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.
President George W. Bush nominated John Roberts to be Chief Justice of the U.S. Supreme Court in 2005. Since then, the Chief's administrative changes to the court and the whole court system have been slow but methodical. To the extent the Chief Justice has control of the matter, Roberts has been taking steps which make the Court into a more thoughtful branch of the Federal Government, ultimately making it more powerful. His first step was to reduce the number of cases considered each year, constraining them to conflicts between lower jurisdictions, unless otherwise mandated. This year, the number of cases heard is about eighty, or only half of the previous numbers. The policy lets unconflicting Appellate judgments stand. A second court must disagree with the first one, for the Supreme Court to enter the case.
The so-called Obamacare case, (NFIB v. Sebelius), meets this conflict-between-jurisdictions standard, but is notable for other innovations. The case was nationally broadcast as a live slide show. It heard arguments lasting three days instead of the usual single hour, and of course, it broke new substantive ground in a case of national interest. The decisions will now get more press attention; but this relatively rapid evolution toward a national debating contest, through modified Court procedure, is more important than it looks. It would be saying too much to claim the whole nation now fully understands its Constitution of enumerated powers, but surely the citizens who have only recently learned something about it must number in the millions. Before this case, many law school graduates might have had difficulty describing the design of the federalized system in a plausible dinner-table conversation. It's not yet clear where John Roberts is going, but he is surely trying to bring the public along with him.
During the semi-televised arguments, I was at first impressed with the rapid-fire exchanges between Justices and litigators about the operation of health insurance. Some people are born with high-speed brains and high-speed speech apparatus; no doubt, such people are sought after to represent others in court. But after practicing Medicine for sixty years and writing books about health insurance, I recognized that several rapid-fire responses by the attorneys were confident but off-target. Frankly, if you only have a few minutes but many points to make, and have to say them before someone interrupts, you would almost have to be a circus freak to manage. This is quite unnecessary, no matter how entertaining it may be to other lawyers. There seems no reason why the questions cannot be submitted in writing, sometimes employing experts on the specific points, and allowing enough time without interruption to devise a thoughtful answer. At present, it seems to matter more what the litigating attorney will agree to, than what is the fact. The outcome of cutting a litigant off after he says, "Yes, your honor, but.." is now only to establish whether both sides agree on a point; just why they agree or disagree is not even sought, let alone disregarded. It would seem useful to know Justice Thomas' reasons for abstaining from questions during oral arguments, for a different sort of example. So, it is easy to imagine that John Roberts has some thoughtful goals in modifying Supreme Court traditions, and equally understandable if jurists of this distinction become irritated by suggestions from the peanut gallery. It is thus fitting that we all hold back and first watch where the varsity means to take us. But allowing the public to express an opinion, is not the same as lobbying for it.
The Obamacare Act was about 2600 pages long, and two years after the President signed the bill, more than half of the necessary regulations remain to be written. The Law is "not severable", which is to say individual pieces of it cannot be attacked in court, without potentially upsetting decisions made on other portions. As a consequence, both the good and bad parts could endure for a long time to come. Or, the whole thing could suddenly sink from sight, relatively quickly. If the Justices can tolerate it, this legislation with many "moving parts" could be in the courts for a long time to come. So, Justices will then find the rule Roberts has made, of only accepting conflicts between the jurisdictions, protects their time and patience. But in doing so it will shift most final judgments into the hands of the lower, appellate courts. The legal profession will like this quite a lot. It will be like the gratifying situation said to prevail when a commanding General decides to retire -- everybody down the line could get promoted one notch.
By artfully selecting cases to argue, there were here four points open to the decision. Only two of them eventually had bearing on the final outcome of this case, but the whole issue is not necessarily concluded. The first decision got the most attention, deciding that the penalty for not having health insurance could be read as just a tax, and therefore was legal for Congress to use as a Constitutional basis for making health insurance mandatory, as Roberts declared the "Commerce clause" was not. The distinguishing feature of a Congressional exaction which is "just a tax" appears to be whether it exceeds the expenditure intended; if it exceeds the expenditure it would presumably be punitive. Nothing had seemed more important to the Founding Fathers than to expand the ability of the national government to impose taxes to service war debts. To truncate this wish of George Washington and Robert Morris into a short-cut, "Congress has the right to tax", or conversely to expand its confining language into "Congress has the right to tax in order to make private health insurance compulsory" just points up that the only real purpose of taxes in Washington's day was to wage war, and that the purpose of allowable taxes probably would have been defined if other purposes had been foreseen. Someone could usefully point out that what the Constitution really means is that Congress has the right to tax for "defense and the general welfare", and challenge anyone to argue otherwise. One sees the clever hand of Gouverneur Morris fuzzing up that argument; are we to ignore the fungibility of money and ask whether Congress may spend money on the general welfare only if it is general? How about earmarks, for example, are they all for the general welfare?
However, to turn a blind eye toward interesting issues is apparently a price that must be paid for obtaining the right for the Chief Justice to write the majority opinion, which eventually slips in some language (in legal language, an obiter dictum) to the effect that , of course, you couldn't use the Commerce Clause to do that. Getting Justice Ruth Ginsburg to sign that will eventually sound like the box John Marshall constructed in Marbury v. Madison. If that obiter dictum is as heat-resistant as the opinions of the first Justice Roberts in Franklin Roosevelt's court-packing effort, then the Commerce Clause is likely to be off-limits for a long time. Of course, if Chief Justice Roberts had joined the other four conservatives he would still have been able to write the majority opinion, but in the opposite direction. Except of course for that inevitable political accusation: There you go again, you 5-4 conservatives.
The second decision, in this case, is the sleeper. Congressional managers in charge of writing the bill had finally decided they had no way to cover 40 million uninsured people, except by diverting fifteen million of them into what is acknowledged to be the absolutely worst part of the American medical system, the state Medicaid programs. And because many States Rights advocates were in charge of state Governor's offices, the Congressional bill-writers added what is now a fairly familiar prod to cooperation. That is, if a state refuses to take the extra Medicaid patients, it will lose all federal funds for existing clients of state Medicaid. This sort of coercive provision has become so standard in highway bills and other federal programs operating at the state level, that it was largely unnoticed in the 48 hours the Congress was given to examine 2600 pages of legislative provisions. This, however, is blackmail, said John Roberts, quite unallowable under the defined separation of powers of the Constitution, between the state and federal levels of government. Furthermore, if some state decides to accept the penalty, it could close the existing program for the poor and accept the subsidy for the middle class, thus enhancing their revenues and reducing their obligations to the poor. Congress must now devise new strategies for suggesting federal programs to the states, and probably will do so. But the financial blackmail strategy now has a permanent black eye, with a skeptical public eye on the alert for it. The ironic conclusion of all this comes from the Congressional Budget Office, which predicts we will end up with 30 million uninsured persons, anyway.
What's awkward about this was immediately pointed out by attorney Richard Epstein: it ignores the century-old precedent set by Chief Justice Taft. Writing about a Child Labor law, Taft created a Supreme Court precedent that the Constitutional taxing power of the national government may not be used to implement what cannot be implemented directly. We can now see an example within the borders of a single case, where the Constitutional taxing power provision is usedto indicate an otherwise impermissible Obamacare, and a few pages later its use is forbidden in the case of Medicaid in order to accomplish a forbidden coercion. Locating the two issues in the same case decision helps make the distinction between using the taxing power for revenue, and using it to coerce obedience; the distinction grows as the magnitude of the tax grows, particularly after it exceeds the intended government expenditure. What is not emphasized is the basis for Chief Justice Roberts reversing the precedent set by Chief Justice Taft on the same topic a century earlier. He did it with the Obiter dictum, and yet he didn't exactly do it. The four liberal Justices who co-signed the decision are not in a position to dispute it, while the four conservative Justices may not wish to. In either direction, however, the vote of the current Chief Justice appears to be both decisive and subtle.
It remains to be seen whether the 'tax, not commerce' strategy was clever. If the tax approach proves to be durable, it presumably extends to a wide range of legislation since Roosevelt's New Deal. Already, its awkward features have emerged in renaming portions of Obamacare into Chapter 48 of Subtitle D of the Internal Revenue Code of 1986 (!). Any law student who tries to look that up is going to have a frustrating time. But on the other hand, sometimes you win by losing. If it should somehow not be a tax, it has already been excluded from the Commerce Clause, so it has no hook left in the Constitution on which to hang it. There's something in this whole wrangle which resembles the position of Germany and Japan after the Second World War. In spite of losing that war, those two nations seem to have prospered better than England and Russia, who lost their empires but are said to have won the war .
In recent years, Congress has taken to producing laws of great complexity, sometimes thousands of pages long. This is particularly notable in the Obama administration but can be viewed as a non-partisan tendency throughout the Twentieth century, starting with Teddy Roosevelt and Woodrow Wilson. As part of the phenomenon, the workload of Congress has increased to the point where the Legislative branch is particularly weakened by its traditional procedures. The Executive branch has responded greatly enlarging itself, able to create most of the Law through regulation after the law is passed; and the Legislative branch reacts by creating excessive detail in later laws. This recipe for self-defeat has come to be called "micromanagement" by business theorists, who tend to view "command and control" as a solution. As long as the Constitution stands, that approach will not be allowed to work. It is not the purpose of this book to redesign government, or even to discuss it in detail. However, it is wise to remember that even good proposals are undermined by the change of circumstance. Unwisely freezing details when not truly necessary could defeat the main goal, which is to pay a large share of health costs with compound investment income.
The main goal is to pay a large share of health costs with compound investment income.
The main concern is this: our present or future systems of managing the currency may not permit compound interest to compound faster than inflation. That can't be blamed on the Health Care system, but it would certainly injure health care. At the present moment, long-term U.S. Treasury bonds pay 2%, but inflation reduces the value of the bond by more than that, perhaps 3%. Income tax reduces the value by perhaps 0.5%. The graduated income tax already makes it useless for the top quarter of the population to buy Treasury bonds, to say nothing of the top 1% of the population. Whatever the outlook for bonds, insurance companies must keep a large bond portfolio to pay claims. Whatever the outlook for stocks, a large stock portfolio is necessary to stay ahead of inflation. The public must not force its managers to ignore these rules in order to match the investment results of others.
Congress has responded to unrelated pressures by trying to collect the same taxes from a loophole-less tax code, primarily for the purpose of lowering the rates on the top bracket. Whatever the outcome of this struggle, it dramatizes that the usefulness of investing in bonds can readily be destroyed by modifying the tax code, by the stroke of a pen, as it were. You certainly would not want your lifetime health insurance to be risked by that sort of thing happening, sometime in the next eighty years, so you do not want the government to be too tightly in control of your investment portfolio. You may love your government, but its agenda is not necessarily in harmony with that of an insurance company.
Legislative extremes probably won't happen, because of the historic sensitivity of Americans to taxation. But inflation could be equally destructive, and control of that lies in the hands of an un-elected committee at the Federal Reserve. Much of this power was unintended, created by going off the gold standard, and then replacing it with the power of the Federal Reserve to issue (or, not issue) vast amounts of currency in response to "targeting" inflation at 2%. Since a casual observer has trouble seeing much of a match between 2% and the actual amount of currency issued, the Federal Reserve Chairman has been given wide latitude in adjusting interest rates for his own purposes. The outcome for present purposes is that a fifty-year history of this system would have allowed the following statement: "You could withdraw 4% a year from an investment fund, indefinitely, and still have the same amount remaining in the fund." In the past year, however, the following analysis emerged from David C. Patterson, the CEO of a very large investment fund: "A draw of 3% a year at any time since 1926 would only have resulted in a steady purchasing power 60% of the time." Whether this attack on a fundamental investing maxim was caused by inflation, going off the gold standard, or the actions of the Federal Reserve, it is a lesson that interest rates cannot be predicted eighty years in advance, within the boundaries of what experienced financiers considered safe enough to depend on.
The Bottom Line. The life insurance industry faces exactly the same problem, and if the life insurance industry has a solution, it hasn't made it public. What the life insurance industry surely has, is lobbyists. The solution they would devise doesn't necessarily address someone else's problem, but health insurance for the last year of life comes pretty close to what they do for funeral cost protection, so one could be confident they would be allies in any congressional manipulation of income tax upper brackets, to the disadvantage of investment funds. And the same thing could be said of the financial community. And the banking community, so one could be reasonably confident there would be plenty of allies against any overt congressional assault. That does leave the loopholes created in any plan by the unintended consequences of some other plan.
All in all, it seems the best strategy to begin with an investment fund which has already been authorized and given a tax exemption: the Health Savings Account. Put as much as you can in one and let it grow. Spend it for some health expenditure if you must, but anyone who puts in two thousand dollars at the birth of a grandchild is probably going to be glad he did, even though it might be left undeclared just how it would later be spent or disposed of. Walk a couple of blocks and open a debit card for the fund, and walk a few more blocks to a broker who can sell you a high-deductible health policy. Link these three features together when, and only when, some changed circumstances make it useful to link them in a single integrated system. If this direst of dire circumstances never comes about, you are no worse for leaving them independent. But if something bad does come about, you may possibly be motivated to change the basic arrangement, or even dissolve it and take your money out of it. Under really dire circumstances, your own ability to judge what is sensible is probably the best protection you can reserve for what is, at the best, a very dangerous world we live in. For far distant planning, it is necessary to rely on our form of government to produce leadership which can handle the problems.
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.
Let's see what we have to work with, in Medicare. The first step is to set the boundaries. Aside from the add-on programs for disabilities and End-stage kidney programs, the public first encounters Medicare at around age twenty, when the working population begins to have 3% of its payroll check deducted. From that point to retirement at age 60-65, Medicare is invisibly taxing payroll checks and paying as it goes, but the beneficiaries hardly know they have it. At age 65, let's say for the sake of tradition, payroll deductions trickle off and Medicare payments trickle in. The serious illness starts to play an important role in life beginning at age 55, but half of Medicare expenditures take place in the last four years of life.
Of course, people who are healthy live longer than people who get deathly ill, so although the average age at death is about 73, medical progress is pushing the average death age steadily older. Some day it will approach 84, the average age of longevity at birth, which is itself predicted to be 90 in a relatively few decades. In short, people are dying older and seemingly can be predicted to die even older in the future.
The problem, however, is whether new treatments or even new diseases will fill in the gap between retirement and the last four years of life. Or, whether increasing longevity will just push the terminal four years older, like the cap on the end of a mushroom. My own personal observation is that diseases which were once thought unworthy of attention are now getting a lot more of it. Skin cancers would be an example. When the average seventy-five-year-old got skin cancer, it was possible to surmise some other life-threatening issue would interrupt the need to worry about skin cancer. Nowadays, there is an increasing tendency to treat skin cancer in the nineties. On the other hand, if we are talking about one of those people who never see a doctor except by looking up from an ambulance stretcher, the trend will be different. In all likelihood, both trends will continue, and it will eventually be possible to say half of the somewhat greater expenses will take place in the last five years of life, even though the average age at death is then approaching 90, Both the ages and the costs will have to be adjusted as we go. These are guesses of course, which should get more accurate as time goes by. From the financial point of view, compound interest will be working in our favor, while biology is probably going to increase costs. If more pessimistic biologic predictions prevail, we will be very lucky to have explored some revenue enhancement.
We have dug ourselves quite a deep financial hole. Suppose, by some combination of revenue enhancement, good luck in the market, and compound interest, the revenue is sufficient to pay for half of Medicare. Very likely what would then happen is the deficit would disappear, foreign borrowing would stop, and Medicare would become self-sustaining (between the payroll deductions and the Medicare premiums). The citizenry would hardly see any difference; the improvement would take the form of reduced foreign borrowing, avoiding catastrophes we didn't expect in the first place. After a few years, we would be back where we started.
Now suppose we doubled our success and paid out the bonus in extra retirement money. Since our present notions of a decent retirement are five times the healthcare benefit, we could expect nothing but complaints about a retirement system which approximately doubled the present Social Security benefits. Otto Bismarck, whose National Healthcare goal was to keep people quiet so he could conquer Europe, would never stand for such a failure. And yet the first of these two approaches would require payroll deductions of 6%, and the second would require 9%, even assuming the Affordable Care Act budget would prove to be revenue-neutral. The burden could be lightened by dipping into the contingency fund, but a much better approach would be to use the strategy of the Last Years of Life -- Reinsurance.
It's hard to believe any problem could be too big to solve, just as it boggles the mind to think of a corporation too big to fail. But if we say the same thing often enough, we come to believe it. People who tell you Medicare is the third rail of politics, are mostly telling you they hope so.
Lyndon Johnson, Wilbur Cohen, and Bill Kissick did indeed bite off more than they could chew, but Medicare really isn't that complicated. It amounts to taking the employer-based health system floating on an enormous tax deduction and substituting three ways to pay for it. The first was to charge premiums to the old folks, which wasn't enough, only covering about a quarter of the cost. The second was to apply a 3% wage tax to younger working people, called a payroll withholding tax, which prepaid another quarter of it, by means of a gimmick called "Pay as you go". And the third, which amounted to half the cost, was supplied by taxes. The year 1965 was the time when the post-war balance of American payments turned from positive to negative, and there was something called the Vietnam War to be paid for.
So after a while, the national budget had to be borrowed, and after the manner of governments, it was borrowed by selling bonds. The largest purchaser of 10-year treasury bonds is China. So, in a general sort of way, half of Medicare is borrowed from the Chinese, and half is paid for by the clients. The debt service is temporarily bearable, but eventually, it must be confronted, and China may have to choose between absorbing the costs or going to war. Our own choice is between kicking the can further down the road, or having the confrontation right now. That is to say, right now there is time for a long-term peaceful solution, but if we delay much more, that option will disappear.
I don't plan to run for office, so let me make a proposal. Instead of continuing the pay as you go system, the withholding tax receipts should be deposited into the Health Savings Accounts of individual citizens who earned them. They should be invested into inexpensive total stock market index funds, redeemable on the employee's 65th birthday or whenever he joins Medicare. That is, redeemable by Medicare, with the residual redeemable at the death of the subscriber. The wage owner would scarcely feel the difference, but the growth of the funds would be substantial. With luck, it would pay for Medicare's deficit of 50%, putting a permanent end to Chinese borrowing, but probably not much more. It would not, for example, pay for existing debt, or retirement costs. Remember, retirement costs are legitimately regarded as a natural outgrowth of Medicare's prolongation of longevity.
The invisible costs of Medicare would eventually be paid for in two other ways: the J-shaped costs of Medicare in the last four years of life, and the contingency fund.
J-Shaped Curve All healthcare costs with the exception of premature birth, genetic disorders and the like, are migrating to older age groups. One of the main causes of disruption is the migration of costs from working people to people on Medicare. But within Medicare, costs are also migrating later in life. Half of Medicare costs are paid for the last four years of life. Since Medicare extends twenty years and growing, half of the total Medicare cost would disappear as a result of lifting this burden and placing it somewhere else. This is called the Last Four Years of Life Reinsurance, one component of the First and Last Years of Life reconstruction of healthcare finance. It will be discussed separately in later sections of this book, but a vital point is removing the cost of the last four years of life, which constitute half of Medicare cost. The consequence is to cut the remaining cost of Medicare in half, potentially funding half forward, half backward.
The Contingency Fund at Birth. And the half which is funded forward can be further reduced by investing at birth and earning investment income for eighty years. By adding the withholding tax receipts from age 25-65, the combined fund can probably pay for Medicare. Just to be certain, a contingency fund could be added at birth, amounting to around $100 at birth and growing to $25,600 at age 80, or other variations of the 256 to one ratio. We have alluded to this concept in other areas. Its power concentrates in the nature of interest rates as well as principal to concentrate at the end of debt. That is, they rise at the end, and prolonged longevity takes advantage of this fact, parallel to the tendency of healthcare costs to rise at the end of life.
For the purpose of the reader following this without a calculator, take the happenstance that money invested at 7% will double in ten years. In nine ten-year periods of extended longevity, the money will have nine doublings (90 years). Follow the bouncing ball: 2,4,8,16,32,64,128,256, 512. In ninety years, a dollar turns into 512 dollars. If the family of a newborn, or in the case of poverty the government, deposits a dollar at birth there is a 500-fold increase at death at 90. There is no sense in being more precise about all the variables in a century, and many people are more skillful than I in manipulating them. But if to this is added another doubling, the ratio becomes 1024 to one, achieved by not liquidating the fund until ten years after the death of the owner. (This feature is added as a safety-valve.)But after the most sophisticated manipulation, it is safe to predict this outcome: The revenue would exceed the need in the last four years of life, even if the seed money turned out to be a hundred times the dollar postulated in the example. There would almost surely be money left over at the end, which might be used to supplement Social Security, although we suggest funding children as preferable during the transition phase.
So that's how you could restore Medicare to some sort of solvency, plus something left over for other purposes.
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.
