The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
It was expedient to leave certain phrases in the Constitution intentionally vague, but the overall design is clear enough. Just as twenty-eight sovereign European nations now struggle to form a European Union, thirteen formerly sovereign American colonies once struggled to unify for the stronger defense at a reduced cost. Intentionally or not, that created a new and unique culture, reliant on the constant shifting of power among friendly rivals. Everybody was a recent frontiersman, trusting, but suspicious. It still takes newcomers a while to get used to it.
So the primary reason for uniting thirteen colonies was for a stronger defense. As even the three Quaker colonies of New Jersey, Pennsylvania and Delaware could see, if you are strong, others will leave you alone. In time, the unification of many inconsequential behaviors created a common culture of important ones; and in time that common culture strengthened defense. At first, it seemingly made little practical difference locally whether construction standards, legal standards, language and education standards and the like were unified or not. Except, that in the aggregate, it forged a common culture.
The practice of Medicine was certainly one of those occupations where it mattered very little whether we were a unified nation. Unification of medical care offered a few benefits, but mostly it didn't matter much, right up to 1920 or so. Even then I would offer the opinion, that unification of the several states (with consequent Free Trade) only made a big difference to health insurance, and still made little difference to the rest of medical care. In fact, there are still about fifteen states with too little population density to provide comfortable actuarial soundness for health insurance, as can readily be observed in the political behavior of their U.S. Senators. Although the number of low-population states gets smaller as the population grows, there are even so perhaps only ten big states where multiple health insurance companies can effectively compete within a single state border. Quite naturally the big-state insurers expect one day to eat up the small ones. By contrast, the nation as a whole, the gigantic population entity which Obamacare seeks to address, has far too many people spread out over far too large an area, to be confident we could unify them into one single program. Dividing the country into six or seven regions would be a much safer bet. That's the real message of the failure of the Computerized Insurance Exchanges -- far too much volume. And the coming failure of the Computerized Medical Record -- with too much complexity. With unlimited money, it can be done, because diseases are disappearing and computers are improving. But why struggle so hard?
It is at least fifteen years too early, and mostly serves the interest of insurance companies, if they can survive the experience. At the same time, we are at least fifteen years away from growing the smallest states to the point where we could decentralize. It's really a situation very similar to the one John Dickinson identified, James Madison briefly acknowledged, and where Benjamin Franklin improvised a solution. In their case, it was a bicameral legislature. In the case of medical care, it could be an administrative division of revenue from the expenditure. It could be the cure of a half-dozen chronic diseases. It could be six regional Obamacare. But creating one big national insurance company during a severe financial recession is something we will be lucky to survive.
Returning to the Constitutional Convention, an additional feature was added to the tentative 1787 document to respond to protests from small component states. They objected that whatever the big-state motives might be, small states would always be dominated by populous ones with more congressmen if a unicameral Legislature is made up of congressmen elected by the population. Pennsylvania had recently had a bad experience with a unicameral legislature. So a compromise bicameral legislature (with differing electoral composition in the two houses) was added to protect small-state freedoms from big domineering neighbors. Even after the Constitution was agreed to and signed, the states in ratifying it still insisted on a Bill of Rights, especially the Tenth Amendment, elevating certain citizen prerogatives above any form of political infringement, by any kind of a majority. These particular points were "rights"; individuals were even to be insulated from their own local state government. The larger the power of government, the less they trusted it.
John Dickinson of Delaware, the smallest state, soon made the essential point abundantly clear to a startled James Madison, when he pulled him aside in a corridor of Independence Hall, and uttered words to the effect of, "Do you want a Union, or don't you?", speaking on behalf of a coalition of small states. It was probably galling to Dickinson that Madison had never really considered the matter, and went about the Constitutional Convention airing the opinion that, of course, the big states would run things. Dickinson, who had been Governor of two states at once, had observed the effect of this attitude and wasn't going to have more of it.
Delegates
Benjamin Franklin, who for over 40 years had been working on a plan for a union of thirteen colonies (since 1745, long ago producing the first American political cartoon for the Albany Conference), devised the compromise. It was essentially a bicameral legislature -- with undiminished relative power in the Senate for small states. In this backroom negotiation, it was pretty clear Franklin held the support of two powerful but mostly silent big-state delegates, Robert Morris and George Washington. These were the three men of whom it could be said, the Revolution would never have been won without each of them. In 1787 they were still the dominant figures in diplomacy, finance, and the military. All three were deeply committed to a workable Union, each for somewhat different reasons. Now that a workable Union was finally within sight, parochial squabbles about states rights were not going to be allowed to destroy their dream of unity.
And so it comes about, they gave us a Federal government with a few enumerated powers, ruling a collection of state governments with regional power over everything else. And since big-state/small-state squabbles are unending, almost any other solution to some problem repeatedly, seemed preferable to disturbing what holds it all together. On the other hand, the Industrial Revolution was beginning at about the same time, and people who recognized the power of larger markets almost immediately set about attacking state-dominated arrangements, systematically weakening them for a century, and redoubling the attack during the Progressive era at the end of the 19th Century. Attacks on what seemed like an abuse of state power, the power to retain slavery, and later the power to perpetuate white racism, were claimed to justify this attrition of states rights. The ghost of the Civil War hung over all these arguments, restraining those who pushed them too far.
However, the driving force was industrialization, with enlarged businesses pushing back against the confinement of single-state regulation within a market that was larger than that. This restlessness with confining boundaries was in turn driven by railroads and the telegraph, improving communication and enlarging markets, which offered new opportunities to dominate state governments, and when necessary the political power weakens them. One by one, industries found ways to escape state regulation, although the insurance industry was the most resistant, whereas local tradesmen like physicians found it more congenial to side with state and local governments. The 1929 crash and the Franklin Roosevelt New Deal greatly accelerated this dichotomy, as did the two World Wars and the Progressive movement from Teddy Roosevelt to Woodrow Wilson. The Founding Fathers were said to have got what they wanted, which was a continuous tension between two forces, supporting both large and small governments; with neither of them completely winning the battle.
Insurance Monopoly
The medical profession further evolved from a small town trade into a prosperous profession during the 20th century, but the practice of medicine remained comfortably local. Even junior faculty members who move between medical schools quickly come to realize their national attitudes are somewhat out of touch with local realities. For doctors, state licensure and state regulation remained quite adequate, and state-regulated health insurance companies paid generously. State-limited health insurance companies had a somewhat less comfortable time of it, but the ferocity of state-limited insurance lobbying, as exemplified by the McCarran Ferguson Act, perpetuated it. The medical profession watched uneasily as the growth of employer-paid insurance extended the power of large employers over health insurance companies beyond state boundaries, and thus in turn over what had been medical profession's kingdom, the hospitals. And the medical profession also had to watch increasing congeniality with big government extend through businesses, unions and universities, fueled by overhead allowances of federal research grants and finally in 1965, federal health insurance programs. Nobody likes his regulator, but national organizations inevitably prefer a single regulator to fifty different ones. Furthermore, everybody could see that health care suddenly had lots of money, and naturally, everybody wanted some.
There is nothing naturally inter-state about medical care -- except health insurance.
It was all very well to pretend that health care was out-growing local-state regulation, but those on the inside could uneasily watch the federal/state competition for control, with the federal government repeatedly stacking the deck more in its own favor. Aside from federal program interventions, there is still nothing naturally inter-state about medical care -- except health insurance. Doctors, hospitals, and patients all tend to remain local, but insurance can easily cross state lines if regulation permits. Even in insurance, small states have difficulty maintaining actuarial stability, driving health insurance toward one-state monopolies. With a few big-state exceptions, even most health insurance companies prefer single-state monopoly status to federal regulation because it facilitates marketing. To praise the virtues of insurance competition is fine, but if sharing the local market means struggling for adequate risk reserves, nationwide regulation will inevitably lead to domination by a few big-state insurance companies. Small-state insurers would enjoy access to a national market; but blocked from it, they need to retain a local monopoly to survive. Fleeting thought might be given to Constitutional Amendment, but there are probably always going to be enough states which consider themselves small, to block the two-thirds requirement for Amendment. Imposing nationwide uniformity by force would possibly improve standards, but uniformity is increasing rather than decreasing, so the argument is not a strong one.
To be fair about it, there was not a strong case for state regulation, either. It could have been argued that uniformity and reduced administrative costs favored central regulation over-dispersed control, because of improved efficiency; and few would have argued about it. Until the ACA insurance exchanges crashed of their own weight around the ears of hapless creators, that is, unable to do what Amazon seems to do every day, and raising quite a few embarrassing recollections. Recollections of the mess the Sherman Antitrust Act inflicted on local medical charity in Maricopa County, Arizona. Recollections of the "Spruce Goose" airplane that Howard Hughes made so big it couldn't fly. Recollections of the gigantic traffic jam strangling the District of Columbia every weekend. And, reminders that 2500 pages of legislation remain to be converted into 20,000 pages of regulations which it would take a lifetime to understand. Suddenly, let's face it, retaining state regulation of health care, or not rocking the boat, gets a lot better press. It might even work better than the national kind, especially in an environment where no one expected a perfect solution, and just about everyone had heard of the Curse of Bigness. When we first discovered that use of health insurance added 10% to the cost of health care, it had seemed like an easy place to extract 2% of the Gross Domestic Product for better things, just by streamlining administration. But after the health exchange fiasco, some people begin to wonder if 10% is just what it costs to use insurance to pay for healthcare. If that is the case, perhaps we should look at other ways of paying our bills, not just a different regulator. Nobody would pay 10% just to have his bills paid, if he understood what he was doing.
Glenn Hubbard, former Chairman of George W. Bush's Council of Economic Advisers, has written his proposals for 2015-2016 as an Op-Ed piece in the New York Times, in January 2015. The choice of newspaper probably has some significance, since the Chairman of a President's Council of Economic advisers sometimes does, and sometimes does not, formulate the economics views of his party and his President. It's possible he seeks to influence the role of his party's Congressional leaders or possibly represents the views of the two former Bush Presidents, or even a variant of them meant to influence Jeb Bush in his run for the 2017 Presidency. Time will probably tell, as the last two years of the Obama second term could be a time of compromise or time of bitter dissent. Hubbard makes ten or eleven points, usually as single-sentence assertions without associated arguments.
Broadened Budget Neutrality. The first point is that Congress has long been working within the boundaries of tax neutrality for any changes in the tax revenue derived from individual social or economic classes, a restriction Hubbard feels is unnecessary. The example he gives is corporate income taxation, which is very likely the area he had in mind. Perhaps, I think he is suggesting, corporate taxes could usefully be lowered without considering the personal benefits to the upper class of corporate stockholders. In effect, Labor Unions are seen to be acting out the attitudes of the Molly Maguires, in which only cigar-smoking plutocrats would be gaining if the corporations they own were taxed less. In the Gilded Age, perhaps family-owned corporations were the norm, but for fifty years American corporations(but strangely, not German corporations) have been stockholder-owned, or even index-fund owned. And if not officially, individual retirement assets are a growing part of every family's savings. There was a time when only rich folk owned stock, but nowadays employee pension assets have become a growing power in the marketplace. Double taxation is much less a class issue than formerly, and perhaps even cigar-smoking union bosses can be persuaded to change their stance and their rhetoric. Lowering corporate taxes might well help the working class more than the top one percent of earners if matters were scored in a balanced way.
Flattening the Steep Step A second point is made that increasing subsidies and tax credits for the poor, leads to a steep step up to employment and a sudden loss of subsidies, as a further hindrance to joining the workforce. Deriding the loss of subsidies as favoring the "trickle down" process, is an unfortunate obstacle to searching for more gradual approaches to general prosperity.
Consolidated Business Tax. An effort to achieve a gradual transition is suggested, of a consolidated business tax rather than industry taxes and exemptions, and very likely a gradual merger of the customary bank loans, versus bonds. There is a sound of general plausibility about this, but no reasoning is offered in the editorial. Depreciation might be loosened somewhat for the general purpose of increased flexibility, but in general, the main area where depreciation ought to be made merely discretionary is in non-profit companies.
Specifying the Top Tax Bracket. It's interesting to read Mr. Hubbard's proposal to make the top bracket for personal income tax the same as the top bracket for business income. The reasoning behind this proposal is not given and is not immediately obvious. However, it does seem to be an improvement to have this issue removed from the class warfare language of "fairness", to be replaced by some other benchmark with a rationale. Hubbard similarly is inclined to replace subsidies to the poor with tax credits, a move which has the additional advantage of smoothing out the "steep step" up to income tax which is more graduated by effectively having more gradations than mere poverty versus no-poverty. Whether this is the underlying reasoning or not, anything which softens the Molly Maguire rhetoric of the 19th Century coal mines would be a step forward.
Health Care It certainly is heartening to see Health Savings Accounts recommended in both of the two alternatives he proposes for paying for healthcare, one with continued employer-based insurance and one with a tax deduction on the personal income tax. And it is certainly time for a way to be found to give equal tax deductions to those who pay for their own health insurance.
Educational Tax Deduction. A truly innovative proposal is made about tax deductions. Mr. Hubbard proposes a personal tax deduction for education and training, similar to the one already given for investment in technology and equipment. There's a question of whether this should be given to the individual or his employer, but that can be worked out in Congress. The idea is excellent, particularly when it is limited to out-of-pocket investments in education since it has the additional potential to address rising tuition costs while encouraging more education.
Block Grants. It is also innovative to consider block grants to the states to replace the tradition of making Federal funds conditional on state "cooperation", which the Supreme Court has begun to disapprove, as an invasion of states rights. This one might even rise to the level of a proposed Constitutional Amendment. There is little doubt the state legislatures are the weakest part of our federalized system, that the Supreme Court recognizes that fact, and leans toward attributing this problem to the system of conditional grants.
Consolidated Entitlements. Unless I am mistaken, there is a welcome proposal to address entitlement programs by consolidating them; and in the process begin to meet the looming issue of underfunded retirement costs. In a sense, the retirement costs are an outgrowth of improved health and longevity, a truly difficult problem created by a desirable effort.
Let's plan to review this program before the end of the year. By that time, it will have been tested in the fire of the adversary process. And since the following year will be disordered by-election campaigns, we can then surmise how much will be passed into legislation, how much will be exposed as impractical, and how much will fail passage but become the lore of long-term party positions in the far future.
On his 66th birthday, a Health Savings Account owner has only one choice at present: to turn any surplus from healthcare into an IRA (Individual Retirement Account), for taxable retirement living. However, that's a step better than Medicare or employer-based insurance alone, which return unused surplus to the donor of the gift, either the government or the employer, in the guise of the reduced premium cost. However, economists agree the salary soon adjusts downward to treat the confidently expected gift, as part of wage costs. Therefore, health insurance is more expensive than it would be if the surplus were returned to the beneficiary directly. These forms of health insurance have been dominant so long, everyone feels they describe necessary features of health insurance, rather than terms of a contract negotiated by parties other than the beneficiary.
The presumption is made the individual has Medicare, so any accumulated surplus in his HSA needs to be spent after age 66, but not on health, since he assumes he will then be completely covered. This presumption is strengthened when the employees of a group plan are merged into a group, but quickly emerge when transfers are made. So any surplus is an average of the group, not specific to the individual. Data is not available to determine whether the size of this issue is enough to worry about. But a pathway probably was not created for overfunding Medicare to create retirement savings through employer-based insurance. In the first place, the surplus does not exist. In the second place, any surplus was probably expected to flow back into Medicare to reduce its cost. In 1965, it was probably expected that Social Security would fill this need, but increasing longevity has created resistance to enhancing all entitlement programs. It scarcely matters, today.
However, if changes in laws and regulations would make it possible, there might be other choices, one of which would be to overfund Medicare coverage, continue the HSA, and spend the generated surplus on retirement. But notice this: as things stand, if you don't need Medicare anymore, you don't get anything back and the government can spend the surplus on battleships. Just as, in plain fact, a commercial insurance company can spend a surplus on executive salaries. It's not fair to say Medicare will "never" have a surplus. By design, any surplus will always be used for healthcare, because that's thought to be part of "share the risk". It's a design feature common in sharing the risk programs, although not a devastating one.
In short, the designers of Medicare never imagined it would run a surplus, and at present, it is far from it. But in the long, long run, scientists will eventually cure those chronic diseases of the elderly, and then there might actually be such a surplus. It is already clear things are moving in the direction of making Social Security a larger if not more important program than Medicare -- in the short run -- and could largely replace Medicare, in the long run. Because expensive illness is often fatal illness, a great many people do not survive it. So, one ray of hope in this situation is that relatively few people will have both devastations, so the future is probably one expensive entitlement transforming into the other with relatively little overlap. In that case, dual catastrophes are best addressed by insurance. With luck, the people who drop dead without warning or cost will equal the number of overlaps, smoothing down national expense to only two groups, which eventually merge into one as science merges chronic disease into the growing group whose problem is outliving their savings. There are other ways of approaching that problem, but at least a flexible health program could provide a source of funding for it and a general outline of where it might be headed. Notice that compound interest works in favor of this solution, and could be an important component. In fact, unknown treatments will increase future expense, but by definition are not counted. Therefore, statistical projections can show a revenue surplus after the age of 90, which may in fact never materialize.
Therefore it would be easier to pass a seemingly meaningless amendment, right now, while it doesn't cost anything. We've just shown how HSA does it, and Medicare could do it too if it tried. The more likely circumstance would be to get a reduction of either payroll deductions or Medicare premiums in return for surrendering some particular benefit, like transfusions for members of Jehovah's Witnesses. At the moment, religious objectors cause lawsuits and other commotion, just because they don't want some particular feature of health insurance, and actually I can think of no reason why we should make it mandatory. In fact, doing things for someone's own good is a suspect idea, generally.
The long-range reasoning, however, is this: in 2015 the great need is for flexibility. Some of us will need to spend every dime we have on staying alive. And some of us will need to save every dime we can, in order not to outlive our retirement funds. But that probably won't be the same dilemma, fifty years from now. Almost every one of us could be threatened with poverty during extended retirement into undefinable longevity. It strains the imagination to think of ways to pay for both the present elaborate Medicare and an extended retirement in addition. So, by that time, I fully expect people to have come to the realization that Medicare must be liquidated piece by piece. Not to fund Obamacare, but to pay for their own retirement. When you go to a funeral every week, the idea doesn't usually occur that dying too early might ever become a thing of the past.
Neither employer-based nor Medicare returns an unused surplus to subscribers.
For one thing, I expect "rent-seeking" to soak up a lot of the savings from people not getting quite so sick. Rent-seeking will take many forms, like Botox injections and cosmetic surgery. Or like elaborate hospital equipment and excessive salaries, or like too much stand-by but essentially unused equipment. It may sometimes be hard to tell where the money is going, but costs will surely fail to fall as rapidly as illness can disappear. We will need a way for people to perceive this, and for them voluntarily to start saving for it by gradually opting out of Medicare. It won't be an all-or-none issue; people will perceive it at different rates. Therefore, we need to provide a way to get out of Medicare in steps, and individually one by one, over a period of decades. For political reasons, the use of a surplus should be limited to your own retirement living. All of this is called "planning ahead".
Proposal 1:At present, Health Savings Accounts are limited to age 21-66. There should be no age limits at either end, and some provision should be made for inheritance of surplus to newborn children, sufficient to cover their healthcare up to age 21. (3320)
Proposal 2: At present, contributions to Health Savings accounts are limited to $3500 per year, age 21 to 66. This should be changed to an aggregate lifetime amount, at least until latecomers have had an adequate transition to the program. (3320)
Health Savings Accounts provide the flexibility to do this, but at present many Medicare program details are awkwardly designed to anticipate the need. Right now, the program is not sufficiently modular to permit dropping one feature but retaining others and letting the funds follow the needs. And designing partial proposals is inhibited by a political terror that the public will misinterpret motives. So the first step is for people like me, who have nothing to lose, to step forward and start talking about it. The need for retirement money is looming ahead; we need to prepare Medicare for gradual liquidizing, to pay for it.
The first step is probably to design a way to buy out of Medicare, save some money by substituting an HSA for their healthcare, and buy something more appealing with the surplus. The first version will probably be crude and awkward, but it provides a platform to build on. Most politicians, whatever they may think of Medicare and its financing, regard talk of privatizing Medicare as political suicide, so we should be thinking of pilot studies, think tanks, and experimental projects. The old folks who have, or will soon have, Medicare coverage regards it as such a treasure, they tell their elected representatives that privatizing Medicare is the third rail of politics: touch it and you are dead. But a Washington sage once remarked that if things can't go on, they will stop. So, what would it require, induce potential Medicare beneficiaries to select something else, before circumstances abruptly force it on them?
That's probably not the best way to go about it. The early initiatives should be generated by scientific advances. The likelihood is great that science will cure one or two of the big five (cancer, diabetes, Parkinsonism, Alzheimer's Disease, schizophrenia) and bit by bit, Medicare will get cheaper in spite of the rent-seeking. As it does, it will seem attractive to increasing numbers of people, to consider cheaper health insurance, shifting Medicare funding to retirement income. The rules should be relaxed to let early-adopters test the changing environment. We already have a flexible funding vehicle in Health Savings Accounts, and fifteen million existing subscribers who will endorse it.
The Problem With Medicare. Medicare is 50% self-funded by payroll deductions and premiums and is 50% subsidized by the federal government. The old folks get a dollar for fifty cents and are not about to give it up. They obviously should get their own fifty cents back. It's the fifty cents of government subsidy which is at issue, and the published budget should reflect that fact. Just notice how retirees display almost no interest in the Obamacare controversy, except for one thing. Old folks are uneasy that funding for Medicare might get squeezed in order to finance Obamacare, particularly if the two were in the same budget compartment. When the conversation gets around to that point, retirees suddenly wake up and start talking loudly. If the discussion centered on the subsidy, things might subside, somewhat.
But hold on. A retiree approaching his 66th birthday has already pre-paid approximately a quarter of the costs of Medicare, and when he joins, his premiums will later amount to another quarter of the cost. That 50% is the retiree's share of the present costs of Medicare, and naturally, he doesn't expect to see it disappear. The 50% subsidy provided by the government, on the other hand, is what concerns everyone. Even the people who advocate "single payer" systems are talking about extending Medicare to the whole population, gradually perhaps, but probably including the 50% subsidy to everyone. Since healthcare now consumes 18% of Gross Domestic Product, are we willing to see 9% of GDP go from the private sector to the public sector in extra taxes? Or in increased borrowing from foreign nations? We will have to let the politicians wrestle with issues like that, but it will be hard to persuade the public to go along with it.
Meanwhile, let's see what persuasion can do if we offer a good enough deal. For a start, let's presume someone in his late fifties had invested in his HSA while he was young, and is approaching the age where he could augment his retirement income from a substantial balance in his IRA (recently converted from HSA). Then, let us say he also wakes up to the realization he gets a second tax deduction from an HSA if he spends extra retirement money on medical care, either on Medicare payroll deductions or Medicare premiums. And if he stops spending some other obligation, he effectively gets a further tax deduction from spending the money on something else which is tax-free. Potentially, that could add a few thousand dollars a year to his income from age 21 to the day he dies. It's a very attractive goal, and while it really would be legitimately spent on healthcare, Congress might well decide they can't afford to lose that much tax revenue.
So, the rumination goes, the proposal must somehow save some money for the Government, too. If the subscriber were allowed to make a deal to buy out his Medicare, he might make a payment out of his HSA of about $86,000 untaxed, which with 6.5% declining income, would repay the costs of Medicare throughout his remaining life expectancy, all from the invested lump sum. That might seem like enough on paper, but the government has been going in debt for some time to foreigners and would like to stop doing that. If possible, it would like to pay back the earlier loans. If you include this debt, the Medicare cost is revealed as greater than it seems. Furthermore, the GAO will quickly tell you, if you save tax money, you, unfortunately, make it harder to balance the federal budget. The details of all this may be hard to explain, but the general sense of it all is pretty clear.
Let's qualify the simplifications. Different people will have different payroll deductions, at different ages. To some extent, these balance out, because if you have a larger balance in your HSA, you are likely to be older, and likely to have paid more into your Medicare payroll deductions. And to some extent, averages will cancel out and vary with the economy from time to time. A change in the tax code would scramble all of these numbers, but it's preliminary. Medicare is best privatized in pieces, and for that you need prices, so preliminary pricing should be devised for those people who for religious or other reasons, would be interested. Furthermore, accumulating money of this order will require normal interest rates, not abnormally low ones as at present. Since that time is hard to predict, it is necessary to supply minimum interest guarantees, best approximated by index funds of 10-year treasury bonds. Buying out Medicare is a very delicate matter, and should be approached very slowly. The first step is to talk about it without starting a panic. The initial appeal will be found among those who perceive a greater risk from outliving their income than their risk of a major illness cost. They are rare at present, but times will change,
Modern health insurance is a century old in America, and much of its interesting history is irrelevant to present controversies. However, a few features are important to know as a preliminary. It started as benevolence by business to its employees after the First World War, at a time when most businesses were family-owned. In 1945, Henry J. Kaiser discovered health insurance could mostly be financed by successful corporate employers donating it to their employees, thus transforming a gift of health insurance into a business expense.
The gift soon became accepted as a normal part of wages, so the pay packet drifted downward to expect it. The employer paid the same total tax, but the employee got a tax reduction. When the corporate income tax rate became double the individual rates, the employer got twice the deduction the employee got. As other taxes began to be based on the remaining pay packet rather than the total wage cost, employers escaped the extra tax. The employer overall got more benefit from the tax shelter than the employee did, and he got it for every one of his employees. Less successful businesses (with less tax to pay) often could not share in these last two features, and often preferred to remain with Subchapter S incorporation, although their employees lost out on deductions and in general were the only losers. If this is new to you, read that last paragraph again.
In this way, the tax exemption became a normal part of business life, and tinkering was greatly resented. By a century later, CEOs have turned this matter over to Personnel offices and financial officers, forgetting its complicated mechanics, and have gone on to other matters. It was a gift, so the employees were seldom consulted about its details, and in time most employees became oblivious to them. The situation began to be known as "third-party" insurance, and in time the basic decisions were made without much consideration of either the employer or the employee, who seldom raised a fuss. In the course of a century, it was the wishes of the insurer that mainly dominated the decisions, mostly because decisions had to be made, and nobody else cared very much. A century of unopposed decision-making gradually warped the employer-based system into a very expensive, inexplicably complicated combination of incentives, all leading to escalating prices for healthcare. The foxes were in charge of the hen house, and everybody's incentive was to let healthcare prices drift upward.
It is the organization of incentives rather than greed or malice which led to this predicament, so it is not justified to attack anyone. But someone who has benefits to defend can become quite offended when the benefits are disparaged. For insurance company reasons, the useless and expensive 20% copayment system has persisted, while the deductible has remained too small to serve a purpose. For political count-the-votes reasons, the benefits package has favored numerous small pills over major surgery, warping the reimbursement system in favor of more transactions. As the disease has receded in younger people, young people have demanded "something for their money", even though it distorted the benefits package unwisely to use limited funds for small bills rather than large ones. Short-term gains repeatedly triumphed over long-term considerations, slowly but relentlessly warping it away from intended directions.
It is my feeling the average reader needs a little more background: in overfunding for Retirement, buying out Medicare gradually, first and last year-of-life insurance, and the plight of the latecomer to lifetime health insurance-- before we are ready to solve problems in the last five sections of this book. There are a few other salient issues to learn, and a century of history to skip before the casual reader is likely to be ready to address the issues in central contention. So, skip it or study it, that's what the rest of this section is all about.
The price of borrowed money includes a provision to pay for defaults on the loan. That is, the interest rate demanded includes a default provision assessed by the banker against what he thinks is the risk of bankruptcy. Since he wouldn't make the loan if he thought the risk was high, he insures a little more accuracy by assigning a general rate of risk for the class of debtor. But what of the creditor who wouldn't suffer much, no matter what the risk of default? Or who ignores the risk of default because he sees very little? That man would have no interest in supporting loans, except to obtain an adequate rate of return; a pure investor, who has the money and is looking for a place to earn a return. If you don't give him a fair return, he will simply pass bonds by, and invest in something else. If the banker feels the risk is greater than the offered return, he too will let the opportunity pass. The consequence is for a fair price to emerge from the marketplace for bonds. The debtor may cry and protest, talking about the unfairness of it all, and telling his wife that bankers are a greedy bunch of knaves. But in a modern bank, he would merely be offered a Kleenex for his performance. There are just times when loans are expensive, and this particular debtor has encountered one. Sometimes, a disappointed debtor visits his congressman, and sometimes the law is adjusted for him to borrow at a substandard rate. James Madison felt that debtors would always outnumber bankers, so there would be a tendency for interest rates to creep upward in a voting republic. Consequently, a mixture of strategies is employed to suppress interest rates. Sometimes the government subsidizes non-market prices, sometimes the risk of default cost is buried in the overall interest rate, sometimes the bank subsidizes the cost out of more obscure profits, usually by raising the rates for wealthier clients if they are numerous. If these simple strategies go on long enough, the default occurs and its cost is assessed as taxes from the bankruptcy courts. In a modern bankruptcy, the defaulted debtor may be entirely stripped of his other assets. If that's not sufficient to cover the loss, either the banking system collapses, or the government does.
There's another big player in this game: insurance companies. Insurance companies buy lots of bonds, trying to match their interest cost with their other expenses, notably their insurance liabilities. If the insurance commissioner of the state permits it, they may even issue some bonds to cover a shortfall. In recent years, they usually buy stock equities, and if they overdo it, the stock market may get them. The crooks in this business take in the premiums in the early years, and sell the company as the aging liabilities grow older, particularly if the Insurance Commissioner is friendly. Fortunately for them, the population has added thirty years to the life expectancies of their clients, so they have not had to resort to any of these strategies as much as they originally did. Insurance companies have been very profitable, and so bond rates have developed a great deal of slack. Whether they take advantage of their opportunities is not for me to say, but it would not be surprising if bond prices, hence bankruptcy laxness, have been both profitable and slack. The two are huge pools of money, operating in largely independent markets, which can operate comfortably and separately, for long periods of time. The last two stock market crashes have been real estate collapses, and real estate is all about mortgages, banks, and interest rates. And the Federal Reserve has responded to both crashes by artificially manipulating mortgages, banks and interest rates.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
