Let me put some emphasis on what I consider the most revolutionary change of a current lifetime. Nothing to do with Hitler, Stalin or Mao; or jet planes, television, and computers. Or even the rise of the impoverished underdeveloped world. To me, the most revolutionary change of the past century has been the extension of the average life span, by thirty or forty extra years, depending on where you happen to live. I'm proud to be a member of the profession at the center of it.
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The Great Depression
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Right in the middle of this revolution, the Great Depression of the Thirties convinced a great many people there were not enough jobs to go around. The Union movement, as we say, or the Socialist movement as they come right out and call it in Europe, adopted a general thesis that a limited number of jobs should be shared equally so everyone could have a chance at them. Child labor should be condemned, and those occupying "decent" jobs should retire early. A number of lesser agitations of the Thirties have the same sound to them: piecework was a bad thing because it encouraged women to work at home, depressing prevailing wages. Home offices are condemned by the IRS for similar reasons. Automation and efficiency generally were resisted. Since I persist in the notion that efficiency is almost always a very good thing, these anti-efficiency campaigns sound like more hidden agendas to spread the supposedly limited amount of available work. But all of this is a left-over idea from the great 19th Century migration from the farm to the industrial city, where job creation generally requires a manager, some risk capital, and an atmosphere of creative destruction -- all of which can seem threatening, except for the seemingly obvious evidence of their usefulness. If you have grown up hating managers and investors, it's painful to be told your only alternative is to spend a lifetime working as their subordinates.
While some people understandably oppose the forward march of efficiency, few want to live shorter lives. Even victims of self-inflicted conditions generally drawback when the consequences become fully visible. Mistaking a lifetime of paychecks for a lifetime of work, they wish to extend one without extending the other. That's called inflation, it seldom creates wealth, usually destroys it. It's vaguely possible that alcoholism, unsafe sex, and recreational drug consumption are efforts to end it all, but let's be charitable. More likely those confused souls are just that, confused.
And that's where matters seemed to rest until recently. People didn't specifically ask for this extra longevity, and while often willing to risk it, are seldom willing to lose it. My own elderly generation can start to see signs that a protracted retirement can eventually lead to running out of money, so there is plenty of need for an open mind, experimentation, and innovation about making retirement a more productive period of life.
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Great Depression of the Thirties
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I heard some college kids talking; kids do talk a lot. The proposition argued was essential as follows: Instead of adding a few years to your retirement, when you are feeble and useless, why not deliberately offer kids an extended period of loafing, when health is good, love-making is vigorous, and the ability to endure the debilitating effects of recreation is still strong? A grungy lifestyle is more tolerable for someone who is thirty than for the same person at seventy-seven so it could be an overall cheaper lifetime. An additional five years of pizza for breakfast; sounds heavenly.
Boys and girls react to this proposal in biologically different ways, of course. Boys don't have the same biological clock, telling them they better start their families while they still can. Raising little children is strenuous, particularly during time shared with continuing education, starting a career, or finding a husband. Getting a divorce is also a surprisingly debilitating distraction, seldom recommended by those who have experienced it. The males have an easier time loafing; so why not return to the customs of a century ago, when girls planned to get married during the same summer they graduated from college. Because a big part of that tradition was "Don't get married until your ship comes in," it tended to define an eligible male as someone thirty years old. Unfortunately, that interferes with another new trend, the buddy system.
Most girls now expect to go to college, and colleges have mostly become coeducational to accommodate the expanded market. Hand in hand kids stroll the lawns of academe, more like siblings than lovers. The faculty marvels at this phenomenon, which to them seems like an unfamiliar mixture of incest and promiscuity, but it does not quite follow the rules of either entertainment. Since the buddy system is probably connected to the increasing divorce rate, universally condemned as a bad thing, it may further evolve into something else. It's been suggested men should get over their traditional reluctance to raise someone else's children. Now that's an idea which is going to take some time getting used to.
So, all in all, let's swallow our generational pride and seriously consider whether we just ought to do what our grandparents did. Men should wait until thirty to get married, while women should marry at twenty; simple. It forces feminists to admit that in one sense they are inferior to men, so declare victory and ascribe it to an innate superiority of women. It also calls the pseudo-sibling pairings of school children into question, which is essentially the only thing new in this whole business. It's probably a lot of fun, but it exacts too high a social price.
Times change. The Japanese have been defeated in "the" war. The spirit of sacrificing anything else to survive an external threat has subsided. California has become a blue state, and is fast becoming a minority-dominated one. A new generation has appeared, and unmindful of historic beginnings, has come to accept old expedients as simply the rules of the game. In particular, fringe benefits are no longer a bonus, but just a part of earnings which for some reason are tax-sheltered.
To sum it all up, Chief Financial Officers no longer feel they are cheating when they maximize tax "benefits". It's legal, isn't it? Obviously, an employee receiving a big gift finds it more welcome than paying for it himself, especially since it is tax-free and other people don't get the same treatment. Economists who have examined the matter are fairly unanimous that fringe benefits are all soon merged in the minds of employers and employees alike as "employee cost." Within a few years in a competitive environment, both sides of the gift soon treat fringe benefits as only a tax benefit, with comparable reductions in the pay packet to adjust for them. The cost of the gift soon equilibrates, only the tax deduction is a true transfer.
Nevertheless, there are economic limits, if not legal ones. Issues like Portability, Job-Lock, pre-existing conditions, and individual choice would disappear if health insurance were freed of linkage to employers since these issues are all traceable to the mandatory link between health insurance and losing your job. We really do have an employer-based system, but it has a price. Lifetime healthcare insurance policies would place considerable strain on portability and choice, so employer-basing stands in the road of multi-year insurance. Maybe, just maybe, we should reconsider the advantages and disadvantages of having it remain a gift from employers. The growing suspicion it has been the main impetus for cost escalation is worth testing.
In fact, the shareholders usually get a bigger gift than employees do. State and local corporation taxes vary, but a profitable corporation pays 38% federal corporate tax, and the total corporate tax burden approaches 50% if you include mandated sharing of other fringe benefit costs, the highest in the developed world. By defining fringe benefits as a tax-deductible cost of doing business, some major corporations effectively increase their net income by half.
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To understand how that is possible, just look at any payroll tax stub next payday. All these features were intended to redistribute wealth, but the CFOs, turned them into shareholder advantages. Tax deductions from the pay packet total about 15% of net pay. But the employer must match most of that deduction with his own contribution, which brings him to 30%. And furthermore he pays twice as high a tax rate: about 40% tops compared with a blended individual rate of 15%, so it all adds up to 60%. Let's use the imaginary example of a $10,000 health insurance premium, where the employee gets a $1500 tax reduction, but the employer gets $3000. It's after-tax money, so the employee effectively gets $1726 and the employer $4200. For a big employer, multiply that by 10,000 employees and you get a noticeable amount of money. It's so much money you can imagine what the stock market would do, if a proposal to abolish it looked as though it might be enacted. But would you believe it -- that's not the worst of the situation.
The worst is -- the employer has been given a very large financial incentive to raise the cost of healthcare. The higher the better, and shareholders ought to love it. Physicians have the same incentive because we would love to raise our fees, as Adam Smith so tersely put it in The Wealth of Nations. But at least we doctors took the Hippocratic Oath, and most of us are a little ashamed of this conflict of interest. Whereas, a stockholder controlled company has hired a manager with the mandate, to make as much profit as he legally can. Let's summarize: we have engineered a system where it is well known among CFOs that you can often make extra profits by giving a gift of health insurance to the employees. And if that isn't a tax gimmick, I don't know what would be. We have finally reached the point where the health system costs 18% of Gross Domestic Product in spite of closing 500,000 mental health beds, all of the tuberculosis sanatoria, all of the polio beds, and lengthened human longevity by thirty years. Maybe you can blame that paradox on doctors, but I doubt it.
We have simply got to stop telling fairy tales about Henry Kaiser and Liberty ships eighty years ago. This is a tax gimmick and it has to stop. I would be happy to meet with the Business Roundtable to discuss how we could stop it without crashing the stock market, but it has got to stop. My two-part proposal is pretty short, however:
Proposal : Employers should discontinue providing free health benefits to their employees, at the same time corporate income taxes should be capped at the same rates as individual income tax. The speed by which this is to take place might be determined by the Federal Reserve in response to economic conditions, but in no case longer than three years to complete the process.
The competitors deserve a word, here. About half of business is made up of big business, and half is small business. Wall Street and Main Street, if you will. The opportunities which Henry Kaiser stumbled upon in 1943 mostly apply to big business, and probably much of that anomaly can be traced to the fact that bigger businesses are more likely to be profitable, and more likely to be engaged in international trade, where competitors don't get a vote. Some of the tax benefits for small business like Subchapter S, probably represent an effort by Congress to help domestic competitors without helping foreign ones.
But self-employed people, and unemployed ones, are excluded. Very likely, much of the politics of healthcare is intended to help these people, without helping small business or big business, and without helping foreign competitors. Pretty soon, you have a tangle of interests affected by removing the obvious tax inequity which Henry Kaiser is given credit for discovering. Just about everybody has something to gain, something to lose. So it begins to be impossible to say, on net balance, how much the country would be improved by abolishing it. That's particularly true, with the Affordable Care Act on trial.
Just how bad things are, is hard to say. But plenty bad enough. We know about job lock and the other features directly attached to employer-based insurance, and we decided to live with them. But the escalation of healthcare costs, and the soaring international debts used to pay for them, are becoming too much to handle. We can tolerate a lot of things, but it's not clear we can tolerate 18% of GDP devoted to healthcare, particularly if the price keeps rising. It's hard to imagine anything people would prefer to spend their money on, then on longevity. But when serious people, or at least people who take themselves seriously, start talking about euthanasia as a solution to our health cost problem, you know the costs are starting to hurt. So get this: you can only do it once, so euthanasia isn't as useful a solution as tax reform.
What a Tangled Web We Weave.For the most part, only economists are familiar with the rather well-established fact that wages in the pay packet soon decline to recognize the value of other items in the total wage cost. In this case, it is the 15-20% tax reduction as a result of the Henry Kaiser tax dodge. After eighty years, news of this theory has seeped into the minds of labor unions and is slowly becoming common parlance among union membership. So inevitably, bickering about tax subsidies for poor people gradually reached the same point of recognition. Negotiators who have won an economic victory on an esoteric point, often find it difficult to restrain their boasting of it afterward.
In the case of subsidies for the poor to pay for national health insurance, the subsidy was based on whether the individual's income was a certain percent of the poverty level. When the individual's income falls in the border zone, it may make a big difference whether or not to include the tax deduction as wages. A decision on this point affected eligibility for subsidy of millions of low-wage employees of big business. And that in turn affected their personal decision whether to buy health insurance in the exchanges or to continue to get it through the employer -- which way would be cheaper? With millions of dollars at stake, it is small wonder the negotiations apparently broke up and agreed on a two-year postponement of including employees in Obamacare. Since the political makeup of Congress had changed since the law was passed, the law itself could not be adjusted to smooth out this difficulty. The implication (pretense?) has been circulated that somewhere buried in legislation there exists some relief from this situation, but it will not be effective until 2018. It scarcely seems likely a useful compromise could be devised during that time window, or during a Republican administration afterward, so stay tuned.
A related issue might also be involved in the mysterious revival of the minimum wage by union politicians. It seems possible the reasoning is that, since you can't lower the threshold for subsidies, perhaps you could raise wages to meet the threshold. Some pretty sophisticated people are apparently advising these politicians about a pretty obscure economic point. Ordinarily, the market wouldn't tolerate such manipulation, but having gone off the gold standard, perhaps it now seems possible to give it a try. All in all, the arguments for a minimum wage are so tenuous, it seems more likely that inflation is being toyed with, as a possible way to expunge indebtedness.
But we are surely a long way from being able to predict the current cost of care, to say nothing of future care. Whatever it is, it is large and would be less if we switched from pay-go to Health Savings Accounts, cleaning up our books in the process.
Others may improve on them, but that states the goal. As the saying goes, "every ship on its own bottom". Even if the package fails to cover all costs, it is obvious that saving money at interest will result in more money than spending it immediately and gathering no interest. You will notice it makes a 3% inflation assumption. Shifting the money with interest promises more money for healthcare, than not shifting the money. The dynamic scoring has been found by experience to be at least 20%, and possibly as much as 30%. How long it will take to work off this burden is unpredictable. What is predictable is that with enough time it will do so, and the surplus can then be applied to the second mistake we have made.
Proponents of a single-payer system have focused their attention on the fact that every person attaining 66 years of age is eligible for Medicare, regardless of income level. So a start toward that goal was made by giving Medicare to disabled persons. Unfortunately, disabled persons under the age of 66 are usually disabled for life, and thus have a considerably higher cost to the program than the "normal" recipients. There are five million of these disabled persons, as against fourteen million regular members. The consequence is the addition of younger disabled persons greatly increases the average cost of all recipients. As a consequence, lifetime Medicare costs are overstated, and the pay-go problem is a little easier to solve. Unfortunately, shifting the cost of the young disabled to another program will not reduce their cost, but foreshadows the financial disaster which could befall us if we adopted a single-payer approach. The true cost of the program is further confounded by the tendency of people to store up a backlog of medical expense, in anticipation of free care in the future.
Proponents of a single-payer system have focused their attention on the fact that every person attaining 66 years of age is eligible for Medicare, regardless of income level. So a start toward that goal was made by giving Medicare to disabled persons. Unfortunately, disabled persons under the age of 66 are usually disabled for life, and thus have a considerably higher cost to the program than the "normal" recipients. There are five million of these disabled persons, as against fourteen million regular members. The consequence is the addition of younger disabled persons greatly increases the average cost of all recipients. As a consequence, lifetime Medicare costs are overstated, and the pay-go problem is a little easier to solve. Unfortunately, shifting the cost of the young disabled to another program will not reduce their cost, but foreshadows the financial disaster which could befall us if we adopted a single-payer approach. The true cost of the program is further confounded by the tendency of people to store up a backlog of medical expense, in anticipation of free care in the future.
Others may improve on them, but that states the goal. As the saying goes, "every ship on its own bottom". Even if the package fails to cover all costs, it is obvious that saving money at interest will result in more money than spending it immediately and gathering no interest. You will notice it makes a 3% inflation assumption. Shifting the money with interest promises more money for healthcare, than not shifting the money. The dynamic scoring has been found by experience to be at least 20%, and possibly as much as 30%. How long it will take to work off this burden is unpredictable. What is predictable is that with enough time it will do so, and the surplus can then be applied to the second mistake we have made.
The young disabled are part of the thirty million people who are unable to pay for their own care, regardless of whether the disability to earn was or was not self-inflicted. We must forget that aspect since no insurance changes will lessen it. Nor is cost-shifting within the hospital a sustainable approach, as innumerable examples demonstrate.
What financing has done to technology is far more upsetting than anything technology ever did to financing. We have here a classic collision of viewpoints. The medical world each thinks the other is getting in its hair, and each thinks it o more important than the other: "I may need you to be able to eat, but you need me to stay alive." Detente would seem to be the wisest policy for both.
Let's begin an exploration of peace terms with several random illustrations, In 1950, I was acquainted with Dr. John Gibbon of Philadelphia, who is given main credit for developing the heart-lung machine. I was able to see the water pump and the boxes of screening, wire and plastic hoses from which it was constructed. The work of developing it was enormous, but the machine looked pretty rickety. I remember thinking the whole project wasn't going to amount to much. In another basement of Jefferson Medical College at the same time, one of the prototypical nuclear scanners was developed. Across town at the University of Pennsylvania, Mauchly and Eckert had just built the world's first computer, financed by barrels of government money a war effort. Because of that cost, Time magazine predicted a probable maximum world market of four machines.
Perceptions obviously have changed in the intervening 30 years. Today, the cost of heart operations and nuclear scanners is a problem worthy of convening invitational conferences, whereas. the cost of computers has declined so dramatically that I own three of them with greater power and reliability than ENIAC.
What moral do these experiences teach us: that technology destroys budgets, or that technology becomes drastically cheaper and more available? A third possible moral is that technology responds primarily to the signals society sends or the incentives society creates. Money, as the common measures of value in society, is the telegraph by which society sends its signals. A fourth moral is no we don't want to believe: that pouring money into something makes it immediately harder to get. The best way to make something universally available may be to leave its price alone.
The Price of Technology Instead of leaving the price of technology alone, we created service benefit, cost-reimbursed health insurance during the Great Depression of the 1930s. On the whole, that experience seems successful. Later, we used post-war wealth and exuberance to provide service-benefits, cost-reimbursed health insurance to those who could not afford the premiums and finance it federally. At the time, the difference was thought to be only a matter of quantity or degree, but the 1965 programs actually invoked an entirely new principle without our recognizing it.
The Blue Cross principle of the 1930s stimulated medical demand by encouraging the "moral hazard" of all insurance; that it makes benefits seem free, hence stimulates profligate usage. What was new about the 1965 programs was unlimited medical demand invading the budget of the federal government, the only entity that can print money to cover deficits. Since we obviously cannot fine-tune health care to synchronize with the business cycle, an inherently inflationary stimulus was placed where it would do most damage whenever the business cycle pointed up.
Indeed, as the cost of medical care was driven upward by nearly unlimited demand, an old stimulus began to get into gear. During the 1930s, the spread of the then-novel prepaid health insurance idea was encouraged by the Internal Revenue Service, which took the remarkable position that an employer paying for health insurance premiums on behalf of a salaried employee was not providing in-kind income or making a gift.
Accordingly, the IRS allowed this financial transaction to be treated as a business expense for the maintenance of a business asset, the good health of employees. This tax loophole encouraged the enlargement of health insurance benefits into what amounts to tax-sheltered income, thus spreading the moral hazard of insurance to new segments of the health field, creating a clamor from other groups (even chiropractors) that they had been excluded unfairly from this Santa Claus largess.
At least one union negotiated more benefit money than there existed I any insurance policy for the money to buy. It reacted to that discovery by demanding that the insurance company create something to use it up. In recent years, such stimulated expansion of benefits has been at least as large a factor in the escalation of health insurance premium as the inflation of units costs of preexisting benefit areas.
The healthcare industry quietly makes rude noises at hearing other industries complain that their international competitive position has deteriorated because of escalating fringe benefit costs. (If those noises have not been load, it is time they got louder.)
During a typical conversation at the bargaining table, the union would ask for a dollar an hour more management would respond by offering 50 cents, plus 30 cents in fringe benefits. That package was as good as a dollar to the union and only cost management 80 cents. The other 20 cents was hidden subsidy of our export prices, of a type we so bitterly criticize in the French and the Japanese. And it ultimately came from the Bureau of Printing and Engraving.
All of the financial pressure pushed up medical prices, particularly hospital prices, and eventually was transmitted through Medicaid and Medicare to the Treasury bond market. If you like inflation, you must love hospital cost reimbursement and tax-exempt fringe benefits.
Efforts at cost control
In 1965, the American Medical Association told the country what was going to happen and was thoroughly vilified for its trouble. There are plenty of doctors still around who were active in the 1965 Medicare battle, and you can easily learn they did not take their position because they were blind to the economic benefits that inevitably would flow to doctors but because they recognized that programs of such stripe inevitably provoke regulatory cost controls.
More than others, doctors live their lives close to the unlimited health care demand of public seeking immortality. Furthermore, as doctors generally are self-employed, they usually share the viewpoint of business owners rather than salaried employees (including those with six-digit salaries plus 24 percent in fringe benefits).
The provoked reaction was not long in coming. When cost overruns immediately appeared, Lyndon Johnson requested a control system in 1967, although the country felt the program had not been given a chance. Richard Nixon imposed wage and price controls in 1972, but they were brief and merely inspired a determination by hospitals to put on fat for the coming winter, usually in the form of depreciable construction projects.
Then Jimmy Carter, with the help of Joseph Califano, unsuccessfully attempted to obtain enactment of a hospital cost containment program patterned after what laughingly was called the experimental programs of Maryland and New Jersey. Today, we are seeing the emergence of sponsorship of the Reagan Administration.
Thed DRG system
New regulations outlining the DRG (Diagnostic Related Group) concept provides that a hospital cannot be reimbursed a total gross amount per case greater than what becomes defined as its peer group. Regardless of gross costs per case, each hospital's year-to-year increase in cost per diagnosis also will be limited.
Since the Standard Nomenclature of Disease and Operations makes theoretical provision for 900,000 diagnoses, and the International Classification of Disease consolidates them into 10,000 fairly common ones, you can be sure that the 480 payment limitation categories to be used under the new reimbursement system will lead to instant chaos. When the outcome is in our favor, we'll remain quiet. When the outcome is adverse. we'll point angrily to the obvious scientific distortion.
The principle for beating the DRG system is really quite simple. If you are going to be paid the same amount of money for simple cases as for complicated ones, find ways to get rid of the complicated cases. That's little tough on the patient with a complicated illness, but business is business. A hospital can't do any good for anybody if it goes bankrupt.
The best solution is to refer complicated cases to centers with more up-to-date specialists than you have. New Jersey is an excellent place for a pilot study of this game plan because complicated cases in North Jersey traditionally have gone to New York City, and in South Jersey, to Philadelphia. Because of employment patterns, such cases not only disappear from New Jersey hospital statistics, they often are covered by out-of-state insurance plans.
The general outline of this system can be seen clearly in the Canadian health system. Being paid the same amount to do a vaccinates as to treat a case of jaundice, the Canadian general practitioner vaccinates like crazy and refers the jaundice to an internist, who refers the case to a gastroenterologist, who refers it to a liver specialist, who, having no one to refer it to, emigrates to the United States. This incentive system takes a profession in which a doctor who receives referrals from colleagues traditionally has been the best in the field, and converts it into a profession in which the doctor who accepts referrals is an idiot.
Perhaps you begin to see why the medical profession in its collision with the financing world sees itself as more sinned against than sinning, and why in 1965 the doctors were willing to forego the certainty of more income rather than witness the soiling of their mission.
A classical error
Hospitals have made a classical error in the way they have used the premier technology, the computer. I pointed out earlier that the meteoric fall in the cost of general purpose computers sharply contrasts with the rising cost of scanners and heart-lung machines, and suggested as an explanation the different ways their use was financed during the past 35 years. If that explanation is to have force, it ought to demonstrate a unique use of computers in hospitals, compared with more overtly entrepreneurial industries.
Almost every industry has its horror stories about computers. However, the financial industries (such as banking and insurance) have more to be proud of in their adoption of computer technology than hospitals do, despite the common estimation that 40 percent of the cost of running a hospital is consumed by information management. A considerable number of hospitals have been spending more than $1 million per year on their computer departments for more than a few years.
Yet, in general, bank computers seem to work pretty well while hospital computers struggle along. What hospital could claim to have exploited computers in the way that Merrill Lynch has done with the cash management account?
I contend that money and numbers are at the heart of the financial business, so if computers are employed to facilitate money and numbers, the bank, insurance company, or brokerage house will prosper. But the practice of medicine is at the heart of a hospital, so if hospital computers are used primarily to facilitate money and numbers, the outcome may be a misdirected mess.
Hospital computer systems should be designed from the inside out, starting with the main mission of the organization, and not from the outside in, starting with the payroll. It is difficult to imagine an organizational philosophy more in conflict with the practice of medicine than batch processing.
The inexpensive silicone chip has made it possible for doctors to get their hands on the computers, and you can expect the history computing to be quite different in the next 10 years from what it was in the era when the machines were too valuable to waste on medical care. As Humpty Dumpty said to Alice in Wonderland, "The question is: who is to be master, that's all."
Technology as measurement
So technology is really a way of measuring organization and incentives, just as money is a way of measuring value and achievement. It isn't good and it isn't bad; it isn't a problem and it isn't a solution. Let me continue with the example of general purpose computers.
Philadelphia is little miffed that, although it nurtured the creation of the general purpose computer, von Neumann gets most of the credit for it and IBM of New York, not Univac of Pennsylvania, gets most of the money from it. The lack of acclaim for Mauchly and Eckert can be set down to traditional Philadelphia distaste for the cult of personality and is a small matter. But in this city, money is another thing entirely.
What happened? Among other things, marketing, management, and luck. I have been told, however, that a central feature of the brilliant marketing of successive computer generations has been synchronization of those generations with the depreciation cycles of the one ones.
The purchaser of a computer has to have enough money to buy it, and he gets that money by depreciating his old one. When it can be predicted that his old machine is fully depreciated, he is ready to be told that a new generation has just emerged from the research department is told to cool it.
I know of at least one purchaser who put in an advance order for a multimillion-dollar machine before it was announced, feeling certain that it was time for a new generation to appear. The announcement actually appeared within a month of his prediction.
IBM's competitors often rushed to announce breathtaking scientific breakthroughs, only to find themselves with a great news release but without production capacity or customers with cash. With a more hard-nosed attitude toward the business of technology, IBM could anticipate years in advance when it was going to be producing and marketing a new generation, even though management had only a hazy idea of what the machine would look like.
Things occasionally work the other way, too, as in the famous story of the introduction of the 360 lines of computers at a time when the software operating system didn't work. While the sales staff sold thousands of 360s, 1,700 programmers were sweating in Poughkeepsie, trying to make it rule. They did get it running and the gamble proved to be one of the most successful in the history of corporate endeavor.
The point is that what was driving the computer industry was not programming, electronics, or genius; it was the tax code defining the depreciation cycle. Just as what is driving the medical industry now is the reimbursement system.
The incentive approach
My advice from the world of technology to the world of finance is if you want technology to be less of a problem, there are some things you can do. You can give up your fringe-benefit tax loophole, for example. Self-employed people like me won't miss it, you can be sure. And you can give up cradle-to-the-grave first dollar coverage and assignment of benefits. You can start to make overt payment for teaching, research, and charity instead of forcing the medical system to bury these costs in the cost of sickness. And you can encourage the state and local governments to shoulder their proper load, instead of dumping it on Washington.
Some of my colleagues worry that I may encourage you to kill the goose that laid the golden egg. While I think cost reimbursement (retrospective or prospective) laid an egg all right, I don't think doctors need to worry much. Sooner or later the realization is going to dawn that there is only one really effective way to reduce hospitalization costs. That is to choke down all the class warfare talk about physician income and offer to pay doctors a higher incentive fee to perform the same service in a less expensive setting.
When you want someone to do something that will save you money, the traditional approach has been to offer to split the savings with him. There are other ways of persuading people to do what you want, of course, including scolding and threatening them. But until the incentive approach is tried and found to fail, it will be reasonable to suppose that people really aren't serious about the matter. After all, it was the incentives in the system that made technology whatever it is today, and it will be incentives that make it whatever it becomes tomorrow.
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.
