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.
Over the next several weeks, members of Congress will be confronted with one scary story after another about what will happen if they try to cut health care costs.
Tax the costliest health insurance plans? Workers will be denied medical care. Reduce the growth of spending on home health care agencies? Elderly patients living alone will be left to fend for themselves. Set up a commission to reduce Medicare waste? Again, the elderly will suffer. Impose a tax on plastic surgery? That’s unfair to unemployed women looking to enhance their appearance. (Seriously, the plastic surgeons are making that case.)
But here’s the thing: It is abundantly clear that our medical system wastes enormous amounts of money on health care that doesn’t make people healthier. Hospitals that practice more intensive medicine, to take one example, getno better results than more conservative hospitals, research shows. And while the insured receive better care and are healthier than the uninsured, the lavishly insured — those households with so-called Cadillac plans — are not better off than households with merely good insurance.
Yet every time Congress comes up with an idea for cutting spending, the cry goes out: Patients will suffer! You’re cutting bone, not fat!
How can this be? How can there be billions of dollars of general waste and no specific waste? There can’t, of course.
The only way to cut health care costs is to cut health care costs and, in the process, invite politically potent scare stories.
I’m as skeptical as anyone of the ability of the United States Congress to formulate good policy, but the last few days have offered a reason to hope that its members may be summoning the political courage to endure the scare stories.
That would be a big deal. Health costs, through Medicare, are the main source of the huge long-term budget deficit. In recent years, they have also caused insurance premiums to rise so quickly that employers haven’t had the money to give workers a decent raise. David Cutler, a Harvard health economist, estimates that the measures already in the health bills will increase the typical family’s income $2,500 a year by the end of the decade.
Real health reform also has the potential to save lives. Because we now pay doctors to provide more care rather than better care, we have not given them an incentive to reduce hospital-acquired infections and other avoidable errors. A new amendment from three senators — Susan Collins, a Maine Republican; Joe Lieberman, the Connecticut independent; and Arlen Specter, the Pennsylvania Republican turned Democrat — would increase the financial penalty for giving patients such infections.
Even this idea, however, has its own scare story. The Washington Post reported on Sunday that hospital groups were & quietly steaming; over it and suggested their support for health reform could be in danger.
•
One piece of encouraging news came on Saturday, when the Senate finally began listening to its own health care advisers.
To help it oversee Medicare, Congress set up an outside board of doctors, economists and other experts in 1997, called the Medicare Payment Advisory Commission. Medpac, as it’s known, tries to figure out which services Medicare may be paying too little for, thus creating shortages, and which ones it may be overpaying for.
Perhaps the single clearest example of an overpayment is home health care. Home health agencies, which care for Medicare patients with specific health needs (as opposed to those receiving general long-term care), have been proliferating in recent years. Yet, according to the most recent data, they still had fat profit margins on Medicare, 16.6 percent. One reason, the Government Accountability Office found, was that fraud was rife.
So MedPAC has recommended cutting home health payments, and the Senate bill would do so, by 13 percent over 10 years. On Saturday, the Senate rejected a Republican amendment, supported by a few Democrats, too, that would have blocked that cut.
The home health provision is actually typical of the cost-cutting measures that have made it into the Senate bill: it’s pretty good. It won’t be perfect, obviously. Some people somewhere may indeed have to stop working with a home health agency they like and find a new one. But that’s not a reason to waste billions of dollars a year subsidizing an industry’s profits.
The real problem with the Senate bill is that it doesn’t go far enough to cut costs and improve care. Here too, however, there are positive signs. For months, centrist Democrats have been saying that cost containment was one of their biggest priorities, but they had not done much to help the cause. That has now started to change.
“ Senators are now really focused on cost containment,” says Mr. Cutler, who has been advising some of them.
The day before the Senate defeated the home health care amendment, Senators Collins, Lieberman and Specter introduced an amendment with some measures to push medicine away from the insidious fee-for-service payment system. The cost-cutting momentum continued on Tuesday when 11 of the 13 freshman Democratic senators announced their own package of measures. Neither proposal is earth-shattering, but both would make a difference.
Among other things, the freshmen’s proposal would do more than the current Senate bill to push insurers to use a standardized payment process. Right now, doctors and hospitals often have to fill out different forms for different insurers. “There’s a lot of money there,” Len Nichols, head of health policy at the New America Foundation, says.
Intriguingly, officials from a rainbow of special interest groups showed up at the freshman senators’ news conference to praise the proposal. To me, their presence highlighted both the biggest strength and the biggest weakness of the proposal. On the one hand, it has a real chance to make it into the final bill. On the other hand, it, like the Collins-Lieberman-Specter amendment, also fails to fix the single biggest flaw in the Senate bill.
Last month, Senator Harry Reid, the Democratic leader, gutted an independent commission — a more powerful version of MedPAC, meant to shield Medicare payment decisions from political interference — that many economists consider necessary. Mr. Reid’s bill would allow the commission to take action only if Medicare spending was rising even faster than total health spending. If total spending rose 8 percent one year and Medicare spending rose 7.9 percent — a miserable situation — the commission would have to sit on its hands. AARP, unfortunately, has emerged as an opponent of a strong commission.
But without one, health reform will be hobbled. And the Senate may be the only hope for changing it.
The House has shown little interest in cost control. President Obama and his administration have pushed aggressively for it, but they have limited leverage. Mr. Obama can’t credibly threaten to veto any of the health reform bills that now seem likely to emerge from Congress.
So after the 11 freshmen announced their plan on Tuesday, I caught up with Mark Warner, the Virginia Democrat who is the group’s leader, underneath the Capitol building and asked him how he and his colleagues would deal with the inevitable scare stories still to come: How do you respond to a lobbyist who effectively accuses you of killing patients?
“I don’t know any other way than you take incremental steps,” Mr. Warner said, “and you hope you get to the tipping point where fear and misinformation don’t have an effect, because people see these things don’t do what they are accused of doing.”
That, obviously, is the long-term strategy. In coming weeks, we’ ll see how well Mr. Warner and his colleagues deal with the immediate pressure. The Grim Reaper is a tough opponent.
Every tennis racquet has a "sweet spot", a place within the stringed area that hits the ball just exactly right with minimum effort, and for that matter, does so with a minimum of noise. If your aim is good, the shot is much improved by whacking it with the sweet spot. In health savings accounts, the sweet spot is that combination of fixed choices over which you have no control, like your age, and independent choices over which you do have some control, like the amount you deposit into the account, or the shrewdness with which you choose your agent. There's a somewhat different sweet spot for males and females, and it will vary with the state of the stock market, or international warfare, during the era in which you had the highest earning potential. In other words, the cost of sickness is the only chance catastrophe we are aiming to protect against. For that narrow purpose, the uncontrollable factor which makes the most difference is
The age at which you started your spending account. Compound interest requires time to work; persons who start their accounts late in life no longer have to pay for their earlier expenses, but they must have some traditional insurance protection during the transition to full dependence on the account, or else some other form of savings. That's why you need catastrophic insurance coverage, but in the early stages of getting established, even that could be inadequate, and nothing can be offered unless the government offers to subsidize it. In order to find a way to capture twenty extra years of compound interest, it is tempting to begin depositing at birth, which is presently prevented by the HSA rule that you must be working to start an HSA. But children have health costs to be managed. In particular, 3% of all health costs are reported to occur in the first year of life. If Congress will allow it, we have a plan in later sections for doing it expeditiously.
Subsidies for the Unemployable, Such as Children. Please do not compare subsidy with lack of subsidy, because the subsidy is always cheaper in the short run. . Furthermore, subsidies are created by the government, and are therefore under pressure to demonstrate equity. Protection in extreme cases must rely on reasoning which placates the "Equal Protection" clause of the Fourteenth Amendment. All forms of insurance contain some incentive not to invest but to squander, and channeling that choice is part of insurance design. Here it attempts to balance a singular opportunity to select the best possible investment opportunity, with the unique ability to spend the proceeds on anything you choose after your health cost has been met. Unfortunately, we have already gone so far with borrowing for health, that many people are of a mind to believe balance can't be achieved. We could go on with this, but a quick summary is there are thousands of possible sweet spots, most of which are partly beyond anyone's control or ability to predict. There are even some circumstances where an individual would be better off putting reliance on Obamacare, trusting the government to bail him out with subsidies; if the nation decided to give equal subsidies for every payment alternative, however, most of these short-term advantages would disappear. The best we can suggest for people who dislike both HSA and Obamacare is, go see your congressman. In this book, we merely suggest that most people would be better off with HSA.
Trying not to be repetitious, there's nothing you can do about your age and sex, or previous state of health. You should have stopped smoking twenty years ago, but you can't help it now if you didn't. Twelve million people already have HSAs; if you aren't one of them, the best you can do is start one now. It's very difficult to imagine a situation in which a late start would inflict harm which subsidy couldn't help. On the other hand, if you make a bad choice of agency, make sure you are allowed to switch to a better one if you can find it. Some brokers charge too much, some of them pick poor investments to get a kickback. Some demand too large a front-end investment, although that may do you a favor in the long run. Essentially, your own choices affect the result, and your main recourse is to invest more than you planned. For the most part, the more you invest the better. If you invest as much as you can and it still isn't enough, you made an investment mistake. It's only a real catastrophe if you then get sick, and Congress didn't provide for those few who inevitably make such a double blunder. In that case, it will have required three misjudgments for a serious mistake to emerge, because even this mishap will be adjusted by aggregate subsidies costing less than the program is able to diminish overall costs -- a very likely outcome.
Interest Rates. Unless you are within a few years of death, or within a few weeks of a stock market crash, in the long run, you are generally better off with stocks than with bonds or money market funds. According to Ibbotson who published the results of all asset classes for a century, the stock market has averaged 11-12% total return for the past century. However, if you maintain internal reserves against a depression, you will probably only receive about 8% as an investor, of which 3% is due to inflation, so figure on a steady 5% after-tax, after-inflation return over the long haul. Use 8% as your shopping guide, resign yourself to 3% inflation loss, and content yourself with complaining about the 4% attrition seemingly imposed by the financial industry. You will find our charts use 5% tax-free as a standard, but show a family of curves up to 12%, just in case someone figures out a better system for harvesting the return. For 3-5 year depressions ("black swans" occur about every thirty years), we show curves of lower returns. Notice endowments and professional investors also figure on 5% overall from a 60/40 mixture of stocks and bonds, because they have a payroll to meet, but you may not. A conservative investor can feel comfortable with a 5% "spending rule", but that assumes a long horizon and the need to make expenditures. Some people have a short horizon and may be able to gamble on a pure stock portfolio because they have some other way to meet medical expenses up to the deductible on their catastrophic high-deductible insurance. But they better know they are gambling, and may, therefore, encounter a black swan they can't cope with. Such people probably need financial advice, because it is also possible to be too conservative if your deductible is comfortably covered. Fear of underfunding may cause the account to become overfunded, but that is scarcely a tragedy because you can withdraw your money without penalty after age 66. In fact, a policy of deliberately overfunding the account at all times never has any great downside, and lets everyone sleep better.
Age at Beginning an Account. If you begin to use an HSA during late working years, you have the consolation that you no longer need to plan for paying for the first forty or fifty years of your own health. However, the years of heavier medical expenses begin around age 45, by which time you have already paid for most of your Medicare payroll deduction, which is about a quarter of Medicare costs. The older you get, the more you have paid with a payroll deduction, but fewer years are left for compound interest to accumulate within the account. Balanced against this is the likelihood you are entering your highest earning years, which carried too far, may tempt you into unwise early retirement. You may need some accounting advice about what is best and still feasible. And you may need legal advice if the laws change.
Younger working people have contributed less to payroll deductions but have longer to earn compound interest in their HSA. People seem to have figured this out, and the largest group of new subscribers are in their twenties and thirties. This is the group with most to gain by proposing a buy-out of Medicare. A quarter of Medicare is paid for with payroll deductions, another quarter by Medicare premiums after you reach 66. If Congress could be persuaded to drop these contributions, what would be left is the half the government pays by borrowing from foreign sources. If you, in turn, agreed to pay off this indebtedness, the government might be tempted to match it by foregoing part or all of your payroll deductions and premiums. Since one about balances the other, the compound interest you earn on your deposits is pure profit. From the government's viewpoint, it might seem a great relief to know the debt would stop growing. Older people are generally so deeply committed to Medicare they would resist, but younger people -- and the Treasury Department -- would find it quite a bargain. Once again, financial advice from somebody good at math is highly advised. When the politics of this matter settle down, it should become possible to state a particular age, below which a Medicare buy-out is safely advisable for anyone. It's almost always in the Government's favor, so independent advice is only prudent. In summary, starting an HSA at almost any age is safe and wise. A Medicare buy-out is wise below a certain age, yet to be determined. In other circumstances, a buy-out is wise if personal finances are comfortable, but right now it would take financial advice to do it. And, of course, a friendly politician to convince Congress to make it legal.
There are two more steps to this transition. But before getting to them, it seems best to run dual systems while you phase one out and phase the other in. It may even prove to be best to run two systems indefinitely. Three principles emerge:
I. It would be pretty hard to run dual systems without also running subsidies for both. This would be part of Equal Justice Under the Law. It's hard to run dual subsidies until you know what the final rules would be. Some subsidies may be difficult to match, and require equivalent subsidies, which are harder to devise.
II. Dual systems and patchwork fixes always provide loopholes for someone seeking to take advantage. Some agency must be designated to keep this in line, using the principle of each system being charged with watching the other one. When you deal with one-seventh of the GDP, tremendous scams are entirely possible. A system of balanced whistle-blowing could effect great savings without the same surveillance costs.
III It isn't necessary to pay for everything. The reader will, of course, have noticed that paying for all of the medical care would save perfectly stupendous amounts of money. But paying for half of it would also save stupendous amounts. And even paying for only a quarter or a third of everything medical would save the economy two or three percent of Gross Domestic Product. That wouldn't be a failure, it would be a tremendous success.
In fact, it might be all the change the economy could withstand for a few years.
The Intergenerational Roll-Over.
The Coming Shift From InPatient to Outpatient Care.
Medicare had been in existence for fifteen years when Health Savings Accounts were designed. Medicare was popular and apparently permanent. Accordingly, the HSA proposal was intended to phase out when the individual became a Medicare recipient. Since there might be an unspent surplus at that time, it was provided that the surplus be turned into an IRA, partly as a gesture of deference to Senator William Roth of Delaware, who was the originator of the tax-exempt fund idea.The consequence is that the HSA now bridges the transition, between health care and prolonged longevity. That's a feature now seen to be an enhancement.
However, experience with the program shows we overlooked something. The plans are attracting a following between the ages of 35 and 50, which is to say they turn unattractive to people 50 to 66, who ought to be in their highest years of earning. On interviewing them, the difficulty seems to be that diseases start increasing at about that age, and a depletion of the account gives it scant opportunity to recover before the program terminates. Compound interest is fine, but if you have used it up for disease A, it cannot compound enough to support disease B. By contrast, a subscriber at age 35 might well be in a position to pay for one bout of illness, followed by compound interest build-up. So the plan covered two or three more severe illnesses before age 66 is attained. The contribution limit of $3300 annually is just not enough to provide a comfortable margin. Furthermore, the purpose of the limit is not clear. If a subscriber contributes more, it would be his own money, not the governments. True, it would be tax exempt, but a very large proportion of the population are tax-exempt through their employer, anyway. People whose income is concentrated may be especially affected, such as those who sell a farm or business, or athletes. Finally, everything said about unexpected illness would be true of unexpected stock market fluctuations.
Proposal 3: The annual limit of deposits to HSA should be increased by a COLA based on medical costs, rather than the cost of living. Furthermore, the limit should be a lifetime limit rather than an annual one. At present, this would substitute a lifetime limit of $132,000 for an annual limit of $3300.
This proposal, while welcome, may still not be enough. The employee with recent experience with healthcare costs, has by the age of 50 come to realize that the personal cost of an HSA has three sources: the deposits which we have mentioned; plus the premium of his required Catastrophic insurance; plus the compound interest rate which his HSA manager is allowing to pass through to him. Additional deposits cost the manager nothing, but the insurance premium and the interest rate are passed through to him from vendors, and their cost is largely obscure to the customer. "Kickbacks" are particularly obscure.
First, the interest rate. The stock market has gone up 12% a year for a century. With transaction costs of perhaps 0.5%, the customer should also subtract 3% for inflation. That creates the remote possibility of paying 8.5% to the customer, and we have in this book generally assumed a net return of 6.5%, with a profit to the middle-men of 2.0%, assuming the middle-man accepts the risk of "black swan" volatility. This is generally about 50% every 28 years. However, the broker probably does not look at it that way. He notices the stock market has gone down in the past few months, may go down more in the next year, and might then take ten or fifteen years to recover to a profitable level. Furthermore, new HSA subscribers may well be young and improvident, have few assets to supply a cushion, and background of judging a consultant's value by the labor he applies, rather than the risks he takes. The customer wants 6.5%, the broker offers 1%. Each sincerely believes the other is cheating him.
Disintermediation, def. Eliminate the middle-man.
The Nut of It.
So, there are other places to look for the difference. The employer can afford to give up the difference, providing he gets a 40% tax deduction directly, borrows the money at 6%, and is making profits this year. The HSA manager can afford to make up the difference, providing he treats the HSA deposit as a pass-through rather than a paid service and makes it up by adding a surcharge to the insurance premium. The insurance company can make up the difference by lowering its prices and profits. It would take subpoena power and open books to know what was a fair proportion for each to contribute. However, the customer must receive a higher income rate, or the complicated interactions will not work. That's where we start. The HSA becomes feasible because transaction costs have been lowered by computers and near-zero interest rates. The customers cannot enter into the bargain if the finance industry refuses to share the windfalls along with the risks. The customer is going to get 6% or forget the whole thing.
Perhaps a simpler way to summarize the unfortunate confrontation is to recognize it is going to be difficult to support 6.5% retail interest rates in an environment of 1% bank rates, and historically low-interest rates, generally. That is particularly true in an environment of falling stock market prices. Unless it can be convincingly shown that someone in this circle is making outrageous profits, or unless someone is willing to put up the capital to buy this business at a discount, the following dangers must be faced and surmounted:
1. The medical customer will eventually resort to what he did in the 1930s. He will neglect his teeth, his gallstones, his varicose veins and hemorrhoids, his eyeglass refractions, and other optional, delayable, services. Consequently, the accident rooms of hospitals will be full of treatable but neglected cases.
2. The stockbrokers will recognize that the era of $250 commissions is over, and the retail customer is going to buy index funds over the Internet from wholesalers, and conduct his medical business dealings out of a bank safe deposit box. The history of discounts in closed-end investment funds is part of this conversation.
3. The insurance companies will surrender their surveillance role, and strip down to a re-insurance role. Something like the PSRO (Professional Standards Review Organization, see Senator Wallace Bennett of Utah) will take their place.
4. The hospitals can survive a long time on their present surplus assets, particularly buildings. In time, much of their role will be taken over by retirement villages. Doctors and pharmaceutical companies will be squeezed in ways unique to maintaining their function, more or less.
Which will we choose, if we are headed toward a 1930s depression? All of them. But assuming for the moment that things aren't so bad, let's start with #2. The stockbrokers are doomed, anyway. Almost all banks have some empty floor space, where a fee-only wealth advisor can function with his computer terminal. Alternatively, CPAs can absorb a new business model, in addition to filling out tax forms. One thing is not going to remain the same: the finance industry has a whole lot of disintermediation to do.
We begin this second edition with a shortened description of the Classical variety of Health Savings Accounts. There had been over fifteen million subscribers to this idea by the time of writing the First Edition, and since then many more people have joined. HSAs are no longer a novelty, requiring a great deal of explanation.
However, newcomers may need some basic information, and after all, there are three hundred million other people who remain to be enlisted. For them, we probably need to explain that the classical Health Savings Account was first conceived by John McClaury and me in 1981, endorsed by the American Medical Association a year or two later (I was a member of their House of Delegates at the time), widely publicized by John Goodman in his book, Patient Power, and taken up by the Cato Foundation, among many other friends. It was enacted as a pilot program under the title of Medical Savings Accounts in 1996 and finally enacted permanently as Health Savings Accounts in 2003. Bill Archer, Chairman of the House Ways and Means Committee's Subcommittee on Health is generally given credit for maneuvering the law through Congress, but a great many others helped a lot.
The actual content of the law is very simple, containing only two main parts. The first of these is a tax-exempt saving fund, and the second is a linkage to a high-deductible indemnity health insurance. Anyone between the ages of 21 and 66 is entitled to join, and after age 66 any remaining balance of the HSA changes into an IRA (Individual Retirement Account). The distinction is, expenditures from the HSA are entitled to a second tax deduction, provided they are spent on legitimate medical expenses. For the whole duration of the period of eligibility, HSA is the only "qualified "retirement account entitled to two tax deductions, the first when money is deposited, and a second if it is spent on medical care. This configuration of double-deduction is common in Canada, but in the US it is unique. The underlying reasoning was that Medicare would replace it at that age, and in addition, there were laws prohibiting payments between two federal programs for the same purpose. It later turned out these age limitations interfered with suggested expansions of the program described later in this book, so one of the modifications now suggested is some appropriate amendment of them.
It is useful however to remind people that Health Savings Accounts are quite different from Health Spending Accounts, which are entirely different. These other accounts contain a "use it, or lose it" spending limitation to the current year, leading to surges of unnecessary spending on prescription sunglasses, etc. at year-end. These spending accounts are definitely not the same thing as savings accounts, but they would come close if the "use it or lose it "feature was removed.
Furthermore, the various vendors of Health Savings Accounts have proved to be ingenious in providing alternatives within the rules. There is even a website displaying five examples of typical variations, and no doubt more will appear. Generally, those variations respond to changes in the economic scene, since many investors remember the high-interest rates of a decade ago, whereas others focus on the negligible rates currently available, but look ahead to a return of high ones. No doubt short sales against anticipated falls in short-term funds rates will appear, and all of the complexities of Wall Street may eventually make an appearance. Investors in small towns are particularly warned to consult a wider range of vendors by reviewing the choices on the internet, reading some national journals devoted to the subject, and similar means of looking beyond limited choices. The original idea was certainly to permit the subscriber to shop around for what suited him best
We, therefore, venture a recommendation, with the usual warning that past performance does not guarantee future results: we favor the purchase of low-cost index funds mirroring the entire American stock market. For a price of fewer than ten dollars a trade, widespread diversification can be obtained and maintained in what John Bogle calls "passive investing". That market has maintained a gross return of 11-12% for a century, and even after inflation is very likely to net 6% or 7% to the investor who adopts a "buy and hold" strategy. Few brokers will assume any risk for small investments unless the customer commits for long periods of time. One available strategy is to over-deposit when the account is opened, but even there the law currently limits deposits to $3300 a year, and many brokers have a $10,000 minimum. These limits, like the age limits, are becoming obsolete, and in any case, should be expanded to a lifetime limit rather than an annual one. Furthermore, it seems useful if some impartial body were given the authority to re-examine all such issues annually, particularly emphasizing the customer's ability to change agents when dissatisfied. Remember that investment agents are not required to put the customer's interest ahead of their own; they are not "fiduciaries". So be cordial, but act with care.
During many medical meetings, I developed two generalizations: if one paper in three is excellent, or if the whole meeting produces one shocking discovery, you are having a good meeting. Two thirds of the time, if you let your mind wander, you haven't missed much. So imagine my surprise, when a 6-hour meeting recently related four formerly incurable diseases with new successful treatments, plus a new slant about how rare diseases spread, and disturbing possible insight into the medical economics of pharmaceutical marketing.
Rare Diseases
Another insight about rare diseases was that certain diseases may be rarities in America, but are common in some foreign countries. Perhaps this disparity was due to differences in hygiene or nutrition, but no, DNA testing shows they are inherited. Genghis Kahn or somebody like him seems to have spread a mutation around his neighborhood, and poor transportation kept these diseases local. But recent globalization increased foreign immigration, so these diseases are now commoner in America when we thought they were local mutations. The new cures? They are for biliary cirrhosis, Hepatitis C, hemochromatosis, and Non-alcoholic fatty liver. Having said that, let's narrow our attention to the non-scientific one, the one about drug pricing.
Hepatitis C
First, some background about Hepatitis C. Like HIV (AIDS) in its early stages, it was mostly confined to males, because it was initially spread by a male to male sexual contact in prisons, along with intravenous drug abuse for the same reason. ( Let me tell you, if you weren't a drug abuser when you went into prison, you will very likely be one when you get out. ) The gay community rattled the cage for more research and the result has been a great decline in Hepatitis B and HIV-AIDS, but Hepatitis C proved much more stubborn. For twenty or so years, we had a test which detected the presence of Hep C, but we essentially had no cure, with the possible exception of Interferon, which made people deathly sick for a year and had only a 30% cure rate. Most patients refused to go along with this treatment, and for years I told most patients that in their position, I would take my chances on a better treatment coming along, rather than subject myself to this grief. Well, today I learned the tables had turned. About twenty drugs, in five classes, had more than a 95% chance of cure in three months, with comparatively little toxicity. All on a single projection slide. The speaker said they were contemplating a campaign to eradicate the disease entirely by 2020, while saying there would be a campaign to eradicate it by 2030, just to be conservative.
Drug Prices
Well, I stopped off at one of the drug company booths to help myself to a free lollipop and chatted with the drug representative. The drug was expensive, like $60,000 for a three-month course of treatment, plus MRIs and other tests to monitor it, plus doctor and hospital charges. Let's guess it comes to $100,000 per patient. Wikepedia tells me there are millions and millions of patients with the disease, and the speaker guessed it was 1,600,000 in America. I suppose the drug company thinks no one can multiply because that comes to about $160 billion dollars. The competition was supposed to lower the cost, but the initial reaction was a rush to recover research and development costs before the disease disappeared. Even that wasn't a satisfying answer, because neither prison inmates nor recent prison inmates could possibly afford it. Most of this projected cost would fall on state Medicaid. Whether there is any connection between this set of associations and the Tea Party rebellion against restraining Medicaid is conjectural. But it is certainly strange that a disease which took so long to find a cure would suddenly find twenty cures at one meeting. The drug rep responded that if you just call the drug company -- don't call your hospital or health insurance company -- the drug company will almost always find a way around the problem without substantial cost. That's fine, but $160 billion? Nobody but the federal government has that kind of money, and it's even questionable they have it to spare.
That's all I know. Don't call me, call someone more likely to know the answer. We do know two things: there is a big pool of disease waiting to immigrate, so we have to talk about world-wide eradication, not just about one country. And the treatment of Hep C uses up your resistance to this sort of virus, and likely causes a re-activation of Hepatitis B if you happen to have had it in the past, as many Hep C patients undoubtedly have.
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.
