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.
Philadelphia Reflections is a history of the area around Philadelphia, PA
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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.
One evening in 1979 my visiting son, puzzled by health financing, asked me to explain. A decade of asking myself the same question led to the prompt reply that there seemed to be two central problems, both of them man-made. It's axiomatic in our family that man-made problems can have man-made solutions.
I believed you adequately understood health care financing if you understood the price reduction which hospitals give to subscribers of Blue Cross but not to subscribers of their competitors, and if you also understood the income tax dodge which the Federal government gives to salaried, but not to self-employed people who buy health insurance.
He asked how in the world these two subsidies were defended, and I told him. He then asked how these monopoly-inducing subsidies related to other weird quirks of health finance, and I told him that, too. He listened quietly for thirty minutes, and then exclaimed, "Wow. That's really the Hospital that Ate Chicago!"
So he went to bed, while I stayed up and wrote a short fancy for the New England Journal of Medicine, called, "The Hospital That Ate Chicago". Next morning I polished it a little and sent it off to the editor. Within a few days, it was accepted. Six weeks later it was in print.
At the 1787 Constitutional Convention in Philadelphia, the Framers had pride in their accomplishment, but great anxieties about how long it would survive. Few of them would have predicted it would survive for several centuries, unmatched in durability by any of its imitators. A dozen wars and unimaginable changes in the nature of American society have not shaken it. It survived two particularly ominous threats, the Civil War, and the 1937 Roosevelt Court-Packing episode, but more remarkably it survived momentous, unpredictable, changes in our political, social and economic environment.
The Invention of Political Parties.
It emerges in retrospect that the founding of the American republic took place during The Enlightenment, a comparatively brief interlude of general allegiance to rational behavior. Almost all efforts at the representative government for thousands of years had previously developed many political parties, and vicious ones at that. The Framers expected that elected representatives would disagree about policy and decisions, but would refuse to win political arguments by personally attacking the political opponents who expressed disagreement. The Enlightenment was world-wide, but the American version had strong doses of Virginia Cavalier courtesty and Pennsylvania Quaker humility of speech. Scarcely anyone in the former colonies was true to the manner born, and so almost everyone was both self-conscious and a little unrealistic about the mannerisms of gentlemen. Mix that with an aversion to the aristocracy recently rejected, and there emerged a hesitation to declare a true gentleman would want to be elected public representative for any reason except sincere desire to serve the public as a duty, and certainly not to seek raw power itself. George Washington was the particular exemplar of this model. Renouncing personal power at the moment of his greatest military acclaim, Washington was outspoken about his hatred of partisanship. Resigning as the victorious leader of the armed forces, his return to private life was an act that exited notice and admiration from the whole world, which had fully expected him to create a throne and sit on it firmly. He soon refused to come out of retirement to accept the Presidency unless it was offered unanimously, and agreed to only one term of office. After he was persuaded to accept a second term, he adamantly refused a third because he wanted to establish a tradition of voluntary transfers of power. Along that line, he was seriously concerned that he might die in office, preventing him from establishing a tradition of peaceful transfer of power. No one dared suggest political parties in Washington's presence, but the moment John Adams became President, partisan ugliness began. And it was Thomas Jefferson who was itching to begin it. Jefferson never considered waiting patiently for Adams to complete two terms, but began attacking him during the first one. However much Washington wanted to establish an enduring tradition of courtliness, his administration during the Philadelphia years now sticks out as a quaint aberration.
So the republic was started and established for at least Washington's term, with the proclamation that partisan politics of the sort universally seen before and afterward was only to be deplored. This period was the ten-year temporary period when Philadelphia was the nation's capital, so the concept persisted in Philadelphia as the dominant local standard for another fifty years. Meanwhile, the rest of the country degenerated into the deplorable politics of the frontier, the ignoble, and well, the gutter. Even after Philadelphia evolved into a serious player of machine and state politics, enough guilt about naked ambition remained to restrain the Quaker State from its normal role as a national political power. James Buchanan was indeed elected president but is believed to have been a failure. Since then he serves as an example of why politics are inherently dirty, not suitable for the ambition of authentic Philadelphians. Digby Baltzell blames much of this on Quakerism; that's a partial possibility, but ignores its lack of application to non-Philadelphia Quakers like Herbert Hoover and Richard Nixon, and its visible watermarks stamped on Philadelphians of all religions.
Not mentioning parties, the Constitution says nothing about their number or management. Since the original language contemplated the election of individuals, it leans toward all-or-none victories, thereby sparing us debate about proportional representation. We expect a two-party system, although we do not forbid more than two. The purpose of a party is to help people get elected, so can he win? is the decisive question in the selection of a party candidate. Extremists in both parties disqualify themselves by this test, so when the election finally arrives, comparatively little difference separates the two candidates, and losers can accept the winner. Our elections are unlikely to be followed by civil war, are more likely to be followed by legislative cooperation. Consider the situation with proportional representation among a dozen parties spread over the political spectrum: in nations that try it, one party seldom wins a majority and must form coalitions after the election results are known in order to achieve that governing majority. A succinct summary of the difference is that Americans make their deals before the election; countries with proportional representation have the election first and make deals later after the electorate is excluded. In the rare circumstance when the public wants the wrong thing, proportional representation is a way to do the right thing against the wishes of the public. While it is possible to envision a good outcome from such a situation, it is not easy to imagine public approval of it.
The Mysteries of Property
Everyone was once a nomad. When vast unoccupied land stretched in all directions, ownership meant very little; everyone moved at will. A particular water hole had importance, perhaps, but ownership of it merely meant fighting off others who came near; tribal ownership was a matter of having enough friends to help exclude intruders. If the tribe moved away and came back, intruders again had to be thrown out. This was essentially the situation of native American Indians when the Europeans arrived.
Conventions of land ownership existed under English common law in 1787 but were only a step better organized than the Indian conventions. All land belonged to the king, who might cede large estates to loyal nobles, but could also take it back if the vassal proved disloyal. The Magna Carta and the English Civil War could be viewed as steps in the disruptive process of eventually ceding portions of the King's land to individuals permanently, to have and to hold. The concept of private property became embedded in English common law and was carried over into our own Constitution, although the awkwardness of Indian rights created an incentive to be a little vague. English common law was not so much transferred into our system as recognized to "inform" it, a characterization which allowed the Judiciary to adopt, modify or ignore the awkward parts. Although the rules were imprecise, the Framers of the Constitution and John Marshall's court created a hybrid system, with enough flexibility to deal with remnants of the two preceding theories of land ownership, the farmer and the cowboy. Pre-revolutionary Royal caprice was frozen at the moment of independence, followed by successive recorded transfers through an unbroken chain to the present. If you could establish your position to the satisfaction of the courts, it was your land, your property. This seems to have been the basic model the Framers envisioned when they wrote the Constitution and served as a template for other kinds of ownership when they wrote of the sanctity of contracts. Because this uniform theory of ownership contained some delicate threads of reasoning, well recognized to conflict with the attitudes of the earlier Indian owners, and a little stretched when extended to concepts like intellectual property, it was essential to establish it as uncontested. Land ownership at that time was the main place to store wealth, and transforming a limitless continent into the useful property was the main route to acquiring wealth. Money in the form of currency was a tool for facilitating wealth transfers, banking was a step removed and remained contentious for a century. The property was wealth, and more sophisticated definitions of wealth were treated as property organized around the principles of real estate. When the Framers spoke of the sanctity of voluntary contracts they also had in mind preventing the recent abuses of debt forgiveness under state legislatures responding to unfettered majority rule. If the chain of ownership broke at any point, and particularly if contracts were unenforced the Framers had reason to fear the country could fall apart.
The certitudes of the Eighteenth century were also the certitudes of the Nineteenth; and even for most of the Twentieth century, those who challenged it were regarded as nuisances, intellectual triflers, perhaps Bolsheviks. The courts, however, began to observe evolving ideas of society conflicting somewhat with this central core of our law. Small businesses protested the unfairness of competing with big business, unrestrained by governmental antitrust laws. Labor unions rebelled at the situation of worker powerlessness in their eternal struggle for higher wages against huge companies intent on reducing costs. Private companies could not possibly compete against businesses run by the government, but perhaps it would be more profitable for all businesses to be run by the government. One by one, foreign socialist and communist countries have tried it and were competitive failures, but perhaps Singapore and China, or Denmark and the Netherlands, have perfected government ownership to a point where some corporate state could impoverish us if we persist in the old economic model. So far, it has not been necessary to argue justice and logic; the economic failures of other systems make adoption of their legal ideas laughable.
Nevertheless, the premise of unlimited open land is disappearing. Only 2% of workers in the economy work in agriculture. If the land is no longer the unwritten monetary standard, perhaps its requirements should no longer be the tentpole of the legal system. Perhaps the government has a legitimate role in health care, support of the arts, support of the poor and retired, education of the young. An underlying concept seems to be that certain economically unprofitable but desirable activities will not flourish in a property-based economy unless they are identified politically and reimbursed by taxation. Perhaps in an information age, the government is the logical and most efficient management of information. Perhaps if the government interfered more in private transactions, society as a whole would benefit. It can be difficult to tell how much this sort of reasoning is based on changing concepts of private ownership, and how much is a claim of collective rights; the two visions tend to merge in weakening individual control of the property, while enlarging public claims to the same property. Something called Society is claimed to exist and claimed to have rights.
This assault on old attitudes currently achieves prominence in the Green revolution, where residents of urban skyscrapers feel passionately about swamps and mountain tops they have never seen. If an eagle roosts on a farmer's land, somehow it is not the farmer's eagle, it is everybody's eagle. Green revolutionaries need to become far more explicit about their rights to the private property of others if they hope to convince judges that they have a case, but their ardor is not deniable.
To summarize what was just said, we noted the evidence that a single deposit of about $55 in a Health Savings Account in 1923 would have grown to more than $300,000, today in the year 2014 because the economy achieved 10% return, not 6.5%. Therefore, with a turn of language, if the Account had invested $100 in an index fund of large-cap American corporate stock at a conservative 6.5% interest rate, it might have narrowly reached $6000 at age 50, which is re-invested on the 65th birthday, would have been valued at $325,000 at the age of 93, the conjectured longevity 50 years from now. No matter how the data is re-arranged, lifetime subsidy costs of $100 can be managed for the needy, the ingenuity of our scientists, and the vicissitudes of world finance-- within that 4% margin. We expect that subsidies of $100 at birth would be politically acceptable, and the other numbers, while stretched and rounded, could be pushed closer to 10% return. Much depends on returns to 2114 equalling the returns from 1923 to 2014, as reported by Ibbotson. At least In the past, $55 could have pre-paid a whole lifetime of medical care, at the year 2000 prices, which include annual 3% inflation. An individual can gamble with such odds, a government cannot. So one of the beauties of this proposal is the hidden incentive it contains, to make participation voluntary, and remain that way. No matter what flaws are detected and deplored, this approach would save a huge chunk of health care costs, even if they might not be stretchable enough to cover all of it.
And if something does go wrong, where does that leave us? Well, the government would have to find a way to bail us out, because the health of the public is "too big to fail" if anything is. That's why a responsible monitoring agency is essential, with a bailout provision. Congress must retain the right to revert to a bailout position, which might include the prohibition to use it without a national referendum or a national congressional election.
This illustration is, again, mainly to show the reader the enormous power of compound interest, which most people under-appreciate, as well as the additional power added by extending life expectancy by thirty years this century, and the surprising boost of passive investment income to 10% by financial transaction technology. The weakest part of these projections comes in the $300,000 estimate of lifetime healthcare costs during the last 90 years. That's because the dollar has continuously inflated a 1913 penny into a 2014 dollar, and science has continuously improved medical care while eliminating many common diseases. If we must find blame, blame Science and the Federal Reserve. The two things which make any calculation possible at all, are the steadiness of inflation and the relentless progress of medical care. For that, give credit to -- Science and the Federal Reserve.
Blue Cross of Michigan and two federal agencies put their own data through a formula which creates a hypothetical average subscriber's cost for a lifetime at today's prices. All three agencies come out to a lifetime cost estimate of around $300,000. That's not what we actually spent because so much has changed, but at such a steady rate that justifies the assumption, it will continue for the next century. So, although the calculation comes closer to approximating the next century than what was seen in the last, it really provides no method to anticipate future changes in diseases or longevity, either. Inflation and investment returns are assumed to be level, and longevity is assumed to level off. So be warned.
The best use of this data is, measured by the same formula every year, arriving at some approximation of how "overall net medical payment inflation" emerges. That is not the same as "inflation of medical prices" since it includes the net of the cost of new and older treatments and the net effect of new treatments on longevity. Therefore, this calculation usefully measures how the medical industry copes with its cost, compared with national inflation, by substituting new treatments for old ones. Unlike most consumer items, Medicine copes with its costs by getting rid of them. Sometimes it reduces costs by substituting new treatments, net of eliminating old ones. It also assumes a dollar saved by curing disease is at least as good as a dollar saved by lowering prices, and sometimes a great deal better, which no one can measure. Our proposals therefore actually depend on steadily making mid-course corrections, so we must measure them.
Our innovative revenue source, the overall rate of return to stockholders of the nation's largest corporations, has also been amazingly steady at 10% for a century. National inflation has been just as non-volatile, and over long periods has averaged 3%., perhaps the two achievements are necessary for each other. Medical payments must grow less than a steady 10%, minus 3% inflation, before any profit could be applied to paying off debt, financing the lengthening retirement of retirees, or shared with patients including rent seekers. But if the profit margin proves significantly less than 10%, we might have to borrow until lenders call a halt. No one can safely say what the two margins (7% + 3%) will be in the coming century, but at least the risks are displayed in simple numbers. Parenthetically, the steadiness of industrial results (in contrast to the apparent unsteadiness of everything else) was achieved in spite of a gigantic shift from control by family partnerships to corporations. Small businesses (less than a billion dollars annual revenue) still constitute half of the American economy, however, and huge tectonic shifts are still possible. Globalization could change the whole environment, and the world still has too many atom bombs. American Medicine can escape international upheavals in only one way -- eliminate the disease. Otherwise, the fate of our medical care will largely reflect the fate of our economy. To repeat, it is vital to monitor where we are going.
Revenue growing at 10% will relentlessly grow faster than expenses at 3%. Our monetary system is constructed on the gradations of interest rates between the private sector and the public sector. It would be unwise to switch health care to the public sector and still expect returns at private sector levels. Repayment of overseas debt does not affect actual domestic health expenditures, although it indirectly affects the value of the dollar. Without all its recognized weaknesses, a fairly safe description of present data would be that enormous savings are possible, but only to the degree, we contain last century's medical cost inflation closer to 3% than to 10%. The simplest way to retain revenue at 10% growth is by anchoring the leaders within the private sector.
How Do You Withdraw Money From Lifetime Health Insurance?
Four ways should be mentioned: Debit cards for outpatient care, Diagnosis pre-payment for hospital care, Transfers from escrow, and Gifts for specified purposes.
Special Debit Cards, from the Health Savings Account, for Outpatient care.Bank debit cards are cheaper than Credit cards, because credit cards are a loan, while the money is already in the bank for a debit card. Some pressure has to be applied to banks or they won't accept debit cards with small balances. Somehow, the banks have to be made to see that you start with a small account and build up to a big one. So it's probably fair for them to insist on some proof that you will remain with them. The easiest way to handle this issue is to make the first deposit of $3300, the maximum you are allowed to deposit in one year. That's difficult for little children and poor people, however, so there must at least be some way to have family accounts for children. You just have to shop around, that's all.
After that, all you do is pay your medical outpatient bills with the debit card, but we advise paying out of some other account is you can, so that the amount builds up more quickly to a level where the bank teller quits bothering you. Remember this: the only difference between a Health Savings Account and an ordinary IRA for practical purposes, is that medical expenses are tax-exempt from an HSA. Both of them give you a deduction for deposits, and both collect income tax-free. If for some reason you do not expect a tax deduction, don't use the HSA, use something else like an IRA. Alternatively, if you can scrape together $6000, you are completely covered from deductibles, and co-payment plans are to be avoided, so then an HSA with Catastrophic Bronze plan is your best bet. If you have a bronze plan, you probably get some money back if you file a claim form, but those rules are still in flux at this writing. The expense of filing and collecting claims forms is one of the reasons the Bronze plan is more expensive, but that's their rule at present.
1. Spend it on medical care. Specially modified benefit packages are possible.
2. Spend less, but spend the savings on something else. The program should not be permitted to do this, but Congress should do it in the general budget.
3. Borrow it, and inflate it away on the books. But inflate the borrowings at some lower rate. The customary techniques of a banana republic.
4. Fail to collect the premiums/payroll deductions.
After 1., which is the essential purpose of the whole thing, the most attractive choice is 4. because a gradual transition is needed, with incentives offered only to those who choose to participate. However, borrowing may be necessary to transfer surplus revenue to age groups in deficiency.
Spending Health Savings Accounts. Spending Less. In earlier sections of this book, we have proposed everyone have an HSA, whether existing health insurance is continued or not. It's a way to have tax-exempt savings, and a particularly good vehicle for extending the Henry Kaiser tax exemption to everyone, if only Congress would permit spending for health insurance premiums out of the Accounts. To spend money out of an account we advise a cleaned-up DRG payment for hospital inpatients, and a simple plastic debit card for everything else. Credit cards cost twice as much like debit cards, and only banks can issue credit cards. Actual experience has shown that HSA cost 30% less than payment through conventional health insurance, primarily because they do not include "service benefits" and put the patient in a position to negotiate prices or be fleeced if he doesn't. Not everybody enjoys haggling over prices, but 30% is just too much to ignore.
No Medicare, no Medicare Premiums. We assume no one wants to pay medical expenses twice, and will, therefore, drop Medicare if investment income is captured in lifetime Health Savings Accounts. The major sources of revenue for Medicare at the present time fall into three categories: half are drawn from general tax revenues, a quarter come from a 6% payroll deduction among working-age people, and another quarter are premiums from retirees on Medicare. All three payments should disappear if Medicare does, too. Therefore, the benefit of dropping Medicare will differ in type and amount, related to the age of the individual. Eliminating the payroll deduction for a working-age person would still find him paying income taxes in part for the costs of the poor, as it would for retirees with sufficient income.
Retirees would pay no Medicare premiums. Their illnesses make up 85% of Medicare cost, but at present, they only contribute a quarter of Medicare revenue. However, after the transition period, they first contribute payroll taxes without receiving benefits, and then later in life pay premiums while they get benefits, to a total contribution of 50% toward their own costs. But the prosperous ones still contribute to the sick poor through their income taxes. There might be some quirks of unfairness in this approach, but its rough outline can be seen from the size of their aggregate contributions, in this scheme. At any one time during the transition, working-age and retirees would both benefit from about the same reduction of money, but the working-age people would eventually skip payments for twice as long. Invisibly, the government subsidy of 50% of Medicare costs would also disappear as beneficiaries dropped out, so the government gets its share of a windfall, in proportion to its former contributions to it. One would hope they would pay down the foreign debt with the windfall, but it is their choice. This whole system -- of one quarter, one quarter, and a half -- roughly approximates the present sources of Medicare funding and can be adjusted if inequity is discovered. For example, people over 85 probably cost more than they contribute. For the Medicare recipients as a group, however, it seems like an equitable exchange. This brings up the subject of intra- and extra-group borrowing.
Escrow and Non-escrow. When the books balance for a whole age group, the managers of a common fund shift things around without difficulty. However, the HSA concept is that each account is individually owned, so either a part of it is shifted to a common fund, or else frozen in the individual account (escrowed) until needed. It is unnecessary to go into detail about the various alternatives available, except to say that some funds must be escrowed for long-term use and other funds are available in the current year. Quite often it will be found that cash is flowing in for deposits, sufficient to take care of most of this need for shifting, but without experience in the funds flow it would be wise to have a contingency fund. For example, the over-85 group will need to keep most of its funds liquid for current expenses, while the group 65-75 might need to keep a larger amount frozen in their accounts for the use of the over-85s. In the early transition days, this sort of thing might be frequent.
The Poor. Since Obamacare, Medicaid and every other proposal for the poor involves subsidy, so does this one. But the investment account pays 10%, the cost of the subsidy is considerably reduced. HSA makes it cheaper to pay for the poor.
Why Should I Do It? Because it will save large amounts of money for both individuals and the government, without affecting or rationing health care at all. To the retiree, in particular, he gets the same care but stops paying premiums for it. In a sense, gradual adoption of this idea actually welcomes initial reluctance by many people hanging back, to see how the first-adopters make out. Medicare is well-run, and therefore most people do not realize how much it is subsidized; even so, everyone likes a dollar for fifty cents, so there will be some overt public resistance. When this confusion is overcome, there will still be the suspicion that government will somehow absorb most of the profit, so the government must be careful of its image, particularly at first. Medicare now serves two distinct functions: to pay the bills and to protect the consumer from overcharging by providers. Providers must also exercise prudent restraint. To address this question is not entirely hypothetical, in view of the merciless application of hospital cost-shifting between inpatients and outpatients, occasioned in turn by DRG underpayment by diagnosis, for inpatients. A citizens watchdog commission is also prudent. The owners of Health Savings Accounts might be given a certain amount of power to elect representatives and negotiate what seem to be excessive charges.
We answer this particular problem in somewhat more detail by proposing a complete substitution of the ICDA coding system by SNODO coding, within revised Diagnosis Related Groupings,(if that is understandable, so far) followed by linkage of the helpless inpatient's diagnosis code to the same or similar ones for market-exposed outpatients. (Whew!) All of which is to say that DRG has been a very effective rationing tool, but it cannot persist unless it becomes related to market prices. We have had entirely enough talk of ten-dollar aspirin tablets and $900 toilet seats; we need to be talking about how those prices are arrived at. In the long run, however, medical providers are highly influenced by peer pressure so, again, mechanisms to achieve price transparency are what to strive for. These ideas are expanded in other sections of the book. An underlying theme is those market mechanisms will work best if something like the Professional Standards Review Organization (PSRO) is revived by self-interest among providers. Self-governance by peers should be its theme, ultimately enforced by fear of a revival of recent government adventures into price control. Those who resist joining should be free to take their chances on prices. Under such circumstances, it would be best to have multiple competing PSROs, for those dissatisfied with one, to transfer allegiance to another. And an appeal system, to appeal against local feuds through recourse to distant judges.
Deliberate Overfunding. Many temporary problems could be imagined, immediately simplified by collecting more money than is needed. Allowing the managers some slack eliminates the need for special insurance for epidemics, special insurance for floods and natural disasters, and the like. Listing all the potential problems would scare the wits out of everybody, but many potential problems will never arise, except the need to dispose of the extra funds. For that reason, it is important to have a legitimate alternative use for excess funds as an inducement to permit them. That might be payments for custodial care or just plain living expenses for retirement. But it must not be a surprise, or it will be wasted. Since we are next about to discuss doing essentially the same thing for everybody under 65, too, any surplus from those other programs can be used to fund deficits in Medicare. But Medicare is the end of the line, so its surpluses at death have accumulated over a lifetime, not just during the retiree health program.
Here's an idea which has been bouncing around in my head for several decades. The first year of everybody's life resembles the last year in several unique ways. Everybody has a first and last year of life, but essentially no one pays for his own healthcare during those two years. They are pretty expensive years, amounting to 3% for the birth year and something like twenty percent for the last one, so if these costs were removed from the calculation of health insurance premiums, it would make a substantial relief. So, why don't we invent a kind of health insurance which pays for those two years, relieving the rest of the system of this cost? Paying for it during years of employment would shift the cost to the earning third, from the non-earning two thirds.
This kind of health insurance would have to be retrospective, but the dates alone would make it fairly easy to administer. Someone else would have to pay these costs first, so it's likely this insurance would largely be a new insurance company. It would reimburse another insurance company which could prove it legitimately paid the cost, that the prices were fair, etc. Whether this was a mandatory requirement for people who had this payment responsibility or a function of the government on everybody's behalf -- makes less difference because this health issue is universal, so it might as well be unspecified. On the other hand, if it is made a voluntary liability of people who have payment responsibilities, they would require some proof the whole arrangement is on the up and up.
Health care can't get more basic than being born or dying.
Irreducible Minimums.
Insurance executives would seek some way to pay average costs for the whole country since it would simplify their job not to get into the nitty-gritty of itemized charges. That's what has happened with the Affordable Care Act, and it hasn't proved to be acceptable to all parties. They might have to be satisfied with partial steps in that direction, paying hospital bills only, or institutions only, since arguing over the cost of diapers and babysitting might be too contentious. There are, after all, many costs incurred during the first and last years of life which are probably not legitimate health care costs, but under the circumstances would naturally have a sort of medical flavor to them. It thus would seem like a good beginning to have the people who are interested in one side of the business or the other, get together and construct a joint proposal which they consider workable. The people who are likely to be presented with the bill would have slightly different viewpoints, and several proposals might result.
This idea, in somewhat greater detail, might be examined in conjunction with universal Catastrophic health insurance. There would be many overlaps, and practicality might dictate the choice. But when we seem to have got it about right, either one of these choices or possibly some hybrid of both, would likely be a better thing to make into mandatory coverage. Or at least mandatory in the sense it might become illegal to have coverage for less universal, and less urgent coverage -- unless you have one of these more basic coverages, first. Society, whatever it may claim, has almost always proved to be pretty stingy. So, other coverages would have to be depended on to provide the extras and to defend their practicality as insurance. It would seem to be a useful thing, to have one insurer arguing cost, and the other insurance company arguing quality, so that neither one would try to threaten the other with unbearable legal costs as the main pressure.
Overview. In earlier volumes, it was proposed to make healthcare more affordable by re-organizing its pieces. We're still on that theme, now emphasizing how to go about harvesting investment income from the quirks of modern healthcare. To be brief about it, health spending now crowds toward the end of life, with most heavy spending after age 65, but most earning power coming before 65. That bifurcating trend continues and our financing gets increasingly middle income-heavy. The initial reaction was to treat workers and retirees as two different classes of people, relying on one to tax the other, ignoring any restlessness about the cost of paying for someone else. Retirees now move to different communities, even different states, almost sorting into two different nations. Furthermore, the gap gets wider, with good health leading to longer retirements. Government is forced to be the paymaster for an expanding free lunch for strangers.
As if that were not enough, at the front end of life, children become entitled to tax their parents for health and education, for longer stretches of increasing alienation. Give things a little time, however, and it's possible to anticipate this additional third of the population feels entitled to tax the working third, deploying the enforcement powers of the government intermediary. Between them, the non-working two thirds will constitute a majority, so even politics may not forestall the problem. To earn more requires more education. To work more should entitle a peaceful retirement. Somewhere, we got on this wrong path for the right reasons.
The book before you is not a list of dooms and glooms. It is a proposal to protect a functioning society by regarding child, parent, and grandparent as different stages of the same person's life, all with a unifying interest in preserving the system. Specifically, we build upon the idea of a Health Savings Account, one account per person throughout one lifetime, as a financial way to illustrate a social point. If you spend too much too early, you won't have much left for later. This proposal is voluntary, you don't have to do it, but in some ways, that's another advantage. No matter what system is used, ultimate protection lies in the sympathy of more fortunate people. Sympathy will last longer if everyone appears to have done his level best--for himself, and with plenty of warning if it wasn't sufficient. Ultimately, there is no escaping the use of insurance for unexpected catastrophes, but that's the last resort. Only an insurance salesman would argue for unlimited insurance for everyone, all the time. And only someone who knows very little about insurance would believe insurance is a form of printing money. Voluntary isn't one-size fits all. Voluntary doesn't dump 340 million subscribers on an untested system, all at one time.
Either voluntary or mandatory, the consequences of our present dangerous path eventually fall on the individual, leaving nothing but the unlimited (?) sympathy of others for protection. The working generation must always subsidize the two dependent generations, but it's the individual at different ages instead of as anonymous classes of strangers. For a final twist, we propose to address this problem by adding the incentive of a second problem we didn't even have until a few years ago. It isn't a trick; everything looks in retrospect as if it could have been predicted.
The cost of a third-party system can be found in the difference between two costs, first-dollar cost, and high-deductible.
Three Surprises. Curiously, the new concept had to be tested before it could be fully understood by its originators. A bit of history may help explain how it came about. The basic concept of Health Savings Accounts was developed in 1981 by John McClaury and me, while John was Senior Policy Advisor in the Reagan White House. Derived from the IRA concept developed by Senator Bill Roth of Delaware, it started as a Christmas Savings Account to build up the deductible for a (high-deductible) Catastrophic health insurance. After testing, the realization dawned that the real deductible was the unpaid portion of the deductible in the account, eventually becoming zero -- because the (linked) insurance premium did not rise as the real deductible declined. Eventually, the HSA emerged with first-dollar coverage for the same price as high-deductible insurance. The modest saving of the deductible within your own hands, plus the relief of that burden upon the insurance company, essentially high-lighted the undue cost of first-dollar coverage.
A different way of enlarging that point emerged from the tendency of non-insurance HSA managers to use debit cards for medical payments, instead of claims forms. Although there must be more temptation to chisel in the absence of strict scrutiny, the debit-card system essentially depended on the client to howl if his own money was suspected of being mis-spent. When you spend a third party's money, there's far less concern than when spending your own. The relative absence of chiseling cost was defining the true cost and effectiveness of third-party policing. And since the cost was seemingly much greater to police than not to police, it exposed the second true cost of using the third parties at all.
That was one surprise, but a more gratifying development was an appreciable fall in medical costs in spite of minimal cost-reduction efforts. At first, this was attributed to the ("adverse") selection of unusually frugal clients, but in time the real incentive emerged: the provisions of the HSA act permitted any surplus at age 65 to be turned into an IRA. That is, an incentive had been created to save health money for retirement, substituting personal responsibility for insurance company vigilance. And the hidden cost of using a third-party system was approximated by the resulting difference between the two costs.
But a third zinger in the system took longer to emerge. What was mainly motivating subscribers to be stingy and vigilant was the provision in the enabling law that when the owner reached Medicare age, the Health Savings Account turned into an IRA, Bill Roth's Individual Retirement Account. The name itself suggested motivation. As improved health care spread among the elderly, they lived longer and longer. Gradually and grudgingly, it was recognized that extended longevity was an unfunded cost of Medicare. There was Social Security, of course, long left in the dust of thirty extra years of longevity. It might have satisfied Bismarck, but it was essentially negligible in the face of really extended longevity -- which eventually proved to be five times as expensive as the rest of health care. What's worse, its cost is even harder to approximate than the future cost of health care, because everyone has his own definition of a "decent" retirement. An underfunded retirement is a stronger incentive to watch your pennies than a specified one, because there is no one, not even the demonized one percent, who can be certain there will be enough left to last. Wasn't that enough incentive to get anybody's attention?
For the purposes of this book, the strength of that last incentive was its most important feature. Almost anybody could tell at a glance that the cost of Medicare was what stopped "single payer" in its tracks, what paralyzed Congress on healthcare, and what defied solutions from any direction. Medicare was the "third rail" of politics -- touch it and you are dead. But with a new retirement entitlement looming which almost made Medicare costs laughable, it was a new ball game. In the new environment, third-party reimbursement was itself standing in the road of lowering everybody's costs through rearranging the payment stream. Medicare became a symbol of what the problem was, not just a lobbying benefit. Increased retirement cost was, in short, a central cost of health care, and anyone who stood in the way of fixing it was misguided. Because it is closest to retirement, Medicare is in fact the first thing you must change, but you better do it very carefully. And by the way, you better do it pretty soon.
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This study of Health Savings (and Retirement) Accounts was begun thirty years ago, with intensity in the past five years. During most of that time, it was paying for health costs which were the central concern. Paying a big chunk of health costs would be an achievement, paying for it all would be an impossible dream. Therefore, paying for the whole healthcare system was the earlier goal of my proposals. If it fell short, well, it paid for a big part of it. Either way, we could afford to leave Medicare alone. But once Medicare came into focus as the main impediment to solving an even bigger problem for exactly the same age group, "saving" it becomes a relatively small issue. New revenue must be found, the quality of care must not be injured, and -- most of all -- public opinion must be re-directed. This is a specialist's game, but the public is now the real player.
Resource Assessment. Adding up all the other economies of Health (and Retirement) Savings Accounts, but now also including the retirement costs, the conclusion is left that HRSAs might pay for health costs, and some but not all retirement costs. Much of the shortfall comes from difficulty stating a "decent" retirement payment which would satisfy most people. That's enough for a Trappist monk is not enough for a movie star, and what will be called decent in 60 years is pretty hard to say. So the most we should promise is healthcare plus some retirement; supplement more generous retirement as you are able. Even promising that much is a stretch, but is certainly superior to healthcare plans without the discipline of individual ownership. Unfortunately, it forces the individual to some choices he must make for himself, versus allowing some big anonymous corporation to do it all for him at a hefty markup. Let's specify the two big dangers he must navigate:
Imperfect Agents Theoretically, the best result anyone could provide would be to give a newborn baby a couple of hundred dollars at birth, let a big corporation do the investing, and pay a million dollars worth of bills over the next ninety years on his behalf, at no charge. The long investing period would provide some astonishing returns, and it would be entirely carefree for the customer.
Unfortunately, experience over thousands of years has demonstrated agents will eventually extract much of the profit for themselves. Countless kings have been known to shave the edges of gold coins, even more, have been found to have employed inflation of the currency to pay their own bills. Investment managers are almost invariably well compensated, usually for mediocre returns. William Penn, the largest private landholder in history, was put in debtors prison by his wayward agent, as was Robert Morris, the financier of the American Revolution. Whole-life insurance companies are the closest approximation of an agent for a Health Savings Account who might propose to get paid a level premium for decades before paying out a benefit for a dead client. They seem to survive by promising a single defined fixed-dollar benefit and counting on inflation to work for them as it does for dictators, overseen by an insurance commissioner. Unfortunately, they have the moral hazard of falling back on other surviving firms to bail out bankruptcy, and the political hazard of trying to force premiums downward for the taxpayer without any reliable benchmark. Just how much they have been rescued by lengthened longevity is something only an actuary knows. Long ago, the situation was summarized by the question, "And where are the customers' yachts?"
Inexperienced Solo Management. If Warren Buffett had an HSA, he would have no problem managing it, and neither would a great many other savvy folks. The problem is to make the management so simple and standard that expenses can be kept low without injuring investment returns, for the average citizen. This consideration almost drives the conclusion the lifetime would be best divided into at least three component parts, with benchmarks and averages published regularly, since the medical and beneficiary problems divide into the same three (childhood, working age, and retirement) components. It begins to look as though a new profession of fee-for-service advisors needs to become educated and distribute themselves widely, perhaps in local bank branches. As will be described in later sections, the need is for the income stream to be kept in balance with the probable expenditures, adjusted for inflation or deflation. It is not to achieve the maximum possible revenue return, regardless of risk. That is to say, the purpose of the HRSA is not to make as much money as possible, but to be sure as much medical need as possible can be satisfied by the revenue available. Let's put it all in a nutshell: There's a big difference between designing a system to cover a public need inexpensively -- and designing a business model to make a profit. But that's not nearly as big a problem, as doing both at the same time.
After Assessing Obstacles Comes Strategy. Most HSAs make payments with a debit card suitable for passive investing (utilizing total market index funds) for inexperienced investors and for otherwise undesignated accounts. However, there's a technical problem: the earning period is not the first stage of life; it's the second, following nearly a third of life in childhood and educational dependency or debt. Health expenses in the childhood third of lifespan may be comparatively small, but the earning capacity is essentially zero. This unconquerable fact leads to splitting investment considerations into three stages, the first and last thirds subsidized by the middle one. The result is, two systems feeding off the middle third in opposite ways, requiring opposite approaches. Somehow, it must all come out in balance at the end. And remember, it starts with a deficit in the obstetrical delivery room unless we re-arrange something else.
If you spend too much too early, you won't have anything left for later.
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.
