The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
For the year preceding, it was general opinion that the financial crisis was caused by $100 billion or so of mortgage-backed securities, mostly California and Florida home mortgages. But around Labor Day 2008 Lehman Brothers collapsed, and the problem became twenty times as large. What that was about is unclear, but seemingly had to do with money market funds being treated as "funds in transit" in consequence of the international monetary agreement known as Basel I, and thus not requiring bank reserves to be maintained for them. It will take time to unravel the intricacies of, and assign the blame for, this mess. However, the markets responded by refusing to trade at now uncertain prices, thus "freezing up". The response of the Federal Reserve was to double the money supply through international markets, mostly using "Central Bank liquidity swaps". The participation of various countries in this action has not been made public.
The doubling of the money supply required borrowing between one and two trillion dollars. After five months, or just after the inauguration of the new Presidential Administration, the markets had seemingly started to function more normally, and the stock market had rallied somewhat. The obviously bewildered leadership of both political parties agreed to the proposal to purchase $1.75 trillion of the troublesome assets, taking them off the market and presumably hoping the markets would function as if they did not exist. By July 2009 this operation was only about half completed. Not only was there disagreement about what these securities were really worth, but the banks which held them were reluctant to allow prices of what they continued to hold to be driven down by comparison with these forced transactions.
Federal Reserve Bank of Philadelphia
In any event, the second stage of this huge government bailout of the banking system is projected as follows: The portfolio of assets would be worn down, either by allowing debts to mature, or by selling them at what is hoped will be advantageous prices. Who will buy them is to some extent dependent on the state of the economy, and to some extent on the perception of the fairness of the pricing. The Federal Reserve Bank of St. Louis has been assigned the task of designing a public formula for how much to buy or sell, depending on selected indicators of the economy. A public formula is felt to be necessary in order to reassure the markets that purchases and sales are not being made in response to secret information or unsuspected problems.
The reasoning would be that if these assets are sold to speculators at fire-sale prices, the money supply will shrink inappropriately, and the recession will be prolonged by the need to borrow replacement reserves for the monetary system. Unduly profitable sales would probably lead to inflation, since the present level of monetary reserves is twice as large as was thought appropriate, as recently as a year or two ago. But this maneuver by a central bank has never been tried before, and the results may well differ from present predictions. The Federal Reserve is prepared to take as long as ten years to accomplish the complete maneuver, but that plan presumes ten years of recession and five congressional elections. It also implies that the economy could swing between 7% annual inflation, and 7% annual deflation, in the two worst cases, and assuming nothing extraneous happens to the economy.
President Barack Obama
In the meantime, two other ominous notes. Although the nationalities of the lenders have not been made public, one can safely assume the Chinese are a major component. Since they are refusing to lend us money beyond two, and at the most five, years, we would be indefinitely in the position of borrowing short and lending long. In other situations, that imposes a risk of depositors starting a run on the bank. And secondly, it is hard to imagine that Mr. Obama's presently ambitious programs in healthcare, environmental protection, two wars and several election cycles, will be allowed to proceed without enormous public resistance to even further fiscal deficits.
Employer-based health insurance. Although improved health care has added moderately to working years of life, a lot of people hate to work, whereas to other minds, thirty years of improved longevity mostly result in a thirty-year vacation after the end of productive careers. The famous American work ethic is not universally celebrated. Pensions and savings sometimes only partially anticipate the cost of enjoying this health windfall, which unfortunately competes with yet another unexpected cost, the steadily increasing expense of dying. These changes were both rapid and unexpected, so confusion is inevitable.
There is still another way of describing this readjustment to a wonderful scientific windfall: Most sick people are now either too old to work or else too young to work, even before they get sick. Health costs therefore relentlessly concentrate toward the first year of life and the last year of life. The strategy we developed of hiding the health costs of the young and the old within the health costs of the worker class confronts the new reality: middle-aged people have many fewer health costs, themselves. That leaves less room to hide the costs of the sickly young and the sickly old, which all along have been buried within the premiums of workers' health insurance. Let's face a fact: Those who are neither near the first year nor the last year, must somehow pay for those who are -- because there is nobody else.
Hiding the health costs of the young and the old within the health costs of the worker class confronts the new reality: middle-aged people have many fewer health costs, themselves.
What does this have to do with employer-based insurance? In the 1920s a rough acknowledgment was made that healthy working people must obviously support sick people who can't work. So it was devised that basing insurance on employee groups (if their dependents were included) might make a good start toward a national solution. Employer-based health insurance was a brilliant improvisation, but as life expectancy continued to lengthen, the gap between retirement and death also relentlessly widened. In 1943, discriminatory tax deduction slipped in, via Henry Kaiser, badly injuring the atmosphere of fairness for employer-based health insurance. Federal Medicare for the elderly was devised in 1965, and state Medicaid for the poor. They helped but didn't entirely cover the gaps either, and we are coming to learn how much we had to borrow to pay for it.
So now we have the Affordable Health Care Act, commonly called Obamacare. It remains to be seen whether even Obamacare can be made to stretch, because thirty years is a long time between retirement and the last year of life, and fifty years a long time to wait to judge results. With wars, globalization of industry and depressions to contend with, the task is hard, perhaps too hard. Unfortunately, having passed a law containing the Affordable Care Act mandates, we must try to do it in 2014, and do it in a rather utopian way for everybody at once. For what amounts to a level "community" premium for everyone, we must make no allowance for differing costs and pre-existing conditions, economic or medical. Many of these wounds are self-inflicted, costing the program many sympathizers who might have endorsed the same goals at a slower pace.
We Had a Secret Plan. It might as well be mentioned that Americans once nursed a secret plan for all this. We consented to spend incredible amounts of money on medical research for eliminating the disease. In fact, we made a pretty good try, considering we never officially admitted it was our goal. If there is no disease, there will be no medical costs to worry about, right? Directly confronted, eliminating acute disease would unfortunately still leave those first and last years to be paid for. There was just no escaping it, everyone has to be born, everyone has to die. And while substantially eliminating disease among the young and middle-aged is an important economic stimulant, it also lengthened life expectancy by almost thirty years in a single century. Those who managed to prosper were indeed rewarded with a thirty-year vacation, but some of the windfalls had to be set aside for those whose luck was bad, destined to spend thirty years in the shadows. It was a big, bold gamble, and in an American sense, we won it. Never acknowledging it was a goal, no one could say we lost it.
Americans will help others if they can, but first, they must be convinced that others cannot pull them down.
We are now engaged in a great upheaval described as insurance reform, to test whether a great nation which secretly believes it can do anything, can satisfy both those who believe it has attempted too much, and those fearful it will fail by aiming too low. Arguments abound. One description of victory would be this: we must abandon the essentially European idea of rich and poor as permanent classes of society. In its place, we should reaffirm the traditional Whig position that rich and poor are largely two or three, or four, stages of every American's life. In Lincoln's view, we all arrived as poor immigrants, gradually worked our way upward in society, usually taking several generations to reach the top. No more than a handful of born aristocrats ever immigrated to America. In a revised version of the same epic poem, all infants are poor, adolescents are always confused, and gradually we become self-sufficient members of society; eventually, we all die. Whigism refuses to see us as members of tribes, some eternally rich, some eternally poor; Whigs mainly hope that Liberty and personal responsibility will be sufficient to preserve the more perfect union. In Lincoln's case, it was a close call, but we made it, even then.
Obviously, people with income must support the disabled, since there is no one else to do it; equally obviously, the nation has not evolved to the point where it can be done by having one angry tribe tax another. Instead, what is needed is to organize some sort of insurance pool in which younger people contribute for their own individual future, recognizing frankly that people will chiefly fear the system cannot keep its fingers off the money to give it back eighty years later. That's really all that is essential, since many models have tested the insurance market, and watched eyes glaze over with the details.
Young people must subsidize sick old people, all right, but the only old person you surely enjoy subsidizing is yourself. For the moment, forget about the difficult transitions, about which 2500 pages of the law were written and will prove to be too little. The challenge to the country is whether we collectively have the courage to stake our lifetime earnings on the proposition that the average person can save enough of average lifetime earnings to pay for average lifetime medical costs, and still have enough left for a comfortable life. If he can't, this scheme is not going to work, because even if he can, the scheme might still fail. A thousand folksy mottos teach us that Americans will help others if they can, but first, they must be convinced that others cannot pull them down.
The Law of Compounded Interest. There's a seldom mentioned advantage to individually owned and selected insurance-like pooling of lifetime health costs. If insurance premiums are pooled, stored, and invested by professionals, they will gather investment income, or compound interest in quantities which always surprise a newcomer. To wit: money at 10% will double in seven years. Or, stretched over long time periods, the owner can withdraw 4% a year, forever, and still have as much as he started with. Within ages, 25 to 75 exists an opportunity for five doublings at 7% or 3,200%. Hidden in this is another incentive: if you only spend half as much money on healthcare as average, you can eke out another doubling, making it 6,400%. Transforming medical insurance from term insurance to a "whole life" insurance model carries the potential for vastly diminishing the lifetime cost to the average subscriber, but that opportunity probably did not exist a century ago. We may say we sacrifice this new opportunity because we do not quite believe it, but in fact, we mostly do not trust any government to give it back, eighty years later.
"Whole life" insurance model carries a potential for vastly diminishing the lifetime cost to the average subscriber which did not exist a century ago.
This paper, therefore, urges a voluntary approach, individually owned and individually selected, primarily because it seems safer to go a little slower than we could if we just followed a command. Anything which includes the word "mandatory" also forbids the testing of alternatives. At least theoretically, alternative approaches are forbidden forever, with the implication that nothing better will ever be possible. At the barest minimum, the Affordable Care Act must be amended to encourage the testing of new ideas by Congress and by state governments. Another similarly hampering word to avoid, is "perpetual", but it seems more conciliatory to avoid the word "insurance" and to outline the nature of this proposal as a non-insurance savings mechanism limited to lifetime health expenditures. To a framework of five proposals, about a dozen other features are later described but held in reserve, waiting to be added slowly as the system can absorb them. This is neither an Executive Branch initiative nor an insurance company product. It is a national strategy, which starts with individual Health Savings Accounts and builds on that foundation. It adds a high-deductible health insurance policy, preferably without co-payments. It strips down the benefits offered by the HSA to the first and last years of life, to prove the concept safely, and to pay for transition costs. After that, it should expand like an accordion to cover as much as it can afford. Beyond that point, we can argue some more, but we are aiming for maximum elimination of complication and subsidy, not because they are necessarily bad, but because they should in time be unnecessary.
For whatever reasons, much of the Affordable Care Act is still shrouded in mystery. After three years, an employer-based system is still predominant, and it remains unclear where a big business wants it to go, or perhaps what makes business reluctant to go ahead. It is even conceivable big business just wants a vacation from healthcare costs, hoping to go back to the old system of supporting the healthcare system by recirculating tax deductions. Once an economic recovery restores profits enough to generate corporate taxes, it will once again be worth saving them by giving away health insurance and taking a tax deduction. Otherwise, it is hard to see what value there is, in a year's respite. Under the circumstances, it begins to seem time to look at some new proposal, neither sponsored by an opposition party nor motivated by antagonism to the Administration initiative. Let's reverse its emphasis, testing how much it is true the financing system now drives the health system, not the other way around.
Both big business and big insurance have been remarkably silent about their goals and wishes for the medical system, while quite obviously agitating for some sort of change by way of government, and quite obviously leaving their own agendas off the visible negotiating table. Let's illuminate the situation, with the medical system speaking out about how employers, insurance, and investment should change while leaving the medical system alone until we better understand the finances which are driving it. The proposed way to go about all this is to harness Health Savings Accounts, with its two different ways of paying for healthcare (cash and insurance), with two-time frames for the public to explore (annual and lifetime), and passive investment of unused premiums versus concealed borrowing. So yes, it's technical, and necessarily it's been simplified. Two important features, multi-year insurance and passive investing, are outlined in this book. But one theme runs throughout: the customers, individually, should have choices. Nothing should be mandatory, everything possible should be left for individual customers to select.
Don't take on too much at once. Health Savings Accounts have grown to over 12 million clients, so it isn't feasible to do more than repair a few loopholes, and let it grow. The next logical step is to get rid of "first-dollar coverage". Not by eliminating insurance, but by making high-deductible the normal standard for health insurance. If we must make something mandatory, it ought to be ensuring big risks before insuring small ones. Catastrophic indemnity insurance is a well-established, known quantity; it's not likely to need pilot studies to avoid crashes. It doesn't need government nurturing; it needs big insurance companies to see the writing on the wall. So let's get along with it, without any mandatory coverage rules. If the old system of employer-based and tax-warped coverage can get its act together, that's fine. Because as I see it, the main danger in Catastrophic coverage is it will penetrate the market too quickly; let people have a level playing field to watch the game unfold. When we have two viable competitive systems, the customers can decide between them, and both will emerge healthier.
An observation seems justified. In a system as large as American healthcare, changes should be piecemeal and flexible; win-win is strongly preferred to zero-sum. Sticking to finance for the moment, we slowly learn to avoid zero-sum approaches, while strongly applauding aggressive competitors. Napoleon conquered Europe, and Genghis Khan conquered Asia by smashing opposition, but it isn't an American taste. Since everyone would prefer saving for when he needs that money for himself, (compared with being taxed to support someone else's healthcare), let's see how far and how fast we can arrange that. The recent extension of life expectancy creates a long period between healthy youth and decrepit old age. About 20% of those born in the lowest quintile of income, will eventually die in the highest quintile. That's a good start, but the process can't go much faster just because someone beats on the table with his shoe.
Nevertheless, a larger proportion of people could save a small amount of money when they are young, and by advantageous investing in a tax-sheltered account, accumulate enough money to support their healthcare costs while old. Some people will never be self-supporting, of course, but the idea is to shrink the size of the dependent population as much as we can. We can at least try it out, on paper so to speak. And if it produces good numbers, perhaps we are ready for pilot projects. That ought to be the next step in our long-term plan to reform the health system without attacking it -- switching from one-year term insurance, to multi-year whole-life insurance. The underlying insurance principle is called "guaranteed re-issue". We aren't ready for that yet, but we are ready to call in the experts in whole-life life insurance and ask for their guidance while setting up information gathering systems to navigate the reefs and shoals. The exercise does seem feasible and is partially explored in the rest of this book. Meanwhile, medical science is steadily reducing the pool of acute illness and lengthening the average longevity. Actuaries are my best friends in the whole world, but I think they are wrong about one prediction. Like retirement planners, both professions assume future taxes and future health costs are going to go up. But I am willing to predict, net of inflation, they will go down as longevity increases. Just wait until you see an enthusiastic medical profession attack the problem of chronic care costs. The nature of retirement living must change. Both things will change because of changes in the nature of investing and finance, the lowering of transaction costs, and the effect it has on the economy. Because: investing is based on perceptions, and a general disappearance of the acute disease will certainly re-direct perceptions of what is important.
Over thirty years have elapsed since John McClaughry and I met in the Executive Office Building in Washington, but a search for ways to strengthen personal savings for health marches on, trying to avoid temptations to shift taxes to our grandchildren, or make money out of innocent neighbors. Most of the financial novelties to achieve better income return originated with financial innovators and the insurance industry. But the central engine of advance has come from medical scientists, who reduced the cost of diseases by eliminating some darned disease or another, greatly increasing the earning power of compound interest -- by lengthening the life span. My friends warn me it must yet be shown we have lengthened life enough or reduced the disease burden, enough. That's surely true, but I feel we are close enough to justify giving it a shot. Before debt gets any bigger, that is, and class antagonisms get any worse.
While Health Savings Accounts continue to seem superior to the Obama proposals, there is room for other ideas. For example, the ERISA (Employee Retirement Income Security Act of 1974) had been years in the making but eventually came out pretty well. In spite of misgivings, ERISA got along with the Constitution. And we had the Supreme Court's assurance the Constitution is not a suicide pact. So, still grumbling about the way the Affordable Care Act was enacted, I eventually stopped waiting to describe an alternative. The long-ago strategy devised in ERISA, by the way, turned out to be fundamentally sound. The law was hundreds of pages long, but its premise was simple and strong. It was to establish pensions and healthcare plans as freestanding corporations, more or less independent of the employer who started and paid for them. Having got the central idea right, almost everything else fell into place. Perhaps something like that can emerge from Obamacare, but its clock is running out.
So we end up funding Medicare mathematically, but with misgivings about both the politics and the economics of it. It would not be the first time America launched an adventure without the money to finance it, as we do almost every time we start a war or face a depression. However, both the ACA is in doubt, and linked with it is the idea of a single payer with Medicare as a model. Although I have grave misgivings about consolidating delivery systems as a first step, it could be a decision that is beyond the suggestion of a citizen.
Under the present uncertain circumstances -- of wishing to put the ideas forward but lacking the ability to control the environment -- it seems better to hold back on grander designs than just saving a little money. The linkage of Medicare and its secondary insurance is both tight and of long standing. By just eliminating the second insurance policy, we might eliminate a large and useless expense as well as suggest a few ways to save more. Isn't saving several billion dollars worth some effort? The factors which would lead America to embark on a financial crusade as radical as suggested here, are not to be found in mathematics, or even in one-man logic. They are cultural and emotional, mostly evolving out of endless simplification and repetition. The public might be persuaded to try something on 20%, which they would be afraid to try out on a whole program, however floundering it might appear to be.
How Would This Particular Approach Make Medicare Solvent? It wouldn't, but it would help. And it would provide a demonstration of the practicality of some of these ideas for worthy motives, and still leave room to back down if they unexpectedly fail. Most people do not trust their own judgment of complicated math, so we have made it simple. It is surely not the case that every single solution is either too complicated to understand, or too simple to be believable. Every grand proposal, from Otto von Bismarck's social security through the European systems to Blue Cross/Blue Shield, followed by Harry Truman, Hillary Clinton's foray into HMO, to Barrack Obama's ACA, has proved to be overambitious at the beginning, and woefully inadequate at the end. It seems there ought to be better ways to do things, but this is our way.
Medicare's original design has become so over-extended it has exhausted conventional insolvency approaches. Like any other proposal that might work, our own plan relies on approaches which are usually thought to be best avoided. So the first fundamental is to keep the core of it simple and be willing to discard the embellishments if circumstances undermine them. The doctors should devise the medical choices, the patients must control the finances, paying only for what pleases them. Government has a limited role in market failures, but a very little role in defining them. The goal is to eliminate the disease, ultimately reducing its cost to a framework of the first year of life and the last year of life. Anything more must defend itself against efforts to improve, then eliminate it.
And there is another idea which needs testing. Alexander Hamilton persuaded George Washington that "A national debt if it is not too large, is a national treasure." In 2006, we may have discovered what is a little too large to be sustainable, by permitting banks to convert mortgage debt to stockholder equity and then watching banks topple over from the sudden shift. Up to that time, it was quite legal to rebalance excess debt that way, which is why no one has gone to jail for doing it. And now we have the uncertainty over whether to encourage more of it (as a safety valve) or punish it (as toppling over the entire economy). It does not help matters for the two political parties to take extreme positions without more evidence. Pre-paying for medical care instead of borrowing to pay for it, is an indirect way of testing this thesis.
First of all, our own proposal depends on such long time periods that unexpected events could be the rule, not the exception. Nevertheless, many Congresses of many political parties would have to understand the basics and leave them unharmed for a century. Secondly, such huge amounts of money are involved that tampering, embezzling and fraud are not merely possible, but inevitable. These problems would confront any reformer. From them emerges the third one. Multitudes of individual Health Accounts would have less risk overall than gigantic single payers because small ones can only be converted into bigger ones, not defeated in a single pitched battle. Inevitably some individuals in charge of any system will prove to be stupid, reckless and venal. The real question is: Compared with What? If you make up your mind in advance that you will rescue everyone who doesn't succeed, the whole system will be no better than a single gigantic reinsurer overseen by either an idiot or a crook, and probably both, from time to time. Index investing is itself a triumph of everyman against the experts, after all. For long periods, single payer systems may be run by saints, but diversity is more resilient in the long run. The more important issue is to define how you will respond when you detect the "imperfect agency". The opportunities for illegal gains will inevitably exceed the individual opportunities for honest managers, in size if not in frequency. Therefore, smaller decision units are better than bigger, simpler is better than complicated, and success should never be guaranteed. The irony of the role reversal between the political party of individualism and the party of diversity is not to be overlooked.
Medicare financing could possibly be eventually covered by this approach, retirement income financing, probably not. To do the quick math in your head, it is useful to remember money at 7% doubles in 10 years. Current interest rates do not achieve that, but then current rates seldom do. During the eight years of the Obama administration, the low-cost total market index averaged 11% gain. Most people would never have guessed that outcome in advance. Much of it never reached the average stockholder because the government (taxes and inflation) and the finance industry absorbed it, but public restlessness may change things. The pharmaceutical industry may possibly be over-compensated, but that's not necessarily permanent, either. In this proposal, we are proposing to make the average patient become an average stockholder, with little voice in management perhaps, but ultimate ability "to talk with his feet", to buy and sell. Let's take the six components of the proposal:
#1. The co-pay feature. We've offered our opinion that co-pay has a little restraining effect on spending, and is only a device for adjusting the amount of insurance to the buyer's budget. So let's take it like that, and use the amount of the copay as, not 20%, but whatever fits our budget. We advocate the accordion principle for predicting future revenue uncertainty. Furthermore, we would abandon the pretense that it is a second insurance policy, and simply pay the carriers a fee for administrative help in running Medicare. That opens it to a bidding process related to work actually performed, eliminates the State insurance commissioner as an actor in this drama, and eliminates a huge source of confusion with the public. Imagine, one statement of benefits instead of two.
#2. The Contingency Fund. is designed to be overfunded for contingencies, so it is hard to say what its upper limit should be. And although on paper no one gets paid off for ninety years, banks are accustomed to rearranging the terms of a loan to shorten the time period for a fee. Dealing with transition periods is an old story for Congressional staff since otherwise nothing would ever be upgraded. The most conservative investment period would terminate at death, but expand to whatever age is necessary to pay it off, up to age 105. That implies the initial deposit never varies. Congress might, however, decide to vary the initial deposit but devise a shorter fixed time period. It makes no mathematical difference, but its political difference might be considerable and we do not propose to weaken our case by getting into such weedy details.
Eventually, a "sweet spot" should emerge. But let's not drop the argument with a confession of modesty. An officer of a large paycheck company recently declared to be the revenues of essentially all government programs have nothing to do with expenses, and everything to do with politics. True, we operate under a general mandate to balance new appropriations with new revenue sources. But the current payroll deduction for Social Security is five times as high as the deduction for Medicare, with only about 25% difference in expenses between the two programs, for example. The accounting rules for appropriations could be made considerably less political without significant impairment of flexibility. In the long run, it is not good politics for the public to discover you have been doing outrageous things. Over and over, you discover the Constitution is a cultural document, intolerant of judges who are obtuse.
#3. Delay Liquidating the HRSA at death. Although things get a little threadbare beyond this point, there is no reason to hold back borrowing for observed volatility. We are at the point in the compound interest curve, were holding the funds for ten years after death would multiply the original subsidy by 128 instead of 64; even 256 is conceivable. We are paying the Chinese much less than that for the Treasury bonds, and they would probably be relieved to see a way of recovering their investment. #2 may not sit very well with some people, but it would surely guarantee repayment, which at the moment, looks rather chancy.
#4. Investing the Pay as You Go. The problems created for others in the payment process have to be reckoned with. We propose the individuals continue to pay/go temporarily for half of the withholding tax receipts. That's effectively unchanged because half the cost has been transferred, but the withholding tax revenue remains constant. What is essentially involved is to balance the problems of the current administrative staff against the problems of passing acceptable legislation. But once more, the mathematical "sweet spot" is comparatively easy to calculate, but the political effects are more intangible. It is probably impossible for an outsider to have a firm opinion.
Additional unknowns in this equation are how much nursing home costs from state Medicaid plans would eventually emerge in the form of Medicare deficits. It is common knowledge that although custodial costs are not allowable costs, states have found ways to make them a federal responsibility. We also understand the HRSA owner might get less than 7% income on his deposits. Although the Chinese debt would stop rising, past indebtedness remains unpaid. Current Medicare bills would have to be paid for probably another decade, and may well rise in size. Ultimately, the way to balance the books is to raise the contributions. So, privatizing Medicare might or might not make it cost less, but would greatly relieve its present costs. Funding of retirements will have to come from other sources. However, right now contributions from the two contingency funds could easily be increased.
#4. The Last Four Years of Life Half of Medicare costs appear in the last four years of Life. By reimbursing Medicare for the last four years from other sources, Medicare's average cost is cut in half. but the withholding tax remains the same. Therefore, we come closer to breaking even in several decades, although we still probably won't quite make it. The essential feature of carving off terminal care is that it is half the cost of Medicare, and therefore reduces the burden on the other contrivances to reach the final goal of financing it.
#5. Simplicity, Simplicity. To begin with the opposite of simplicity, two quite unacceptable new ways to manage the medical payment system have been suggested by others. One alternative is to consolidate the whole industry, with one corporate administrative arm assuming the payment tasks for everybody, along with the whole delivery system. That scarcely seems appropriate management for a health complex which is already too big to manage. But it seems to generate many current proposals, especially those coming from the bureaucracy itself. Another idea, based on its resemblance to whole-life insurance, proposes a giant company or government department to concentrate on health finance, doing it for everybody. It might seem suitable for an insurance company, a medical school, a computer company, or a medical society. That seems to be what these organizations would like, but it immediately creates additional complexity, because computers only work if you specify some response to every contingency in advance. In a sense, this version of "Single Payer" would be a throw-back in thinking to the days when only a big company or a big government could afford to own a computer.
Is medical finance really so complicated most people couldn't handle it by themselves? Let's remember the anguished words Tzar Nicholas: "I don't run Russia. Ten thousand clerks run Russia." What the Tsar was saying, was the problem isn't individual complexity, the problem is the huge volume of simple problems. For example, if we proposed to butter everybody's bread, it wouldn't be hard to do, it would be hard to manage.
#6. Linking the New Medicare with Health Savings Accounts.. Probably the most important feature of putting pearls on the string is to avoid tangling the string for the convenience of the pearl. The purposes of the linkage are to acquire a connection to the retirement feature and its incentives to save and to lengthen the time period of any compound interest. It is not to generate inter-plan borrowings or conveniences, particularly for the early entrants to the string of pearls, at the expense of the later ones.
Is medical finance really so complicated most people couldn't handle it by themselves?
For Health and Retirement Savings Accounts --- Transfer Slips, and Monthly statements, Only. So, yes and no to computers, which is what all this amounts to. Abundant cheap computers tempt us to use them for simple tasks, at the risk of making the simple task complex and losing the truth in a huge pile of statistics. (In another generation, a self-correcting code may conquer this problem, at the same time it will widen the opportunity for vandals.)
The proposal made here instead is a confederation of otherwise free-standing organizations (The Pearls), each hiring its own experts, feeding into a common channel of Health Savings Accounts owned by individual patients (The String). Individuals could hire consultants if they pleased but the decisions should be so simple the average high school graduate could cope with them.
One consolidated lifetime account form, which serves as a transfer vehicle for a single person's various balances. Sort of like a lifetime check-book. It provides a common incentive to be frugal for future retirement, and a common way to multiply such savings.
If that won't suffice for some tasks, we are traveling down the same path as the income tax and should re-consider such high-handed laziness.
There might be many networks, as long as their balances are uniformly transferable and they each link ultimately to a transferable retirement fund (The Goal) and a transferable investment fund (The Multiplier). Such networks might grow very large, but still, remain quite simple, and decisions which belong to the patient would remain within his control. The only outward purpose of such paperwork would be to transfer credits of the owner, to debts of the same owner or vice versa, with the adjusted balance ultimately coming to rest in his retirement account, creating a common incentive to be medically frugal. This would maintain adequate "records" (which mostly no one ever reads), an information source, and a designated HSA representative, but their outward form and unit would remain a transfer slip. You are striving for a good retrieval system, not a good archive system. If you want a simple system, give it to individuals who have an incentive to keep it simple. Don't give it to people who have a graduate degree an incentive to make it complicated.
If you want a simple system, give it to individuals who have an incentive to keep it simple.
This particular feature has a political element. The American public now imagines it gets a bargain with Medicare, somehow getting a dollar of healthcare for fifty cents, and therefore a treasure they are unwilling to surrender. In all probability, no organization except the government could function long with such a deficit, so taking the deficit away from the government necessarily places it in the hands of someone who must balance his books. Somehow, legal protections for the patients against the debts of organizations which participate in the confederation must be established, so they can occasionally provide benefits at a loss, but only within stated limits. Called a "loss leader", the situation is a common one, but the effect is quite different from making the government a payer of last resort. Two additional savings multipliers must be added, although they will be explained shortly, along with two important investment designs.
Investment Mechanisms.We promised to discuss two investment mechanisms which might help matters. The first is the tendency of compound interest to rise with time. We have already shown above that adding another decade to the example will have an exaggerated effect on the outcome. This is an inherent quality of compound interest which crept up on us as science has conquered early death, and should have wide application in the future. As we learn how to avoid borrowing and learn how to be successful creditors, it should become a commonplace to rearrange financing to optimize it.
The second new model is index investing. As international borrowing has vastly increased the money supply, interest rates seem to have settled at a new low. Bonds have always been a zero-sum investment, but recent trends seem to set an even lower boundary. Common stock has more risk and volatility, but John Bogle and others have shown that it is practically useless for an ordinary person to buy anything but low-cost total-market common-stock index funds ("passive investing") since the fees charged by intermediaries tend to wipe out the profit from active investing. We recommend a heavy emphasis on this method. Beyond that basic approach, other strategies may be considered as a way to add fractions of a percent to total returns, but best avoided by people without experience, or lifetime years to recover from investment misjudgments.
In Final Summary of Privatizing Medicare. The public sector has been allowed to turn "privatization" into a term of contempt, when in fact it is a goal for the public sector to emulate. Very few people begin their careers in the public sector without spending their whole career there. In that sense, they are natural monopolists and act like them. We should strive for more varied career paths.
Even with considerable twisting, Medicare is so underfunded, no way can be found to self-fund it without adding several hundred dollars per person as a pump-primer. Of course, that's a great bargain compared with a hundred thousand dollars of medical care later on, but it will meet far more resistance than five hundred dollars is worth. Even then, it might require forty or fifty years at the most optimistic, to show a profit. In the Pearls on a String concept, the deficit might be made up by surplus generated by other programs, but Congress is unlikely to be willing to identify such a donor, and indeed it is a slippery path. The Affordable Care Act does not look as though it is going to generate a surplus, for example.
Barron's recently invited 1000-word summaries of radical change proposals. tg.donlan@barrons.com
Health insurance financing is a gigantic wealth transfer system. Politically, it is described as a transfer from rich to poor. But it really is a transfer from one age bracket (working people) to two non-working ones, children and retirees. Add thirty years of longevity by curing the diseases of one age group faster than another, and the balance between age and wealth distributions gets bent out of shape. Socially, it's dangerous. It gets even worse to base one-year casualty insurance on employment, tempting employers to dump a system which ends when employment does patch together by tax incentives. Average employment duration is around three years, so almost every condition soon becomes a pre-existing one, whenever employees lose their insurance. Insurance companies see what's coming, and cannot be blamed for getting out before it collapses.
More revenue would help, but existing sources are almost exhausted at 18% of GDP, while a rapid change in health delivery would flirt with disaster. But one thing remains: using the idle money in pay/as/you/go to fund a transition matching a change in spending incentives, or even scientific research eventually eliminating the disease. It would work with income returns of between 3-7%. Compound interest on money already collected would pay the deficit. Extension of the age limits on Health Savings Accounts would stop the borrowing, and trust funds would extend the compounding for 21 years past the average age of death upward, to the point it would far exceed the need for retirement funding through taxation or borrowing. Transfer of $4000 of each grandparent's HSA surplus (at death plus 21) to the HSA of one grandchild would add another 21 years to compounding downward, leaving several millions of dollars per person for retirement, curing a number of social turmoils in the process. That probably wouldn't happen completely, but a Medicare surplus rather than a deficit would allow any transition to be much speedier. The present 2.9% employment tax presently collected from working people would equal or exceed what is needed if compounded. Since the new fiscal limits would be enforced by the laws of mathematics, there would be far less temptation to spend it on battleships. Further extensions of longevity would increase revenue faster than inflation could undermine it. Essentially, it would be asked to match 104 years of compounding--with what took 42 years to accumulate. There's plenty of slack if you try those simple numbers on a free compound interest calculator, found on everybody's Internet. A second chance to do what we should have done in the first place.
True, the necessary change in incentives would come from unifying three systems into one lifetime one, incentivized by noticing the remarkable savings already created by millions of Mid-Western subscribers to HSA. A few sentences of amendments to existing law should be all that Congress needs to struggle with since these are existing programs. Whereas the R's need to see a single-payer system has become a single-saver system, the D's can save face by asserting they are the same thing.
George Ross Fisher MD
3 Haddon Avenue South
Haddonfield, NJ, 08033
Cell 215-280-6625
office 856-427-6135
Email: grfisheriii@gmail.com
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.
