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.
The official position of the Pennsylvania Medical Society on the topic of abortion is, we have no position on abortion. I ought to know because I was the author of this position, proposed at a moment when the PA Medical House of Delegates was obviously going nowhere. After two hours of angry debate, we had to stop before we split into two warring medical societies. The Pennsylvania delegation to the AMA was then obliged to hold the same no-position on a national level. As I recall, our position was likewise greeted by the AMA House of Delegates with great relief, and word quickly circulated in the corridors that Pennsylvania had a position everyone could endorse for the good of the organization. For several years, this no-position position was widely referred to whenever the topic threatened to arise. It almost invariably stopped the discussion in its tracks, as it was intended to do. In going back over the minutes, it would appear the AMA never actually voted to adopt a no-position motion, a discovery that surprised but did not change the basic determination to let the rest of the nation settle this. We were going to stay out of it.
Roe vs. Wade
Because, one hundred forty years earlier, we started it. If you actually read Justice Blackmun's opinion for the majority in Roe v. Wade, as very few agitated proponents seem to have done, the original medical origin is clearly laid out. Blackmun had been a lawyer for the Mayo Clinic before his appointment to the Supreme Court, acquiring unusual medical resources and experiences for a lawyer. Now prepare for a logical leap, to the The Gross Clinic, Thomas Eakins masterpiece painting of Philadelphia's pre-eminent surgeon in a black frock coat, holding a dripping crimson scalpel in his bare hand, encapsulates the original situation. Note carefully that anesthesia is being given to the patient, but the surgeon is not wearing a cap, mask, gown, or rubber gloves.
Gross Clinic
In 1850 medical science had progressed into a forty-year time window when anesthesia made abortions painless, but Pasteur had still not identified bacteria, and Lister had not devised a way to cope with them. Abortions, common in ancient Greece but forbidden by Hippocrates, suddenly were widely demanded by 19th Century women in a situation when their judgment was vulnerable. Abortions were easy to do, all right, but women died like flies from the resulting infections, and the American Medical Association was distraught about it. The Oath of Hippocrates was brought forward to emphasize its prohibition of abortion, and the performance was made unethical for a member of the Association, sufficient cause to warrant expulsion. When that proved inadequate, the delegates agreed to go to their local state legislatures and seek legislation prohibiting the performance of abortion by anyone, member or non-member of the Association. These laws were quickly passed, and it was the Texas version which was overturned by Roe v. Wade as an unconstitutional denial of privacy. Roe was a pseudonym for the patient, and Wade was then Attorney General of Texas, the officer charged with enforcing Texas law.
By 1900 abortions became both easy and safe for the mother, and by 1911 the AMA had reversed its position. The scientific surgical situation is well illustrated by a later famous painting about Philadelphia surgery by Thomas Eakins, the Agnew Clinic, in which the surgical team is portrayed in its modern costume of sterile gowns and rubber gloves. But it didn't matter since by that time various churches had hardened their doctrines. Religious leaders and their constituent politicians simply no longer cared what the medical profession thought about it. For at least the following century, ideological combatants were plainly only interested in whether physician opinion might advance one side or the other of their argument with useful official statements. Our real position, if anyone cares, is that we started out seeking protection for the safety of the mother, but the issue got twisted by others into disputes about the welfare of the unborn fetus.
Agnew Clinic
Since this is the case, there plainly may be a reason for state legislatures to reconsider the state laws they passed in the 19th Century, during that forty-year window of time when the scientific facts were in transition. But when a leap is made by the appointed referees of the federal government to overturn state laws, even about a basically medical issue, there has to be some legal reason to intervene; a medical reason somehow doesn't count. Justice Blackmun's discovery of an unnoticed right to "privacy" in the Constitution, where the word does not appear, is just too hard for us non-lawyers to deal with. Suppose we leave the fine points of the Bill of Rights to those constitutional lawyers. What's at stake here, among other things, of course, is whether the Federal Courts are justified in overturning well-intentioned state laws which had served well for at least fifty years -- simply out of impatience with the sluggishness and political timidness of state legislatures to revise obsolete laws. That's unbalancing the Constitution for a comparatively minor cause. Even major cause is something we have agreed to adjust in other ways, by amendment, not judicial opinion. And that's my opinion, having comparatively little to do with abortion.
Keep flipping a coin, it's unlikely to come up Heads eighteen times in a row, but it could happen. Once they get to be the richest in the country, most people would quit flipping rather than risk everything on the fifty-fifty chance the next flip will come up Tails. But Robert Morris, William Bingham, Alexander Hamilton, and many others would not only reach the pinnacles of wealth but still gamble everything they owned on a bold chance to get lots more. Stephen Girard was the same way, although in his case he never seemed to lose.
First Bank
By 1811, Girard was the wealthiest man in America. Among other things, he was the largest stockholder of the First Bank, and ran the largest shipping and merchantile empire in Philadelphia, trading extensively with France and England. From these contacts, he was able to see relationships between France and England, and between England and America, we're going to deteriorate into war. So, Girard cashed out, totally selling his overseas trading interests rather than risk blockades and confiscations. It was a shrewd move, boldly getting out before others could see what he saw. Girard was 61, his wife was permanently hospitalized, and he certainly never had to work again.
As a major stockholder in the bank, Steven Girard was well aware of the strong populist sentiment that the Government had no business running a bank. Although he did his best to preserve the bank, he could see its closure was politically inevitable with Thomas Jefferson as President of the United States, soon to be followed by his Virginia crony, James Madison. When the charter was revoked, Girard took his immense cash horde -- and bought the doomed bank with it. From the Virginians' perspective, they were going to need that money if they went to war with England; while in Girard's view they could not possibly fight a war without a bank to finance it. As matters turned out, the War of 1812 was largely financed by Girard's personal wealth, which ultimately meant that Girard bought the Government's bank with the Government's own money.
Girard Estate Map
Even making allowances for the fact that the troubles over the national banks were a symptom of the immature financial markets of the nation, which made passive investment difficult for those with rentier ambitions, Girard was clearly a compulsive gambler. Most compulsive gamblers are losers, Girard just happened to be a compulsive winner. His new bank was enormously successful, and as late as 1829 he purchased all of Schuylkill County for its coal discoveries, expressly directing in his will that his heirs were never to sell it. His estate still owns a large part of South Philadelphia, based on the same long foresight of a pretty old man. If you think that's easy to do, just ponder what finally happened to Robert Morris, Haym Salomon, and Alexander Hamilton.
Jay Robert Stiefel of of the Friends Advisory Board to the Library of the American Philosophical Society entertained the Right Angle Club at lunch recently, and among other things managed a brilliant demonstration of what real scholarship can accomplish. It's hard to imagine why the Vaux family, who lived on the grounds of what is now the Chestnut Hill Hospital and occasionally rode in Bentleys to the local train station, would keep a book of receipts of their cabinet maker ancestor for nearly three hundred years. But they did, and it's even harder to see why Jay Stiefel would devote long hours to puzzling over the receipts and payments for cabinets and clock cases of a 1720 joiner. Somehow he recognized that the shop activities of a wilderness village of 5000 residents encoded an important story of the Industrial Revolution, the economic difficulties of colonies, and the foundations of modern commerce. Just as the Rosetta stone told a story for thousands of years that no one troubled to read, John Head's account book told another one that sat unnoticed on that library shelf for six generations.
Colonial Money
The first story is an obvious one. Money in colonial days was mainly an entry in everybody's account book; today it is mainly an entry in computers. In the intervening three centuries, coins and currency made an appearance, flourished for a while as the tangible symbol of money, and then declined. Although Great Britain did not totally prohibit paper money in the colonies until 1775, in John Head's day, from 1718 to 1754, paper money was scarce and coins hard to come by. Because it was so easy to counterfeit paper money on the crude printing presses of the day, paper money was always questionable. Meanwhile, the balance of trade was so heavily in the direction of the colonies that the balance of payments was toward England. What few coins there were, quickly disappeared back to England, while local colonial commerce nearly strangled. The Quakers of Philadelphia all maintained careful books of account, and when it seemed a transaction was completed, the individual account books of buyer and seller were "squared". The credit default swap "crisis" of 2008 could be said to be a sharp reminder that we have returned to bookkeeping entries, but have badly neglected the Quaker process of squaring accounts. As the general public slowly acquires computer power of its own, it is slowly recognizing how far the banks, telephone companies, and department stores have wandered from routine mutual account reconciliation.
John Head's Account Book
From John Head's careful notations we learn it was routine for payment to be stretched out for months, but no interest was charged for late payment and no discounts were offered for ready money. It would be another century before it became routinely apparent that interest was the rent charged for money and the risk of intervening inflation, before final payment. In this way, artisans learned to be bankers.
And artisans learned to be merchants, too. In the little village of Philadelphia, chairs became part of the monetary system. In bartering cabinets for the money, John Head did not make chairs in his shop at 3rd and Mulberry (Arch Street) but would take them in partial payment for a cabinet, and then sell the chairs for the money. Many artisans made single components but nearly everyone was forced into bartering general furniture. Nobody was paid a salary. Indentured servants, apprenticeships trading labor for training, and even slavery benignly conducted, can be partially seen as efforts to construct an industrial society without payrolls. Everybody was in daily commerce with everybody else. Out of this constant trading came the efficiency step for which Quakers are famous: one price, no haggling.
One other thing jumps out at the modern reader from this book of account. No taxes. When taxes came, we had a revolution.
It is misleading to make precise predictions, about almost anything, eighty or ninety years in advance. However, predicting the average of millions of people is more accurate than predicting any individual future, whereas mathematical principles like compound interest are precise, forever. But let it be clear; what follows is rounded off, estimated, and largely based on projecting past experience into future performance. You must do so, if you want to talk about it, at all.
Investments are more predictable than health costs. At 10% they will double in seven years; at 7%, doubling investments takes ten years. Ten in seven; seven in ten. From birth to age 91, there will be time for thirteen doublings of investments. At seven percent, only nine doublings. With a focus on health economics, Americans divide into four groups: children from birth to 26, working people from 26 to 65, retirees over 65, and poor people of any age. We assume only people from 26-65 are able to deposit money in Health Savings Accounts; children and poor people are dependent on working people to help them, while retirees must live on money they earned while they were 26-65. Businesses and governments are pass-throughs which sign checks, but in our way of thinking, only individuals make and spend money in the national accounting of it. These are the assumptions, please read them twice.
1. Investment predictions are based on Ibbottson's compilation of actual market performance since 1926 of all investments in all classes. It's safe to assume index funds, now available in the trillions of dollars, will follow Ibbottson's patterns for the next hundred years, only because they were remarkably steady during the last century. Two major depressions and a dozen minor ones, one World War and a dozen smaller ones, were unable to shake the long-term trends for more than a blip in the lines.No such prediction can be guaranteed, of course. Highly diversified, Index funds have management fees of about a tenth of a percent, making them steady passive investments for people who have little investment experience, and probably equalling performances of most people who do. Using Ibbottson's raw data, half the population will do better and half will do worse--by managing their own money, even with professional advice. But if everybody buys the index fund without advice, everybody will perform the same. Collectively, the average common stocks of "small" American corporations (but nevertheless greater than one billion dollars of market value each) achieved a ninety-year performance of 12.2%, which we here discount to 10% by using diversified ETF (index funds) of really big stocks with familiar names.
2. At present, the only realistic source of deposits into a Health Savings Account is by individual investors within the age group 26-65, except for investment income. Contributions made on behalf of children derive from money earned by working parents or by -- somebody else aged 26-65. Retirees invest, but the core of what they invest was earned earlier, again 26-65. We ignore exceptional cases. The population 26-65 supports their own costs and those of everybody else. Nevertheless, it is impossible to make precise predictions about the time and amount of shortfalls in individual Accounts when sudden withdrawals must be anticipated. For the most part, transfers are made from accounts in surplus to accounts in deficit, but particularly during the phase-in period, supplements may be necessary. However, everybody's Health Savings Account is a separate piece of property and not a pool. This difficulty is managed by slightly overfunding everything to keep transfers to a minimum, and pooling these surplus amounts by agreement to reimburse them at some later time for some specific purpose. Furthermore, the principle is announced in advance that if shortfalls are unavoidable, the accounts to be billed for it are to be limited to the working-age group from 26 to 65. The ultimate fallback is the full faith and credit of the taxing power of the U.S. Government; but we hope to avoid using it except in dire emergencies like a national nuclear attack or something else of this order of severity, eventually establishing a reputation of a self-funding program. Within that program, the real fallback is to the 26-65 generation who are earning a living. They are expected to care for their children, and aging parents, but by individual agreement. Since the plan is to stop collecting 6.5% payroll deductions from this age group, and anticipated deficits are of the nature of 0.5% of income, assessments should be comfortably met, although it is too much to expect them to be cheerfully met. A whole chapter is later devoted to this sensitive topic.
2.5 Transfers are necessary, however. Because of the security risk, it is probably wise to introduce the extra step of transfer into and out of an insurance or insurance-like pool, so that transfers between Health Savings Accounts can be performed by a tightly controlled security organization which maintains permanent transaction records as its main or only function. Pooling would actually ease the accounting burden of linking every account in surplus with every account which runs a temporary deficit when actually it is only necessary to account for the balances between individual accounts and the pool. If newborns have individual accounts, they will have to be linked to their parents or guardians, and perhaps transferred from their parents' accounts at age 26. Although making health insurance a personal rather than a community activity is a step forward, there will be much occasion for reducing individual volatility while the accounts are still too small to provide their own liquidity reserves. This is also the place to put subsidies for the poor, and payroll tax assessments on the 26-65 age group, replacing the 6.5% payroll tax for Medicare pre-payment, which has been eliminated out of consideration for dropping later Medicare coverage. After the transition phase is complete, the pool will be less necessary, but it may take decades before money spent on obstetrics comfortably matches up with money pre-funded for cancers and strokes.
3. Medical costs essentially do not matter for lifetime plan design, since this is "found money". Rising costs are of course the main concern, and of course, we should pay all of them, but not necessarily by investment income, entirely. We strive to generate as much new revenue as possible and are confident it will raise appreciably more than the present system. If more is needed, additional sources must be sought. It might, if all went as planned, generate half of the cost of healthcare in the far future. But it will never seem like that much, because we are already outspending our revenue, and borrowing the shortfall. Only after our books balance on a current basis, will the public notice any difference. Congress will notice it sooner and be tempted to spend it. If it generates more than we need for healthcare, then if we are wise we really should spend the surplus on retirement costs for an aging population.
However, the outlines of what is possible can be made out. Likely, future medical costs for younger individuals under the age of 65 should remain constant, or even decline in the future. However, medical costs of the elderly are assumed to rise in the future, as people live longer and get more expensive chronic diseases. CMS says 5% of the elderly generate 50% of costs for their age group. Conditions related to obesity are a new source of such costs, while Managed Care has had no effect. Exceptions will appear but predicted cost curves seem likely to assume the shape of a dumbbell, bulging at the ends, but shrinking in the middle. Since working cash for inter-person transfers and unexpected illness are laid on the working age group, it is a lucky happenstance that future predictions almost always show a dumbbell or wasp-waist shape to the cost curve, making it possible to design budget shortfall levies to concentrate on this level. The biggest threat to future healthcare financing may well lie in the likelihood that people who now die at the age of 60 will live to be 85, and be afflicted with the same high expenses as we now see in people aged 85. If present trends continue, the rising costs after age 85 contain a mixture of falling sickness costs, hidden within rising domiciliary costs, or nursing home costs, which possibly belong in a different budget. This outcome seems more likely that the present rate of longevity extension, which is more likely to level off. However, the original point is the strongest on: it is a mistake to pretend to predict a future which cannot be predicted.
4. We assume average health costs for a lifetime to be $300,000, based on a Blue Cross of Michigan study, confirmed by AHRQ and CMS to be of that general magnitude. It is a critical number since it is the burden workers age 26-65 must carry for the whole medical system at every age--averaging $7800 per year apiece for the working person. It is important to know how it is calculated, to understand what it means -- and what it doesn't.
Calculated as described, the $7800 pays for one working person, plus averaged contributions for dependents and charity obligations. Because of cost-shifting, the proportion of redistribution is unclear. But, remember, these are lifetime costs, using current prices. If costs remain otherwise identical, a 3% inflation rate means the answer, calculated the same way next year, will be $309,000. This point is made to convince the reader, that even if we do not know the precise costs, we can be fairly sure that costs will soon outrun our ability to cope with them.
In order to include present costs and present practices, a hypothetical person is constructed from current costs at each level, reassembled in order to reflect current costs for current treatments, as if they all occurred in the year of death. It, therefore, includes 3% inflation over the time span from birth to each particular age. The modest costs of childhood are thus inflated the most, while the expensive last year of life is not inflated at all. Since it will be adjusted in the next paragraph, it is probably not a serious error.
Predicted Future Healthcare Costs. If the $300,000 we spent on each person's health in the last 90 years should merely increase at 3% inflation, lifetime costs will become $4.5 million, 91 years from now. That's sobering enough. But if medical costs increase as much as they actually did in the past century, lifetime costs will come to an unthinkable $1.5 billion dollars a person. Therefore, we accept the present hypothetical lifetime cost, including inflation, to have been $300,000, and assuming no change other than 3% inflation, will be $4.5 million, 91 years from now.
Nevertheless, we know in retrospect that a solitary deposit of $55 in 1926 at the 10% rates which actually prevailed last century, would have kept even with it without later additions. Today, to keep up with the costs of a newborn great-grandchild could apparently be accomplished with a deposit of $796, over twelve times as much. It's still an achievable goal, but it's drawing away from us. Remember, $800 will only pay for present prices, plus 3% inflation. Unlike the last century, the next century cannot add thirty years to life expectancy, or eliminate thirty diseases. In fact, only five remaining diseases account for half the cost, and life expectancy has no room left to increase by another thirty-year extension. The medical profession has the scientific tools to make it work, provided the financial and political professions create the right environment. The present prospects are for science to deflate disease costs in every age group except the oldest, but to quantify is impossible. Since 1913 when the Federal Reserve was founded, a dollar then is worth a penny, now. The medical profession can't help with inflation. Perhaps no one can, but at least a monitor exists to make mid-course corrections of the currency.
More than that, notice the difference between $300,000 and $796. The difference, although roughly estimated, suggests the savings possible by switching to lifetime costs, and investing the difference between "whole life" and "pay as you go" annual payments. It is unnecessary to come even close to actual costs to see the savings from financing the medical system longitudinally, outstripping anything imaginable in extra administrative costs, or price escalation from moral hazard. Cut it in half, or take only a tenth, the savings are so appreciable you begin to wonder if they might upset the stock market. There are even safeguards from miscalculation, remaining inherent in other approaches to cutting the cost of medical care.
For example, we fervently hope, but make no assumption in the example, for an extension of working life, both down and up, to 24-75. That is, we favor a reduction of the two great vacation periods in American life, by a parallel extension of the lifetime of significant work. We recognize most Americans do not agree, and in a democracy that's how decisions are made. But this safety valve remains available to those with bad luck or bad timing; it's how you recover your finances if they have slipped along the way.
Let's cut wasteful practices, particularly the habit our government has of making hospitals into welfare programs, or our insurance administrators have for making them into banana republics, and the habit the public has of wanting everything for free. Let's structure costs in such a way that if an individual doesn't overspend for healthcare, the money saved gets applied to better retirement. It gives the individual some skin in the game, which is the essence of bringing costs down by competition.
Right now, however, it is necessary to examine how we might extract the savings from Health Savings Accounts, gradually transitioning from one-year term to whole life with investment, without upsetting the system. And examining what useful things might be done with a cash windfall before too many extra noses push into the trough. After all, you cannot spend the money after you are dead.
Let's start backward from an assumed guess of $300,000 average lifetime expense, from the viewpoint of someone aged 90, which is also only guessed-at future longevity, to the day of death. To have $300,000 at age 90, you must have $30-40,000 set aside at age 65 in index funds. Remember, in the elderly, we are talking about the period of greatest health costs by present projections, in an age group where few people are working and thus must entirely depend on investments and pensions. It can be done but it's a stretch. In many ways, the greatest obstacle would be the mindset of elderly people themselves. We are talking about buying common stock for elderly people, who must overcome the main reason they buy high and sell low. Left to themselves, they will lean toward the safety of low-yielding bonds.
We have repeatedly alluded to The Monitoring System, which will take time and experience to design. Whether the monitor resides within the Treasury, the Department of Health or some independent agency is a political question that others probably feel they have a better right to decide. Such an agency might have many functions, but since it must have the power to make myriads of mid-course adjustments, it probably requires a self-balancing oversight board like that designed for the Federal Reserve, and we favor that approach. At least once a year, that monitoring body will have to recalculate the estimates of the emerging trend of the balances between costs and revenues, and the distribution of the balances among each yearly cohort from birth to age 91.
Those yearly recalculations would set the price of entry into the system for latecomers, calculating what it would cost to make up for failing to pay for it all at birth. And if the system makes a revision for new information about trends in motion, everybody will in a sense be a newcomer, subject to a late deposit levy. And since the working adults 26-65 will be picking up the extra costs for birth to 26, plus charity cases at all ages, there will have to be secondary and tertiary adjustments in the levy. Furthermore, there may be a recalculation of the cost of a particular age cohort for current medical expenses, and that will have to be set as an additional deposit required for that age cohort. Meanwhile, the investment managers will report on how close they came to their target, and further adjustments made. The Federal Reserve will make a report on current inflation rates, leading to more adjustments. The ultimate goal is to set a price for late entry at each year, so that continuing future income distributions will be equal, for current entrants, as for those who made a lump-sum investment at birth. This monitoring system will also be responsible for smoothing out short-term volatility, as in an influenza epidemic, and possibly long-term readjustments of internal lending and borrowing which were not anticipated at the outset of the program.
The Elderly Investor. Although the Libertarian view is that people ought to be able to do what they please with their own money, this is one case where it probably would be advisable to mandate the pooling of investments, in spite of the obvious introduction of political risk. The argument runs: it might be possible for most people to save $30-40,000 by any number of ways before the age of 65. But after 65 it becomes a little unwise for a growth fund to place trust in the investment judgment of a class of people who rightly prize security overgrowth. They will predictably have a very hard time shaking the perceptions of their age group. On the other hand, if there is ever a chance people will accumulate $45,000 in savings, it would be at the time they stop working. Let's hurry on; our present purpose is to illustrate the principle we are driving at.
Working people 26-65. Between the time they get their first job and the time they retire, working people have children, send them to college, buy a house, and try to come up in life a little. They get dozens of claims for their support, so in our example, to have perhaps $35,000 to surrender at age 65, using our system they might alternatively have to have $500 available at age 27, from Santa Claus. And then let it grow, untouched, to the next goal of $35,000 when they reach 65. That sounds easy, but it often has its problems. If somebody, say their parents, gives them the $500 as a present, it's all pretty easy. But if they have to work for it, then somebody has to give them $35 at birth, because the daisy chain is connected from start to finish. That's right, $35 turns all the way into $300,000 at age 90 if each step is coordinated. It pays for an entire lifetime of health costs. But it doesn't need to. If just about everything goes wrong, a quarter of that would still amount to a big chunk of money. Are you going to tell me no one could afford to give $7 to a newborn? There's no rule against making a partial contribution to your own care. There are practical problems to be addressed, but the power of compound interest isn't one of them. In fact, you might easily find that no investment house would accept a $7 deposit for a 90-year forward account.
Children. After the elderly, the second subsidized group is composed of children, including obstetrics and pregnancy. There is overlap here between child and two parents, and for conceptual purposes, there is nothing to do but be arbitrary. The addition of 26 years of compounding is too tempting to quibble about ambiguities, which might be solved by giving it to any of them, or to all three. That heightens the unfairness to those who do not have children, but it also creates an incentive for the mother to have her first child younger. Medically, that would be a desirable thing. Our society, perhaps even our biology, has created a tradition that the parents subsidize the health costs of children. The Health Savings Account system formalizes that tradition or at least does not conflict with it. For the surprisingly small amount of one single payment of $150 at birth, the child would have $40,000 at age 65, assuming a 10% investment return. Investment advisors might rebel at their costs for accepting amounts that small, but a single-payment zero-coupon bond or credit might be created. That would ease the mechanics, as well as reduce the outcry against federal subsidy to people who might be indigent when the child is born, but are far from it later in life. The disadvantage is a bond makes no provision for the health care of children even though it pays for it, so some patchwork is still needed. A birth deposit of $150 would be worth about $2000 at age 26, and average childhood medical costs might be somewhat greater, so a transfer of ownership could imply a net liability.
The Poor. The third and last category of subsidized people consists of those who are both poor and sick at the same time. Unfortunately, we have tried and rejected two methods of dealing with their problem. The first was defined by the original Good Samaritan: "Take care of him, and I will repay thee." And the second method was almshouses, now a relic of the past. The disadvantages of both approaches are now obvious. The third method was to eliminate poverty, which has worked pretty well. Fifty years ago, sixty percent of the hospital beds in Philadelphia were "ward" beds. Nowadays, there are few enough of them to scatter among paying patients. But the disadvantage soon appeared that the public became determined to prevent the inevitable rationing from spilling over to more fortunate components of society, in an era when hospitals are fearful of discrimination. Mindful of the long history of charity for the sick poor, and the spotty history of using government to cover the costs, we propose that governmental charity be paid out of the pool for inter-account transfers. That preserves an independent audit of just how much is paid by whom, and it is linked to an assessment process on people who must pay the bill. That will not prevent government from discounting its contribution, as it does not prevent Medicaid from discounting hospital bills. But it widens the audience who are instantly aware of it, all of whom will be heard from in the November elections. Individuals are compassionate, governments only pretend to be. You would almost have to say it is the one remaining good feature of having a King -- to symbolize the nation's simultaneous aspirations, of opulence and compassion.
Since America has rejected the obvious approaches to caring for the sick poor (almshouses and blank checks), our institutions are in some disarray. We even seem to be rejecting a mixture of the two, which was the hospital reaction to the 1965 entitlements. Until we identify and concentrate the sick poor in some way, we cannot even measure the size of the problem. But at least concentrating the rest of the population's sickness on paper allows us to measure their cost and (by subtraction) estimate a health budget for the sick poor. It will inevitably cost more than average, and result in worse outcomes. But only after we measure it, can we even decide how much we can afford.
What you have, including the three demographic subsidies, is what it seems to cost working people in today's environment to care for themselves and their obligations. It's distributed over forty years of working, but not everybody works that whole period of time. If you wish, you can contribute $100 a year from age 25-65, a surprisingly small amount which after compounding at 10% should pay the lifetime costs of one person (yourself). Calling it $150 to be safe, it is no more than a tenth of what most people suppose they pay for annual health insurance. Therefore, it is safe to suppose a family of four could afford to pay for ten poor people (in addition to themselves) at the cost they are already spending. Remember please, our goal is not to pay for all health care to the last penny. Our goal is to devise ways to pay for as big a chunk of it as we can.
And by the way, devising some method to get the latent money out of these accounts for medical care, since $300,000 does no good in a frozen account of somebody aged ninety. Please read on.
When the idea of Last-Year insurance was presented to the AMA in December 1987, someone got to the microphone before I could. The AMA system is to publish meeting agendas in an advanced handbook. The subject had therefore been announced with a few spare sentences leading up to a proposal that the Association should look into the matter.
Whether the proposal was really unclear or whether a comedian just jumped at an opening, the subject was introduced with a mocking story. There was a little town outside Philadelphia, it seems, which used to have an ordinance about its fire hydrants. All hydrants were required to be inspected, one week before each fire. To follow that jibe with a description of insurance technicalities isn't the easiest position to in, but somehow the reference committee subsequently found the generosity to endorse the study.
Last year of life insurance is life insurance, paid after the death of the subscriber. The death benefit is paid to a health insurance company, reimbursement medical expenses incurred during the final year of the subscriber's life. The ultimate effect and the intention is to reduce the premiums of health insurance.
Since there can be no free lunch, it is clear this proposal will not reduce the cost of medicare care. The overall total cost of health insurance, therefore, is not changed by changing the form of premium collection. Indeed another layer of administration is required. What difference can it make whether you pay part of your premium to company A or company B? There are five answers.
Pre-Funding. As emphasized in the first section of this book, there is a great need to change our national system of health insurance from a pay-as-you-go system to a prefunded one. Such a radical shift in philosophy could be quite disruptive, so transitional steps are needed. each age group has a different point of view about pay-as-you-go. Young subscribers since their premiums are higher than their risks. Older subscribers feel thirty years of paying premiums creates a moral obligation for health insurance to carry them through their time of heaviest expenses. Consequently, established dominant health insurers have legitimate anxiety about new companies skimming off their healthy subscribers, leaving them with the sick ones and thus triggering an insupportable upward spiral of premiums and dropouts. The problem is to prevent this disaster for the private sector without precipitating it by changes which frighten away healthy subscribers. The problem is to fix the engine with the motor running.
Therefore, the initial reaction that last year insurance constitutes fragmentation is unfair; the segmentation is intentional, aimed at providing a gradual shift toward pre-funded health insurance in one area where it may be achievable. Ina segmented system, reducing the premium for a reduced unfunded component of health insurance means fewer remains at stake when you try to reduce the unfunded problem still further. Subscribers and insurers have more temptation but less latitude for gaming a system with fatal illness largely removed. When a greater proportion of claims represent randomized unpredictable acute illness or accidental injuries, the troublesome non-random risks are easier to see. The main difficulty is obstetrics, where family planning makes the insurance mechanism highly unstable; further ideas relating to obstetrics need to be developed and would be easier to develop if isolated underwriting of fatal illness proves a success.
Catastrophic Health Coverage. When Secretary of HHS Otis Bowen opened up the subject of catastrophic health insurance, he was probably as jolted as other physicians to watch the way this popular idea was instantly redefined. Once it became clear that catastrophic health coverage was a legislative slam-dunk, attempts were made to include domiciliary care of the aged, chronic illness of all sorts, mental retardation, and many other things which were expensive hence a catastrophe if you had to pay for them. Any hope Medicare could be restructured to pay for expensive illness first, paying for minor illness only if money was left over, went up in the smoke of special interest lobbying and revived hope among liberals of extending Medicare into a national health scheme.
This appalling example of what is out there on the other side of the gates, should at least remind serious students of health financing to use highly technical definitions when they make a proposal. There is, of course, plenty of room to argue that terminal care life insurance should cover expenses two years before death, or conversely that it should only cover two months. You can change the calendar definition of the coverage almost at will, and yet still intelligibly call it last-year insurance. The intent is clearly to cover the characteristically high costs of dying under medical supervision, as contrasted with saving lives with medical miracles, or nursing chronic invalids. if such coverage should pay for sunglasses, facelifts, or porcelain teeth, it would clearly be unintentional. Terminal care of fatal illness.
With the mechanism largely impervious to deliberate redefinition, and largely immune to manipulation for profit, isolation of the ethical issues of terminal care becomes a possibility. The cost of the problem gets held up for regular consideration, as premiums for the coverage get revised. Public attitudes about whether an extreme medical function is desirable would surely be reflected in the choices actually made between different coverage options. At different ages, one might feel a desperation to have every possible chance of survival, yet might later wish to be left to die in peace. Lawyers may argue about the legitimacy of living wills, but few would dispute that someone who spent his last-year insurance on something else, had made an important statement about his wishes. Deathbed discussions are almost invariably couched in slogans. The same relative, on the same day, may say "Let him die in peace," and then "Where there is life, there is hopes." Such expressions are usually made for the effect they have on the listeners and do not greatly illuminate underlying public attitudes about a serious subject. Observation of how much of their money they are collectively willing to spend is often a better guide to what people truly want that is the expression of opinion by their representatives. On one occasion, I happened to watch a large conf=gressional committee listening attentively to testimony on health insurance when unexpectedly the subject of euthanasia was introduced. Within two minutes, a majority of the congressmen had fled the room.
Pre-Existing Conditions. People change jobs with fair frequency, voluntarily and involuntarily. The tendency of young entrants into the job market is to take part-time or small-time employment in order to gain experience, but then if possible to work their way into permanent employment with a major employer. This progression is seen by them as moving into a better job, one "where the benefits are good."
This system has a sort of hidden equity to it since generous pay and generous benefits are definitely linked with the profitability of the firm. Unions have tended to be strong and aggressive in prosperous companies, while conversely companies in the rust belt losing out to foreign imports have found the industrial unions much more tolerant of givebacks. Fortune 500 companies definitely get a better quality of worker, because they pay up. With many exceptions, the tendency is to work for small struggling companies when you are young, and big prosperous ones when you get good at your work. This unofficial system provides health insurance directly to the working population, while the youngsters just entering the job market mostly don't have health problems. If such a young uninsured person does get suddenly sick, the larger companies may still pick up much of the cost involuntarily, courtesy of the cost-shifting mysteries within hospital accounting systems. Much against their will, the large prosperous companies do partially reinsure the system against risks being run within the pool of young people from whom their future employees will be drawn.
Obviously, such a system is unstable. One of its worst features is that those who develop extremely serious illness before they get into the employer health insurance mainstream, are probably permanently excluded from it. There is no way available to them or their parents to guarantee future insurability for health insurance. As long as health insurance remains so firmly linked to employment in a large firm, it is hard to imagine any solution except through modification of the life insurance mechanism. Even so, if large numbers of people are to be encouraged to protect their insurability for health insurance, some way must be found for them to get their investment back, once the huge majority of them eventually do acquire employer-paid health insurance. We will return to this issue in the next chapter.
If the average person lives to be 80, and that's almost true, only forty years of that time are spent in the workforce where employer-based group health insurance is the norm. Since this period of time includes the coverage of dependents children and has potential carry-over to retiree health benefits, it is critical for the individual worker and his family to lock up his health insurance protection. The most frightening aspect of sickness among active workers is the possibility they may not be able to get health insurance when they lose their jobs. To be sick and out of a job is to have a "pre-existing condition." Since the pre-existing condition is the one most likely to cause a problem, it is small consolation to be covered for everything else. To have a wife with leukemia or a child with cerebral palsy is a very strong reason not to switch jobs if there is any question of health insurance coverage. While the person who knows the condition exists may have some bargaining power or individual coverage options before he leaves the job. But to develop a serious health condition during a period of unemployment is a truly ominous situation. Insurance contracts do not include exclusions of coverage of pre-existing conditions as legal boilerplate, they really mean to exclude the risk to themselves. In fairness to them, it must be noted they cannot possibly allow people to get sick and apply for insurance. The situation needs some mechanisms for insuring against loss of health insurability, and last-year-of-life insurance might at least serve to reduce the range of potential uninsurability.
Portability. Our system of linking health insurance to the place of employment has the disastrous obverse that if you lose your job, you lose your health insurance. This particular issue periodically gets more attention when a recession in the economy leads to waves of layoffs. Employers of more than??? are required to maintain health insurance for ??? weeks after a layoff. Employees are entitled to continue their employer's group health plan at their own expense for ??? weeks more. However, such arrangements are complicated and unwelcome; it is not clear they are very popular with families who have suffered the bewilderment of losing their income. Last-year-of-life insurance would be as portable at your own expense, while funded life insurance is both portable and permanent as long as the cash values can carry the premium. Perpetual insurance is still better; the cash values have built to the point where the interest they generate is sufficient to pay the premium further contribution.
True, present income tax laws permit only term life insurance to be considered a business expense for an employer. In 1988 the Congress is undoubtedly in no mood for social legislation which increases the national budget deficit, such as by creating a tax shelter for cash-value life insurance. But laws can be changed when Congress wants to change them, and the experience with the catastrophic health insurance shows the public can sometimes whiplash congressional opinion very rapidly. A severe recession would immediately restore Keynesian ideas about budget deficits to fashion. The best present response to legislative defeatism on this subject is to examine the net effect on the deficit of replacing a portion of health insurance premiums with last-year life insurance premiums, transferring tax-deductibility from one to the other. If the two financial effects wash out, permitting last-year health premiums to be treated as business deductions should worry few practical politicians.
Experience-Rated Unfairness: The AIDS Epidemic.If a company had a policy of paying all medical bills of its employees, the cost to the company would vary with the amount of sickness there happened to be. Since self-insurance of this type represents at least half of all health insurance in America, health insurance companies must offer a comparable cost if they are to have any hope of selling insurance. Rather than establish a single premium rate for the community, the usual practice is to offer "experience rating", sometimes also called "merit rating." In an experience-rated group, the premium is adjusted up or down to reflect the cost of the claims actually submitted. From the point of view of the subscribing employer, the cost is the same as it would be to pay the claims directly, and the administrative profit of the insurance company may well be less than the cost of processing the claims in the employer's personnel department. Adjust this cost somewhat to recognize the interest earned or lost on the premiums and claims, and you pretty much have a formula for the dominant American health insurance system. The cost of fatal illnesses, the last year-of-life costs, are thus buried in a system which emphasizes the yearly costs of employers while making little analysis of the individuals who are included in the coverage.
From time to time, reformers have tried to force health insurance companies to charge a uniform community rate to all subscribers, but are immediately confronted with a rush by low-cost employers to drop out of insurance and adopt a self-insuring approach. As long as health insurance is unfunded and carries no future guarantees, it is not easy to convince lucky people they should pay more than they have to, just to lower the premiums of those who have bad luck. An earlier section of this book dealt with the pernicious effect on intergenerational risk-sharing which is exacted by the tax code in return for treating premium costs as business expenses. Many people see the wisdom of paying a higher premium when they are young and healthy so they will not be stranded when they are middle-aged and sick. A fair number of people are willing to pay more for their health insurance if remain healthy than if they happen to get sick. But almost no one wants to pay more for his health insurance when he is well while relying on the unenforceable voluntary generosity of future generations for support if he gets sick himself. Everyone distrusts the possibility that future generations might go self-insured and leave the present generation hanging out to dry.
Experience-rated health insurance, therefore, is an evil for which there are few obvious remedies. Since employment groups delimit final boundaries, experience-rating is inherent in basing health insurance on the employer. Last-year-of-life insurance contains the potential for the major cost risk of fatal illness to escape voluntarily from that employer-based partition. There is no way to know how much-hidden age, sex, race, or other discrimination there is in job recruitment, and certainly no. way to know how much the potential health costs are weighted in the equation. NOr is there any way to know how much American Business are unsuccessful with foreign competition because of these immeasurable issues is dramatically illustrated by the current epidemic of a contagious venereal virus, HIV...
AIDS is invariably fatal, its complications are expensive to manage, and it is relatively easy to surmise who is likely to catch it. This combination of features creates strong incentives for insurance companies to exclude the condition from coverage, or exclude high-risk groups from the subscriber base. Since the average cost of treating a single case is???, several HMOs have been driven out of business by having a run of cases of AIDS. From an insurance viewpoint, the most treacherous feature of AIDS is that the distribution of cases is not random throughout the population. If even a financially strong insurer is careless or altruistic about accepting high-risk groups, it's premium structure may rapidly become overpriced by comparison with competitors who somehow did not have so many cases. To be perfectly frank, homosexuals are overrepresented in the entertainment, fashion, and advertising industries, as well as the art world in general. It is almost impossible to imagine such industries maintaining an employment-based health insurance system in the future except if they somehow exclude paying for the risk of AIDS. If the epidemic spreads, and particularly if legislatures seek to prevent the exclusion of certain industries, then cities like San Francisco may simply not have any health HMOs or states like New York may not have any health insurance. Whether the exclusion is applied to people with positive blood tests, or to unmarried males, or to the entertainment industry, to cities or to whole states, insurers will find a way to protect their own solvency. If not, the whole country will be without health insurance until a cure is found.
Consider now the advantages of last-year-of-life health insurance for coping with this problem. Since AIDS is invariably fatal, it has the grisly advantage that no one is going to recover from the condition, only to contract a second expensive fatal illness later. Everybody else who doesn't get AIDS is also going to have a last year of life, and for the majority, it will be an expensive year. Medicare finds that ??% of its claims over the last 60 days of someone's life. Because the AIDS victims are young they have fewer years for compound interest to reduce premium costs, but having said that it remains true the population-wide risk of fatality at a young age is very small. Community premiums could double or triple without discouraging potential subscribers who have the cost of terminal cancer in mind. Actuarial costs of last-year insurance for the whole population can be calculated much more accurately than any individual can guess his own risk. Risk-avoidance strategies might somehow evolve, but with so little annual mortality in employer groups, yearly experience-rating could not be their mechanism.
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.
