I should spend a few more hours on this:

• I need to investigate the comparable options available to the self-employed. I really prefer to keep our businesses separate, if we can.

• I need to revisit that inscrutable Health Service Administrators website and see if it can make some sense out of who they are and what they do.

• I might open a Section 125 plan so that I can price the insurance options available to employees of Kraken Enterprises. That’s the first step in figuring out whether taking over Anne’s freelance business and getting divorced make financial sense.

Two things are certain: First, my dad was a top casualty insurance salesman for 35+ years, and my go-to guy for everything insurance related. I wish I could talk to him now. Second, if I was 13 years older I could just get Medicare and wash my hands of all this. I honestly don’t know how we’re going to get through the next 13 months, let alone 13 years.

Incidentally, it does not appear that federal healthcare reform is going to help us. The plan that's taking shape cuts off subsidies at double the poverty rate.

The only thing that would save our bacon now is if Congress extends the COBRA subsidy for another nine months. AFAIK, that has not even been proposed.

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.