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.
Some things are easier to understand when they start before they get complicated. That's true of banking, where it can now be puzzling to hear there was a strong inclination to forbid banks by law. While we were still a colony, the British discouraged bank formation, fearing strong concentrations of wealth at a great distance could lead to ideas of independence. Anti-bank sentiment was thus a Tory characteristic, although as the Industrial Revolution progressed, Karl Marx and Fredrick Engels stamped it permanently with a proletarian flavor. Large owners of farmland were displeased to see their power weakened by urban concentrations of wealth, while poor recent settlers of America wanted to buy and sell land cheaply, so they favored a currency that steadily declined in value. People with wealth have an incentive to keep money stable, but people with debts have an incentive to pay them off with cheap money. After these battle lines clarified and hardened, the debate has transformed from an original dispute about banks, into catfights about a strong currency. As Rogoff and Reinhart have pointed out, inflation is a way for governments to cheat their citizens, devaluation is a way of cheating foreigners. Naturally, politicians prefer to cheat foreigners, but national tradition curiously seems to favor one style more than another. Essentially, they are the same thing with the same motive, although outcomes may be different. One is restrained by fear of revolution, the other by fear of an international currency war.
Alexander Hamilton
While George Washington was America's first president, Alexander Hamilton was Secretary of the Treasury and Thomas Jefferson was Vice President; the cabinet contained only four members. Although Hamilton was born poor, the bastard brat of a Scottish peddler in the view of John Adams, he had learned about practical finance in a counting-house, and later gained Washington's confidence on the headquarters staff; Washington eventually made him a general. Jefferson was part of the slaveholding Virginia planter elite, elegant in writing style and knowledge of art and architecture, sympathetic to the French Revolution; eventually, he died bankrupt. Early in the Washington presidency, Hamilton produced three long and sophisticated white papers, advocating banks and manufacture. Jefferson was opposed to both, one facilitating the other, which we would today describe as taking a green, or leftish position. Banks were described as instruments for accepting deposits in hard currency, or specie, and lending it out as paper money. The effect of this was a degrading of gold into paper money, or if not, an inflationary doubling of currency. Banks would be able to create money at will, a capriciousness Jefferson felt should be confined to the sovereign government. Just keep this up, and one day some former banker from Goldman Sachs would be able to tell the President of the United States, "The bond market won't let you do that." In this sense, the bank argument became a dispute about public and private power.
Thomas Jefferson
Hamilton, a former clerk of a maritime counting house, could observe that sending paper money on a leaky wooden boat kept the real gold in the counting-house even after the boat was lost at sea. To him, prudent banking transactions enhanced the safety of wealth, reducing risk rather than enlarging it. Later on, he learned from Robert Morris that a bank floating currency values on the private market disciplined the seemingly inevitable tendency of governments to water the currency. Once more, banks should enhance overall safety in spite of being vilified for creating risk. To both Hamilton and Jefferson, all arguments in an opposing direction seemed specious, designed to conceal ulterior motives.
Banks came and went for a century. By the time they almost were a feature of every street corner, banks were taking paper money (instead of gold and silver) as deposits and issuing loans as paper money, too; the gold was kept somewhere else, ultimately in Fort Knox, Kentucky. With experience, deposits could stay with the bank long enough that only a rare run on the bank would require more than 20% of the loans to be supported by physical ownership of gold. By establishing pooling and insurance of various sorts, banks persuaded authorities it was safe enough for them to hold no more than 20% of their loan portfolio in reserves. By this magic, loans at 6% to the customer could now return 30% to the bank. A few loans will default, a reserve for defaults was prudent, so the bank with a 2% default rate could settle for a 20% return rate. A bank which was deemed "too big to permit it to default" was invisibly and costlessly able to trim its reserves, and thus receive a 25% return by relying on the government to bail it out of an occasional bank crisis. With this sort of simple arithmetic, it is easy to see why multi-billion dollar banks were soon arguing that 5:1 leveraging was too small, a reserve of gold and silver was unnecessary, and the efficiencies of large banks were needed to compete with big foreign banks. By the time of the 2007 crash, many banks were leveraged fifty-to-one, which even the man on the street could see was over-reaching. The ideal ratio was uncertain, but 50:1 was certain to collapse, probably starting with the weakest link in the chain.
Alan Greenspan
This brings banking arguments more or less up to date. Except in 1913, an "independent" Federal Reserve Bank was created. It was a private reserve pool balanced by a public partner, the government. In time, the need for gold and silver was eliminated entirely, by the wartime Breton Woods Agreement, and the Nixon termination of it. The predictable inflation which could be expected to result from a world currency without physical backing was prevented by allowing the Federal Reserve to issue, or fail to issue as necessary, the currency in circulation. This substitution was deemed possible by having the Fed monitor inflation, and adjust the flow of currency to maintain a 2% inflation rate. Although 100% paper money was an historic change, it has endured; it has withstood efforts by the politicians to re-define inflation, undermine the indices of its measurement, and brow-beat the vestal virgins appointed to defend the value of the dollar. The old definition of money has changed: it is no longer a store of value, it is only a medium of exchange. The store of value is a nation's total assets. Jubilant politicians have added an additional burden of preventing unemployment, to the original one of defending price stability. In practical terms, the goal is defined as maintaining a 2% inflation rate, while achieving a 6.5% unemployment rate. It remains to be seen whether the two goals can exist at the same time, particularly if the definitions of inflation and unemployment become unrecognizably undermined.
And it even remains to be seen whether the black-box system can be undermined from within. The Federal Reserve is so poorly understood by the public that his enemies now accuse Alan Greenspan of causing the present recession. It is argued that the eighteen years of banking quiet which his chairmanship enjoyed, was only gradual inflation, deeply concealed. It is contended that the unprecedented steady rise of the stock market during those eighteen years was financed by a small but steady loosening of credit by the Federal Reserve. Perhaps what this means is: the definition of inflation must be tightened so its target can be made and adjusted, not to 2%, but to some number slightly less than that, measured to three decimal places. Or that the 6.5% unemployment target must be jettisoned in order to preserve the dollar. With that prospect including international currency wars as its corollary, it will be an interesting debate, and immigration policy is related to it. Because one alternative could become the abandonment of the fight against inflation, in order to sustain the new objective of reducing unemployment, Jefferson would have won the argument.
REFERENCES
The History of the United States: Course 8500, 15 Hamilton's Republic: ISBN: 156585763-1
When medical care was entirely a private two-party arrangement, the patient and doctor negotiated what was to be done, and often the price; if the patient could not pay, some embarrassed workaround was figured into the equation, including a vague promise to pay the doctor when he could. A surprising number of patients did pay later, and because the doctor's bill contained very little overhead, even partially paying it off created an unspoken promise that the patient would now be welcomed back.
It was the appearance of insurance forms which created secretarial overhead, even though of course it also brought along some revenue. Skeptics may doubt the extent of this, but at my advanced age as a patient I now visit four doctors of different specialties. Collectively, they seem to have fourteen assistants and fourteen computers I can count. That remains the situation even if a patient delegates decision-making to members of the family, or a hospital wants to know what is being given away to charity patients, or a bewildered patient seeks a second opinion. It changed abruptly when third-party payment seemed to entitle a government or an insurance company to be reassured that claims were legitimate. This uneasy and often resented intrusion into a private matter began to cause friction even in the 1920s, soon after third-party reimbursement made an American appearance, and as physicians gradually recognized that "utilization review" generated more overhead cost than simple claims submission. At first, health insurance companies were restrained from brisk business-like behavior, by the realistic possibility that the patient might switch back to paying bills in cash. Somehow that possibility now seems so remote that when the owner of a Korean auto manufacturing company tried to pay his hospital bill with hundred-dollar bills, the hospital simply had no procedure for handling such an unexpected request.
As long as a secretary was sitting there filling out forms, she might as well answer the phone for appointments. In this way, appointment systems became routine, including hidden extra revenue loss generated by broken appointments. Insurance pre-payment is always complicated by the realities of emergency care, where considerable expense must sometimes be incurred before the third-party has a chance to review the facts; in this lies the origin of the term "reimbursement". The third-party acquired the ability de facto to delay or deny reimbursement, an action immediately regarded as high-handed, since expenditures had already been made in good faith and could not be recovered. The right to deny such claims was implicit, and at first it was used gingerly by insurance companies trying to establish themselves. Now that insurance is considered normal, any incurred costs must be handled in some way, so other subscribers are charged extra to keep the hospital solvent. The cost to the system is exactly the same this way, but no other way has been suggested to maintain the credibility of insurance oversight. When I once told the owner of a department store that I had 2% bad debts in 1955 (ten years before Medicare) he replied that my bad debts were less than his and my bookkeeping was far more elaborate. True, some hospitals could not survive without the insurance system, but if others in better locations examined their experience extensively, they might discover their accident rooms are net losers for the insurance. Third-parties slowly retreated, hospital prices crept upward and the system readjusted, but no one is entirely satisfied with this showmanship masquerading as a balance of terror. When you see a sick or injured person turned away from an emergency department for lack of insurance proof, you can be sure there is either not enough slack in the system, or not enough administrative imagination.
Senator Wallace Bennett
Early in the 1970s, Senator Wallace Bennett of Utah devised a solution to this problem, and persuaded the rest of Congress to endorse a nation-wide system of Professional Review Organizations (PSRO), run by the medical profession but paid for by Medicare. Although many physicians muttered about the "creation of new elites", and hospitals were particularly uneasy about the migration of power, the new system worked reasonably well. If the physicians in the local PSRO approved a service, it was paid for. If payment was denied by a local PSRO, an appeal to a state-wide body of physicians was provided. In that way, prevailing local standards were respected, while appeal to distant physician judges was also provided, to guard against local vendettas ganging up on someone they disliked. Inevitably, a few localities would elect an unsatisfactory PSRO, so a voluntary national organization was formed to educate, inform and defend the process, and better able to discipline it with peer pressure than might be supposed. The national organization was pleasingly benevolent, sometimes apologizing for its role as a necessary one to weed out constituent PSROs whose bad behavior might discredit the others and start up the usual chatter about professional self-government: The foxes were guarding the hen house, and must be replaced by wolves. The PSRO gradually adhered to an unspoken rule of rarely boasting of success; it saw its role as redirecting unsatisfactory behavior, not vanquishing wrong-doers. It soon became evident that successful PSROs were of two types, rural and urban. In localities where a single hospital served a county or more, physicians were of all types mixed together, and the need was to strengthen the emergence of the natural leaders, often by placing them on the PSRO board. In large cities, however, a sorting-out process had usually resulted in strong hospitals and weak ones; birds of a feather flew together. The weaker hospitals were soon identified and urged to elect stronger leadership; sometimes it was necessary to suggest that the institution might serve better as a nursing home. Throughout the process ran the threat of exposure; successful PSROs usually relied far more on peer pressure than the threat of withholding payment.
What ultimately defeated the PSRO was its success, not its failures. Many pre-existing elites were content to see a new governance structure fumble, but felt highly threatened by a successful one. Moreover, the AMA leadership seemed particularly concerned about the direction of "regulatory capture", and was not completely certain whether the PSRO was beginning to dominate the Washington bureaucracy, or the AMA House of Delegates, or a little of both. The PSRO fraternity was definitely a large national organization of doctors who knew and respected each other, and many of its leaders were in the AMA House. Matters finally came to a head in a famous vote opposing the PSRO, by 105 to 100. The opinion of organized medicine meant a great deal to Congress. When representatives of the PSRO next testified before the Senate Finance Committee, the Chairman of the Committee wryly announced the next speaker from the AMA was one who was "presumably here to explain to us the difference between 105 and 100." The PSRO law was soon amended, and insurance review took its place.
AMA House of Delegates
For the time being, utilization review in the future is apparently currently limited to Medicare, under the Medicare Accountable Care Act. With the foregoing bit of history to warn the Accountable Care Organizations about what they are getting into, a simple set of principles can be stated. Utilization review encounters two components of cost: the volume of care, and the price of the services. Doctors control the volume, hospital administrators control the prices. Determining the proper volume of services is a job for practicing physicians, alone and unhampered. To some extent, under the new law an incentive to keep it that way was created by sharing with the provider members a portion of any cost savings associated with the patient group. But the ability to change the sharing will probably be a a one-sided government decision unless the physicians fiercely insist that it remain negotiable. Agreeing that the physician voice should be dominant in the issue of service volume should not imply agreement to exclude their inspection of the prices of services. When physician income becomes linked to their choosing less expensive alternatives, physicians must not continue to be blinded to what the true cost of components truly is. While it remains conceded that hospitals and vendors must retain some flexibility in adjusting the ratio of charges to costs, any deviation from a standard bandwidth must be negotiated with the physicians affected. Past experience should be ample proof of the fairness of this demand.
The volume of most medical services at present is about right, but prices will keep rising when they bear little relation to the underlying direct costs. Furthermore, the Medicare (or similar) Cost Report of every hospital must annually report the ratio of cost to charges, probably by item rather than department. And this ratio must be monitored. Complexity is no argument against doing so; the Chargemaster system has never been resisted because of its complexity. It has been no secret for thirty years that a twenty-dollar aspirin tablet has a very high ratio of charges to its actual cost. Other items are provided at a loss, and the mixtures are highly variable between hospitals. Everyone concerned knows this situation is unsustainable, but everyone recognizes that total denial of reimbursement is entirely too destructive if no slack remains in the system. If it is successful an appeal mechanism will become necessary, because new treatments can be resisted by old treatments, but the optimum rate of change will vary by local situation.
Rather than overcomplicate matters, the goal should be total denial of reimbursement for denied services, because the public will demand it. It must however, be coupled with an adequate profit margin on approved services, to service the costs of retrospective review. Designation of the optimum ratio of cost to charges is a critical decision, much like the function entrusted to the Federal Reserve, of picking the best average interest rates for the national economy. If the agencies selected by Obamacare get this point very wrong, very often, the public must quickly be in a position to let everyone know of its displeasure.
The other source of circumvention is the hospital system of enforcing a physician hierarchy reporting to a physician chieftain, but insisting that the chieftain himself be financially beholden to the hospital administration. In that way, financial health of the institution sometimes dominates the health of the third parties, who then find a way to retaliate. if this issue is neglected a deadlock could affect the health of the patients. Since a three-way balance must be preserved, governance must be fairly shared three ways. Those who believe this is a minor issue because the third party obviously has final power, have a great deal to learn.
This book was originally based on a notion, on a dream if you will. A whole lifetime of healthcare might be purchased, for what now only covers a quarter of a half -- those scarcely-noticed payroll deductions for Medicare, listed on everybody's payroll stub. But then politics and Supreme Court decisions came along. Turning over each pebble on a new heap, it nevertheless seems that amount might still stretch to cover all of the nation's average lifetime costs, although payroll deductions wouldn't resemble the way to do it. Reducing prices by 28% of $350,000 is a ton of money, particularly when multiplied by 300 million people. Let's lower expectations by saying the new narrower proposal might only reduce prices by 14%. That would be $39,000 times 300 million, or twice the combined fortunes of Bill Gates and Warren Buffett. The $39,000 is a substantial amount for anybody, and $ 11.7 trillion is an astonishing aggregate for the nation. That's once in a lifetime, but it's still $140 billion a year.
I decided to ignore the 42% of historical costs which Obamacare covers (age 21 to 66) until its facts emerge. Just add the cost of the earning segment (21 to 66) to estimate whole lifetime costs. That does leave a gap of one third in the middle of life. If you don't know what the Affordable Care Act will eventually cost, you can't be confident what lifetime healthcare will cost. I'm confident lifetime Health Savings Accounts would cost much less. The Affordable Care Act has not yet convincingly described any cost reductions. But to be fair, neither do Health Savings Accounts. They reduce the price by adding revenue.
The issue is how to transfer $238,000 from individuals in one group, to another group.
Quick calculation now follows. Average lifetime healthcare expenditure (in the year 2001 dollars per person) is in the neighborhood of $350,000. That's the estimate of statisticians at Michigan Blue Cross, confirmed by Medicare. Medicare takes half of the annual cost, from birth to age 21 takes another 8%, and we don't know the cost of the unemployable of working age, but they are 10% of the population. So, the new segment we assigned ourselves, involves at least 68% of national health costs, and probably somewhat more. That represents the basis for saying the working population 21-66 must pay its own costs and somehow transfer at least 68% more to what we will call the dependent sector. At a minimum, that's 68% of $350,000 per lifetime, or $238,000. Don't take it too seriously, but that's the ballpark.
Endowment funds traditionally aim for 8% annual return (3% from inflation, 5% net). The stock market has averaged 12% gain for a century, so 4% isn't exactly missing, but its disappearance requires convoluted explanation, later in the book. Starting with those bits of information and adding a few more, just re-arranging payments would get to the same final result-- by spending one-third as much money. The cost of separating employer-based insurance from all the rest of it exceeds my abilities, so it will have to dangle. How we got to that conclusion isn't rocket science, but it isn't obvious, either. So let's make the conclusion easier: you can make a ton of money doing what is suggested. Don't complain it isn't two tons or only half a ton, it is what it is. You can put this data through a big data computer, or use a slide rule, but you are still dealing with predictions about the future, which will contain lots of uncertainty. Although it will not make healthcare free, it implies savings of about $38,000 per person, per lifetime. View that saving in two ways: it's only about $500 per person, per year. Or, viewed as a nation of 316 million inhabitants, it saves $150 billion per year. Skeptics could attack the math as exaggeration, and still get an answer in billions per year. Tons instead of billions would be even more accurate, just sound less precise.
Next might come nit-pickers. You can't get 8% investment income returns a year, unless this, or unless that. Very well, just say this is the top limit of what is possible as an average, using average investment advice. The Federal Reserve confidently promised to keep inflation at 2%, but actually experienced 3% over the past century. Chairman Bernanke tried his best to "target" inflation up to 2% but inflation just resisted going up that far, and it's pretty hard to get any agreement about why it resisted. Accuracy just isn't possible when you are predicting the economic future. That's why the unit of measurement is in tons. Tons of money. Who will save it and who will steal it, is much harder to predict.
Some doctors, deans, drug companies, financiers and politicians will always try to increase their spending to equal any available revenue. About forty percent of the public will line up at the same trough. All that is beyond my control. You won't find one word in the accompanying book to suggest I endorse such behavior. All I did was write a cookbook. The cooking is up to you.
Starting with N-HSA We have just described the general outline of New Health Savings Accounts (N-HSA). Essentially, it consists of individual HSA funds for children, connected to Medicare by permitting the funds to sit in escrow from age 21 to age 66. However, the amount which can be accumulated during childhood is small, and the task it is asked to perform is large. Because children are so lacking in income, they can't be expected to accumulate much, even though their grandparents may have helped out. Consequently, that small amount multiplied by compounded income for 45 years, will probably only pay for one designated segment of the Medicare program, and it is unlikely it would be able to pay off much of Medicare's accumulated debt.
So, although it can be shown to be workable, it would look like a long run for a short slide, to an economically illiterate family. Meanwhile, its political enemies would likely describe it as meddling with Medicare, and its chances of achieving the necessary enablements would shrink. However, the grand discovery is, the Health Savings Account idea resembles how President John Adams once described his native Boston -- Every goose is a swan. Every problem we encounter, that is, seems to suggest an unexpected new improvement. Let's explain the three accompanying graphs.
Three Graphs. The top graph shows the situation, without either a bridge around or participation in, the Affordable Care Act. The HSA escrow comes to a halt for 45 years and then resumes with Medicare. There are two savings accounts, but each starts at zero and lasts two decades. One is an escrow account, unspendable until age 66.
The middle graph imagines the situation with a dormant escrow gathering interest during the 45 years. Notice the thickened blue escrow.
The bottom graph is a cutout enlargement of the transfer point for grandpa's gift, showing how easy it would be to adjust the escrow transfer from zero to $29,000. The difference between the extremes added to the escrow is the difference between solvency and riches. To imagine a small deposit spiraling out of control is probably a little fanciful, but for those who worry, here is a ready solution.
Adding Obamacare. If we achieve political consensus, and thereby add the subscribers from age 21 to 66 (the only age group which reliably produces real new wealth), the arithmetic suddenly transforms. The complete system from cradle to grave generates enormous surpluses. After studying this paradox for some time, I came to realize that what distinguished it from Lifetime Health Savings Accounts (L-HSA) was the two, eventually three breaks between programs, where the escrow fund could drop to zero, without some agreement to transfer it between insurance programs. If it drops to zero, the effect of compound interest rising at its far end is chopped off, and overall returns are much reduced. The whole idea unfortunately then becomes politically precarious and runs the risk of some small glitch somewhere unraveling it. To use our own descriptive terms, three Classical (C-HSA) funds are nice, but one Lifetime (L-HSA) is so far superior it raises grandiose questions of starting an inflationary spiral. But in a sense, the radical Right is correct. The changes to the Affordable Care Act must be drastic enough to generate public support for merging the radical plan of the left with a radical plan of the right, essentially making both of them unrecognizable. I'm no politician, but I can easily imagine the difficulties of that negotiation.
The Goose is a Swan. But I came to see that what makes it impractical is the same as what makes it so glamorous. The possibility of linking the healthcare fund to the stock market would likely be brushed aside by the explosions of a money machine -- the system as originally envisioned for L-HSA generates almost any amount of money you please. That's a pretty intolerable effect of inflation heedlessly disregarding any monetary standard, even a return of a gold standard.
But if the HSA is more or less denominated in index funds, it essentially has a monetary standard built in and could maintain it if someone held a meat ax in reserve. Some impregnable threat is needed to control the monster, and it is provided at the three linkage points, where the three existing insurance programs connect.
Three Meat Axes. The connection after the children's escrow fund is the most leveraged and therefore the most sensitive since we have already demonstrated how the difference between zero transfer between two funds, and the transfer of $27,000, is the difference between marginally paying Medicare bills, and having money to burn. If some totally reliable monetary angel could be discovered and put in charge of it, the discretion about inflationary consequences could be placed in one pair of hands.
But the history of inflation has been that even Kings, Popes and Emperors have succumbed to the temptations of such power. Remember, this fund is truly generating $350,000 of new wealth per person (in a nation of 300 million inhabitants) if it operates precisely as hoped, so it starts with some latitude. There are several Presidents of the nations of the world, who might fairly be suspected of raiding their own currency right at this moment, however. Wisdom suggests more caution is necessary. For example, Congress could permit a discretionary band within which the Executive branch could operate, perhaps in consultation with the Federal Reserve. That might permit Congress to create some very difficult hurdle for the process to jump, for widening the limits of the band, such as a Constitutional Amendment.
There's an End in Sight. And also remember, my colleagues in the research department are busy looking for a cure for cancer and Alzheimer's Disease, and I feel confident they will eventually have success. Just cure diabetes, schizophrenia, or birth defects, and our problem with Health Savings Accounts would transform into how to turn them off. In the meantime, we must modulate the ups and downs of medical costs which are steadily becoming less urgent. Take warning from the recent example of the price of tetracycline, which a year or two ago was 35 cents retail for fifty capsules, and suddenly jumped to $3.50 for a single capsule. And then with a new owner, jumped to thousands of dollars. If things like that continue to happen, we might be ready for another pet scheme of mine, the limitation of health insurance coverage to covering the first year of life, and the last year of life, by eliminating most of the disease in-between. Because of the helplessness of both these population groups, and the universality of the need for their coverage, in their case alone drastic interference with market mechanisms might appear justified, to those who are injured by them. The rest of us ought to have a say in something like that. But that's another book, for another time.
We're some way from seriously having that type of problem, so let's get back to details. For this purpose, paying patients arrange themselves into only three groups, children, working folks, and Medicare recipients. Thus there exist three breakpoints between these three programs for different ages, assuming Congress authorizes transfers between them, especially from grandparent generation to grandchildren, incidentally relieving the middle generation of a lot of cost-shifting. There is now so much (necessary) cost shifting, it is nearly impossible to sort out the cost numbers. So I won't try to do it, except in a sort of general way. Rationing is a sort of a lip-service concession to the wide-spread liberal endorsement of a single payer system, endorsing but without facing the resultant deficits in every direction. Instead, we encounter the worrisome potential for generating too much money, even though that is hard to believe without endorsing galloping inflation. There is little difference between external transfers -- between insurance plans, and internal transfers -- within one mega-institution -- except, in this case, one approach creates impossible deficits, and the other approach raises a real concern about inflation. A compromise might be devised, but it requires some sort of conciliatory response from both sides, for even a beginning.
Meanwhile, I don't scoff at the legal issues of who is responsible for those bills, if we destroy the family unit with exciting new social liberties. And I haven't forgotten the problem of corporate finance officers, who have run a confidence game for eighty years, making money for the stockholders by giving away health insurance to employees, as long as they can conceal what they are really doing. We've suggested in this book, we should offer the business a reduction of their corporate income tax to levels comparable to individual tax levels, in return for getting them out of the health insurance business. In a sense, it returns the favor of making a profit by giving away a service benefit, by -- generating revenue for the public sector in return for reduced taxes in the private sector. I'm entirely serious about offering major corporations a one percent cut in corporate taxes for each two percent reduction in fringe benefits tax exemption, down to the point where the top corporate income tax rate is equal to the average individual tax rate. That benchmark is selected because of the temptation otherwise created, to elect Subchapter C to S inter-conversions, exploiting such tax differences. The international corporate flight is another serious consideration. Meanwhile, it is always possible to equalize employee tax exemption by allowing HSAs to purchase catastrophic insurance through the HSA itself, if the law would permit it.
Inflation Protection. Q. Now, wait a minute. If we permit a money machine to be built, what is to prevent it from resembling the galloping inflation which ruined the Weimar Republic? And if we devise a way to keep the United States from going down that road, how do we prevent a hundred small foreign states (Zimbabwe, for instance) from doing it deliberately in order to use their sovereign status to acquire the index funds held by Health Savings Accounts?
A. You've almost answered your own question about Zimbabwe. Even without freely floating currencies, the markets are quick to detect changes in the value of the foreign currency. Zimbabwe can force its own people to accept pennies disguised as trillion-dollar bills, but everybody else avoids them, whereas bitcoins don't even have sovereign power. And as for our own domestic currency, I propose we enact a band of fluctuation in consultation with the Federal Reserve, within which the dollar can float, and beyond which the band may not be expanded without a Constitutional Amendment, again in consultation with the Federal Reserve. In two hundred years, the amendment process has only let one matter (Prohibition of alcohol) slip past, which had to be revoked after the experience with it. Almost every other indiscretion has proved to crumble in spite of the temptation to raid the cookie jar.
Watchdogs. Three breakpoints, one between each age group, with wildly different medical needs and financial viewpoints, need watchdogs. Since going to zero between any two of the three insurance programs could bring inflation to a halt, and since venality knows no political boundaries, I suggest each breakpoint be governed by a different political entity, composed of a board nominated by a different branch of government, and each ratified by a different process. It may or may not be necessary for them to share the same information agency, since think tanks are very popular right now, but may not continue to be. We will need another conference in a resort hotel to work out a paper but keep in mind that foreign powers will be anxious to infiltrate and subvert it. So maybe we need two conferences, one to review the other. After all, we are talking about 18% of the gross domestic product, and Benjamin Franklin isn't available anymore.
The Escrow subaccount within Health Savings Accounts now stands unveiled for what it is -- a transfer system between plans. It pays for health insurance, usually not for current care but designated for underfunded future care. Regular Health insurance sometimes contains similar communication-and -funds transfer channels, but informal ones, patchwork for adding new features to existing ones, as in adding federal funds to state-controlled Medicaid. We here offer the escrowed Health Savings Account as an individually owned policy, specifically incorporating specific finances of a string of pearls to new ones with independent delivery- system regulations. As long as the pearls are careful, they can have a neutral transfer system, like the state-national one for the rest of the economy. Disputes are regulated by the courts under a common Supreme Court. The Court might be a new medical one, or use the one we already have.
This tripartite system not only conforms to the Constitution but restrains mission creep. That's historically why we have a Bill of Rights, although the document doesn't say so.
If the escrow subaccount is purely a transfer system between Pearls on a String, what is the function of the non-escrow portion? It is to permit each Pearl to fund separately and independently, and to make it easier to keep one Pearl from subsidizing another inadvertently. An argument can be made that New York now subsidizes Mississippi within the Federal Reserve monetary system, but that was for facilitating the approval of the various states -- the states which badly wanted a Federal Reserve would be taxed extra to get it -- but it is uncertain whether the same considerations apply to healthcare. The absence of cross-subsidy may be seen as an advantage in Healthcare, and therefore the issue should be decided by Congress. Perhaps decision could be delayed until the public gets a sense of what it wants after some defined period of experience.
When Health Savings Accounts were first discussed, it was assumed they would be funded by employer contributions, so and so many dollars per month or per quarter per employee. Tax deductibility would be decided once, and probably continue indefinitely for a class of employees or a certain type of employer. Actually, that proves to be the most difficult method to determine, because health insurance is given to the employee as a gift, and therefore has already been made tax-exempt. The potential for double tax exemption is raised, and various strategies could be adopted to simplify the tax status.
The double tax exemption might well be re-examined, but much of its unfairness traces to employer's inequitable tax exemption in the first place, which we have repeatedly suggested Congress equalize. It might be compared with using the income from municipal bonds, also tax exempt and tangled up in the minimum tax provision as well. If the amount of questionable deposits is overall fairly small, the matter can be taken up in a general revision of taxation and passed over for the present.
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.
