The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
For fifty years, turmoil in the health insurance industry has originated in the steel and auto industries. It seems strange that no heroes have come to general public attention, although there may be heroes who are known to insiders; somebody may yet write a book about it. This may be of only passing importance, but the present distress in the American Big Three automakers suggests that unexpected legislative proposals concerning health financing could emerge from that direction. The turmoil in Detroit once centered on the auto industry enjoying windfall profits which labor wanted to share. More recent discord comes from the opposite direction: the automakers now cannot afford to honor those contracts they signed with labor having to do with health benefits.
The contract for the United Auto Workers was certainly generous. Printed up in a little red book for wide distribution, the contract states emphatically that an employee for six months or more will be completely covered for medical expenses for the rest of his life. If Medicare pays some of the cost, that is fine, but if Medicare reduces its benefits, the employer is liable. Some features of this contract may have been changed since it was printed, but it is difficult to imagine what incentives the UAW would have to agree to modifications. Except, of course, the self-interest which emerges when it looks as though the employer might go out of business unless there is some form of relief from wage costs.
To judge what is going to come of this is to judge the likelihood of the various arguments, predictions, and recriminations that are so common in heated disputes. Two things are pretty clear to auto industry outsiders: the UAW contract provides more generous health benefits than almost any other employee group enjoys, while the auto industry has worse earnings than many or most other industries. Consequently, both the employees and the stockholders have an incentive to make adjustments in the auto industry, a situation shared by the steel industry and other major auto suppliers. The form this has seemed to take is to favor some form of national health insurance, in which the taxpayers would take over the obligations of the auto manufacturers. So, look out for proposals from Senators and Congressmen from Michigan, and watch which nominees for U.S. President are favored by the rust-belt political delegations.
Workers in other industries are not certain to go along with such proposals. After all, most people resent it when someone else makes out better than everyone else for decades, and then comes asking for a hand-out.
Recently it was announced that Apple Corp., the largest corporation in the world, enjoys a 50% profit margin. By contrast, an American hospital seldom makes more than a 5% profit, and many lose money. Even at both extremes, individual products have differing ratios of individual prices to individual costs. Only in the aggregate do they produce a company-wide profit of 50% and 5%, respectively. It is on this aggregate profit and loss that the company is judged, its officers promoted, dividends declared for the stockholders, taxes get assessed, and the value of the company measured by the stock market.
A for-profit company is judged by its profitability, and while most hospitals are run as not-for-profit organizations, the accounting convention for nonprofits is to judge "profitability" by the annual increase (or decrease) in its net assets, essentially the same thing as profits and losses. It is not necessary to examine the little quirks introduced by such things as the ownership of fine art. While a not-for-profit corporation is judged by its profitability rather than its profits, that's also really the same thing. It has been said that fewer than a thousand people in America understand nonprofit accounting, and while it is an important subject, it is just not the one we are discussing.
It is also important for even a layman to understand that government accounting while resembling nonprofit accounting, differs in one important feature: departmental accounting regards money from the general taxpayer fund as an asset, not a liability. Therefore, what we would normally regard as a loss for a government department has two components: any reduction in its assets, and any money from general taxpayer funds. The sum of the two is the loss from operations, and in the case of Medicare, it is about $550 billion a year, plus the decline in assets (in the Medicare Reserve Fund) of another $19 billion. Thus, if Medicare were a business, it would be said it lost $569 billion a year, or about half of its expenditures. If a nonprofit hospital were considered with the same numbers, it would be said to have lost $19 billion, because it has no transfers from general tax revenues.
The only present point is that it is difficult to discuss hospital economics in anything but the same aggregate form which is natural to for-profit entities, so you must look to the increase or decrease in its assets instead of profit and loss. If that premise is accepted, it must also be accepted that internal cost-shifting is not merely a permissible but an essential feature of their accounting. There are no dividends to dispose of excess profits; excess profits must be transferred somewhere and justify the costs of something else. Sometimes, just sometimes, a large vaporous cloud called "indirect overhead" floats around justifying expenditures. And weakening price resistance to them, so it's doubly important to concentrate on indirect costs. Triple, because the accountant has very little idea of the relevance of the indirect cost to the main business of the organization, which in this case is medical care. As soon as you start calling it healthcare, its relevance is even more difficult to define.
A large vaporous cloud called "indirect overhead" floats around justifying expenditures. And weakening price resistance to them.
Although a few corporations existed in the Colonial Period, corporations were not considered important enough to be dealt with at the 1787 Constitutional Convention. As the Industrial Revolution proceeded, that indifference was no longer useful, but a special blockade was created by what emerged as the central organizing principle of the new Constitution. That principle of limited federal powers is most clearly stated in the Tenth Amendment, declaring that any power not specifically assigned to the Federal Government belongs to the states and the people themselves. As a practical matter, corporations are created by state legislatures, and the Union would not have been agreed to without that provision. In spite of the current opinions of Justice Ruth Bader Ginsburg, the enduring force of this provision is illustrated by the difficulties the European Union is having over that same issue -- of limited federal sovereignty. It continues to be true that, if the federal union will not agree to limited federal powers, there will be no union. To explain the point, this must continue to be true of any voluntary union of sovereign states which are unequal in size and strength. A peculiarly American twist to this situation is to give corporations a choice of fifty state corporation statutes, and somehow they gravitate to Delaware by choice. It can be argued that a wide choice of governance rules leads to a selection by merit, but the militarily smallest of states does consistently win the prize. Whether that is an oddity or has something to do with it, remains a puzzle.
It is disconcerting to consider that the Affordable Care Act may have upset a minute of healthcare regulations, originally finely balanced on the need to run a hospital with reasonable business latitude. After all, it is impossible to follow society's mission if a hospital cannot itself determine some indirect costs. Once a hospital reaches even moderate size of two hundred beds, almost any product of a hardware store, department store, or supermarket could plausibly be required to run it. Business supplies, school supplies, parking, and building maintenance are required, as are architects, lawyers, and electricians. Once you go down this list, you might constrain approval to buy supplies and equipment that sound as though they belong in a hospital, but one hospital reported its largest single expense was heating oil, closely followed by ice cream. Somehow, every item must be connected in some way to a service which can be charged for, which is an accountant's trick for establishing what is a legitimate expense. Sometimes this is pretty hard to do; a hospital needs a hammer, but how do you assign the cost of the hammer to some item which is legitimately charged for? It soon becomes evident that the assignment of indirect costs is always going to be a little questionable, but always absolutely essential. In the early days of hospital cost accounting, it was reasonable to aggregate the indirect costs of each department and assign them to the direct costs of that department.
From this evolves the concept of a cost-to-charge ratio. Reasonable uniformity in the ratio of charges to costs within departments, or between various departments, assures that cross-subsidy between insurance companies and patient classes is fairly uniform. Without that check, complaints between competitors would be immediate. Essentially, this sort of system depends on equal justice being applied, at least in a general sense. When equal justice is impossible, the accounting department can only rely on intuition and overall balance. Outside regulatory agencies can compare the cost/charge ratio in one hospital's operating room with that of some comparable institution. The first step in such comparisons is to compare the institution-wide ratio with its peer group. If that doesn't produce a reasonable result, the analysis can go down to individual departments to individual tests and procedures, until the source of a wide discrepancy can be isolated. At that point, questions can be asked, and a reasonable conclusion reached. But that was forty years ago. When charges are submitted for an electrocardiogram totaling several hundred dollars, and drugs at several times the retail price in a neighboring pharmacy, this sort of analysis is fruitless because it leads to ridiculous results. It is time to agree that a reasonable pattern of only direct costs can be typically and quickly laid out. On the whole, it can be judged that it is indirect costs which become very hard to follow by the usual step-down process. Therefore, it seems reasonable to pass over direct costs quickly, and go straight to the indirect costs, judging them on their separate merits. Apparently, It really does not matter what charge they have been assigned to; what matters is whether they are legitimate. Outliers can be dealt with individually. What is important is for community representatives to assess, is whether the bulk of general overhead costs can be justified for a community, whether the bulk of CEO salaries suits community expectations, or whether landscaping costs unsettle community opinion.
The main reason for having health insurance is to protect yourself from being fleeced.
Jonathan E. Rhoads, M.D.
This all sounds pretty dry and boring, so let's look at something more exciting. Let's notice that in Medicare's own analysis, the ratio of average charges to average audited costs, or the hundred commonest diagnostic groups, in every section of every region, is four hundred percent greater than the audited cost. In plainer language, the charge reported and billed is 400% greater than the cost, which would be eight times the profit margin of Apple, Inc. if it were paid. It's not paid, but the mystery continues as to why hospitals keep on billing for so much more than they know Medicare will pay. The comparatively small variation in this markup suggests there is a reason unrelated to unreimbursed care since the variation in bad debts is likely to be much greater between hospitals. But the sad consequence is that the poorest people in the country, those without health insurance, get billed -- and vigorously dunned -- for amounts they of all people cannot afford. Another viewpoint was offered by an elderly surgeon, after whom an entire hospital pavilion has been named, that "The main reason to have health insurance is to protect yourself against being fleeced."
Unfortunately, it is just this sort of needed commentary which is most questionable on a constitutional or political science level. It is not at all certain that consumer groups or third-party insurance groups have a right to be dictating salary levels, or whether an institution needs a new HVAC system. It is far from clear that a government of limited federal powers has any right at all to be dictating local hospital indirect expenditures. When Medicare was only one of several dominant payers in a hospital, they did acquire a sort of legitimacy when they insisted on equal treatment with other payers. Now that Federal Laws of uncertain shape, mandate universal coverage of uncertain form, it becomes legitimate to ask whether the format of filling in the coverage gaps can stretch the Constitution into assuming the total administrative control which the Constitution seems to prohibit. As these new regulations get actual implementation, more and more people will acquire "standing" by sustaining a provable personal injury. It remains to be seen, where that will lead.
There are exceptions, but in the interest of preserving their own flexibility, the three branches of Constitutional government generally try to stay out of each other's way. The Constitution specifies no penalty short of impeachment for getting on another branch's turf, presumably because the threat of retaliation would make each branch hold back from it. To fall back on impeachment requires a decision that a particular turf battle qualifies as "high crimes and misdemeanors". That term is so vague it probably implies a threat of exile or execution, which in the past were only considered in hereditary monarchies with a succession issue. While King James I was beheaded for falling afoul of parliament, many other Anglo-American governments have been changed peacefully since that time. In any event, the events attendant on the passage of the Affordable Care Act were exciting enough that few realized it might soon appear before the United States Supreme Court. Immediately after enactment, twenty-some state Attorney Generals sued that the Affordable Care Law exceeded the limited powers granted by the Constitution to the federal government. Following a puzzling resolution of that issue (that its penalties were really a tax), the Speaker of the House soon announced he was also planning to sue because the President's actions did not "faithfully" match the intent of Congress. Representing only one half of the Legislative branch probably does not give the Speaker sufficient "standing" but if the coming elections provide him with the concurrence of the Senate, it seems unlikely the Court would permit a President to veto his own impeachment.
Responding to this unexpectedly legal turn of events, this book about healthcare and its insurance could, unfortunately, be forced into a series of national debates about Constitutional Law. In spite of strong misgivings that lawyers knowing little about medical care were digressing from insurance into Constitutional Law, there seems little choice but to hang on, waiting for an opportunity to get back to medical care. We can consider it lucky that James Madison was anxious for the Constitution to be simple enough for the public to understand. And that Gouverneur Morris, the "Penman of the Constitution", was talented enough to make it so.
All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.
Article 1, Section 1.
The power to legislate is exclusively vested in the Legislative Branch by Article 1. of the Constitution, but the Executive Branch is permitted to issue "necessary" regulations to enforce the law. Because party control of Congress changes, sometimes the new party in control may think what the other party felt was "necessary", is in fact contrary to a new definition. There are two choices: either let the new Congress repeal and rewrite it, or let the Supreme Court issue a mandamus order to enforce that "intelligible principle" which every law must contain if it is to be Constitutional. In the case of the Affordable Care Act, the persistence of Democratic control of the Senate leaves the Speaker of the House only with the choice of a writ of mandamus ("We command") or a declaration of unconstitutionality. The narrow margin by which the Democrats hold the Senate majority does open an additional possibility of defeating them in the November 2014 elections, thereby strengthening The Speaker's case that he represents the whole Legislative Branch.
So long as Congress 'shall lay down by legislative act an intelligible principle to which the person or body authorized to [exercise the delegated authority] is directed to conform, such legislative action is not a forbidden delegation of legislative power.'"[2]
J,W.Hampton v US, 1928
The President does have room for maneuver before any such lawsuit reaches the Court. There are 450 sections to the Affordable Care Act, and the White House staff seems to be busy devising regulations which implement them. However, most of the regulations are emerging in the form of Temporary Regulations, followed by a comment period. Therefore, there is the potential to hold back until the very last moment on making some or all of them into Permanent Regulations. This could create an opportunity to display politically attractive features for the purpose of the November elections, while at the same time reducing the number of persons actually affected. And thus reducing the number with "standing" to join the lawsuits. (The Court has traditionally refused to hear the complaint of anyone who cannot claim personal damage.) This explains how the unusually early timing of the suit of the State Attorney Generals was possible, maintaining the states were being coerced to accept Obamacare duties and costs. There was no need to sell any insurance in order to examine that complaint. Even then, dating from John Marshall's declaration that "The power to tax is the power to destroy", the penalties for noncompliance can only be described as a tax if they remain small (otherwise, they would be coercive).
Turning in a somewhat different judicial direction, many snarls in Medical Care trace to Legislative action; reforms almost always begin in that Branch. But the same logic applies to Courts. If a problem begins with Constitutional design or Judicial action, its reform might best begin within Courts, because the other Branches may feel inhibited. Such initiation is not necessarily "judicial activism". Sometimes Court action alone is needed if Court interpretations have changed an issue; anti-trust is an example. But the most important need for Court initiative is in Tort Reform, where Chief Justices have administrative jurisdiction. Other branches may feel it is not their place to meddle; some Chief Justices may feel administrative intervention is not to their taste. If other problems grow out of Constitutional design or Judicial action, it can also be awkward for other Branches to deal with them. Still, other problems straddle the Branches; Judicial action might at least be considered. For example, hardly anyone would have predicted a collision between the President and Congress while his party dominated both branches; that was true during the brief period after the Affordable Care Act was enacted. The way it was enacted so enraged a segment of the population that political control soon shifted to the opposition in the House of Representatives, and threatens to shift still further in the November 2014 Senate elections. As Mr. Dooley famously observed, "The Supreme Court follows the election returns."
The Affordable Care Act has 450 sections, so it may be some time before it is legitimate to criticize a failure to write and implement all the sections, even though the law passed the House of Representatives in a single day, nearly three years ago. It is therefore much more likely a charge of failing to enforce the intent of Congress faithfully would take the form of asserting that regulations were promulgated based on no underlying intent expressed in the law. On the other hand, just what a clever lawyer can do with a President who promises on television not to do something which has already been done after the direction not to do it is written in (Section 1251) the law, may prove to be a greater challenge.
The Legislative cannot transfer the Power of Making Laws to any other hands.
John Locke, 1690
For lawyers, however, the possibility of modifying Franklin Roosevelt's Court-packing effort is probably the greatest legal challenge in a century. In the 1933 case of Schechter Poultry, the National Recovery Act was declared unconstitutional because of its unconstitutional delegation of regulation to an executive agency. Violation of the nondelegation doctrine may well be present in the Speaker's suit. President Roosevelt responded by threatening to keep appointing Supreme Court Justices until he achieved a majority. Public uproar was deafening, and both sides backed down. That is, Roosevelt did not pack the Court, and the Court upheld , which declared that an Iowa farmer was engaged in interstate commerce, even when he grew vegetables for his own personal use. By some sort of Judicial logic, this ruling has been taken to mean that "commerce among the several states" is just commerce, and the Interstate Commerce Clause of the Constitution has become merely the "Commerce Clause". Such judicial magic was a long step toward eroding the meaning of the Tenth Amendment, and subsequent decisions have considerably retreated from it as the country continues to outgrow the ability of a central Federal government to manage so much over so large an area. It is a matter of considerable importance therefore, whether Obamacare litigation might signal a continuation of, or a retreat from, the direction it took in the Court Packing dispute. It is very hard to predict whether some event, like the appointment of a new Justice, might change the direction of things, but the most immediately predictable event will be the November 2014 Senate elections and anything which might strongly affect their outcome. An additional prediction would be that every nuance of every decision will be scrutinized for some indication of how each Justice might likely vote on an Obamacare case. By that time, unfortunately, the outcome of the Obamacare case may have no more to do with the practice of Medicine, than the Schechter Brothers case had to do with the price of chickens.
Meanwhile, in the increasingly uncertain climate of an Obamacare decision affecting medical care, we offer a few suggested areas where the Supreme Court might take actions as the initiator, rather than the passive referee, of relevant rules.
The U.S.Supreme Court might be urged to:
1) Mandate income tax equity for health insurance, disregarding who pays the premium and how, 2)Reconsider the 1982 Maricopa Case; at least, remand it for trial, 3) Assert Judicial leadership in Tort Reform. 4) Define ground rules for coordination between Regulations and Statutes, 5)Review the inconsistencies between Obamacare and ERISA, particularly the question of who has standing in the two instances. 6) Review the rules of the House and Senate, particularly as they apply to House-Senate reconciliation of two versions of a bill. If possible, the Legislative Branch should request this kind of intrusion, first.
2624 State and Federal Powers: Historical Review
2250 Obamacare's Constitutionality
2289 Roberts the Second
2625 What Can Supreme Court(s) Do About Tort Reform?
2592 More Work for the U.S. Supreme Court: Revisit Maricopa
The main purpose of fitting a small picture of health financing reform, into a big picture of health financing, or even into a bigger picture of national financing -- is to help judge whether the proposed reform is even remotely feasible. In constructing this assessment, our first task is to see whether healthcare as we project it can be self-sustaining. If not, we would have to look around for something else to subsidize it, because healthcare is not going to go away. We would have to shrink its ambitions, or else shrink the ambitions of something else, like abolishing the rich in order to subsidize the poor. Therefore, balancing the books in this context means showing how the health system can become self-sustaining.
Revenue Let's start with available revenue, which must ultimately come from people of working age. That is to ask, how much can people from age 26 to 65 afford to devote to healthcare? Their children are too young to contribute, and after they retire, the retirees are living on what they accumulated while they were working. Everybody hopes to save a little more than that, but what they have is probably best put in the category of retirement costs. Other derivative savings categories, like corporate income and government subsidies, either come directly from working people as taxes, or indirectly from organized charities, inheritances, and savings. Since 1965, aggregate foreign transfers have all been negative.
Painless Augmentation of Revenue. All budgets seem to start this way. Everybody's appetite seems bigger than his wallet. But few budget discussions begin with the proposal that we perpetually find new sources of revenue for two-thirds of projected expenses. That is, most organizations assume you have to borrow in order to meet your goals. Eventually, you find new sources of revenue, or else the debt service grows to a point it destroys the vision thing.
Substitute Investment for Debt. We presently regard the diverging curves of revenue and expense as a tragedy, when they could be turned around as good luck. The pay as you go system allowed employer-based health insurance to forget about the early costs of people who had not pre-paid them. In a sense, pay-go borrowed its capital costs and never expects to repay them. It may have assumed later generations would pay off the debts, but the later generations just continued the minute, and let it grow. Like all insurance companies, it rejoiced in the gift of protracted payment periods, growing out of unexpectedly extended longevity.
There's a tipping point in such developments: if the interest you earn on savings is greater than the interest paid to your creditors, your debt burden shrinks; if it's the reverse, you probably go broke. In the favorable case, the more longevity keeps extending, the cheaper it becomes to extend the debt. The health industry has permitted the insurance and finance industries to enjoy this windfall. It's time for the Health Industry to take possession of what it created, but you need not expect the insurance and finance industries to cooperate gracefully. As John Bogle so annoyingly pointed out, the finance industry has absorbed 85% of the income from investments. The insurance industry is allowed to charge 10% to collect healthcare bills. And big business finances the transfers by paying half of its inflated tax liability in taxes, while denying the same advantage to its foreign and small-business competitors. No one expects these three giant industries to roll over on command, but the government can be pressured to stay out of the road while the healthcare industry switches from being a debtor to being a creditor, hence avoiding bankruptcy in order to be rewarded for extending everyone's lifespan by thirty years. In short, by switching from pay/go to Health Savings Accounts. From debt-pay to pre-pay.
Substitute Independent Multi-year for Employer-based One-year Term Insurance. Since both the Clinton and the Obama health reform teams had extensive contact with business interests, there is little doubt they were well aware of two flaws in the employer system. It is not portable, leading to the campaign agitation about "job-lock"(Clinton), and it does not roll over from year to year, resulting in a furor about pre-existing conditions(Obama).
These are both manifestations of employer control, inherently consequences of employment mobility. It is unclear what combination of pressures impelled both administrations and their political associates to avoid the ERISA solution of shifting employer control to an independent insurance company, funded by employers. Perhaps it was fear of union domination of ERISA plans, perhaps it reflected resistance from non-profit insurance, perhaps something else. In any event, this resistance stands in the road of the many advantages of multi-year coverage, perhaps forcing attention to inferior solutions less directly distasteful to employers.
In any event, the lifetime cost of whole-life insurance is roughly a quarter of the cost for equivalent coverage in year to year term insurance. Furthermore, the term product is generally less attractive as a revocable product, hence even more expensive than it seems. It is certainly troubling to hear that term insurance would be unprofitable if fewer people dropped their policies. We would defer to insurance experts on the relative merits of different ways to extract cash from them for medical requirements. Using the cash balances is one way, reducing the terminal benefit is another. Nevertheless, the HRA experience is only half of the accounts have any yearly withdrawals at all, so perhaps the whole-life approach contributes only half as much as its final balance to paying for healthcare. If it eliminated the need to prohibit pre-existing conditions, it might save even more. Perhaps whole-life and term would have appeal to different age groups, so the ability to transfer should be protected. The need to create an information and research center for healthcare is evident in questions like this.
Where Should the Retail Outlets be Located? Health Savings Accounts can be regarded as insurance plans with a banking front end, or else regarded as Savings accounts with fail-safe insurance attached. Instead of a fight to the finish, it is exciting to envision one plan as part of existing insurance offices, and the other as part of brokerage houses. The resulting competition might quickly surface important advantages to different customer needs. It might also adjust more easily to shifts from inpatient care to outpatient, or different state regulatory postures. Some thought might also be given to facilitating foreign medical tourism.
Zero-sum (Painful) Augmentation of Revenue. For health insurance to cross the tipping point between a debtor and net creditor, it must receive a greater return on its investments. The investment community is struggling with a recession and a hostile regulatory climate and will resist a loss of margin unless it is accompanied by a considerable increase in sales volume. They are entitled to make their case but are not entitled to make their own facts. The government needs to assure that prices are more widely transparent, and cost-free transferability is easy. Fees for deposits, withdrawals and transfers should be both low and immune to kick-back arrangements. Fiduciary status should be encouraged if not mandatory. Competition in the sunshine should be the goal, so long as investment income is comfortably above the tipping point. Health Savings Accounts already report $22 billion in deposits, while potential volume is a hundred times that much. There is room here for all participants to prosper, and for optimum rules to emerge. Somebody without narrow boundaries should be empowered to watch, to prevent, and to enforce. With some imagination, the Constitutional quarrel between Federal and State regulation could be turned to advantage, not to obstruction.
Balancing the Books. In this summing-up exercise, balanced books imply health industry self-sufficiency. Even if it is decided to unbalance them by, let's say, subsidies to the poor, the size of the subsidy should be measured against the size of the budget, and the size of the populations involved. Somebody or some agency must be charged with doing so, because health financing is very fluid.
As a first step, health savings Accounts at their most optimistic, fall $50-$80 thousand short of stretching $132 thousand into $350 thousand. That's a whole lot better than falling $200 thousand short, which is the present plan. Almost by definition, we don't believe it can be done by raising cash contributions, but it is sure one big step toward it. As data accumulates and the economy clears, we hope the figures will seem more favorable. As medical research progresses, we hope the overall costs will go down, but an expensive cure for cancer could blow that hope away.
We might expand the international trade of healthcare, both by sending Americans abroad where labor costs are lower and by importing foreign nationals for expensive forms of care, at a fee. For a long time, there was a weekly flight between the Netherlands and heart surgery in Texas, to the financial benefit of both countries. We have not made much effort in that direction, since that time. And finally, there has been very little progress in converting the infirmaries of retirement villages into low-intensity hospitals, an advance with considerable promise if helicopter transfers were facilitated and telemedicine advanced. Because of hospital zero-sum resistance, this trend would best begin in remote regions, and might even require some pilot studies. Finally, it would help a great deal if the retirement age spontaneously moved several years older. Perhaps to age 75. Beyond that, we are going to have to resort to subsidies and cost-cutting to balance the books. That's not the best solution, but it's all this approach can provide. By the way, that's not exactly peanuts. Try multiplying $100,000 times 340 million to see what an advance we have made on solving an apparently unsolvable problem.
If anyone is still listening, we seem to be forced to start experimenting with lifetime Health Savings Accounts. They have more promise, but less experience to back them up. Very likely, they might produce an additional lifetime $100,000 revenue, but they have one immediately important obstacle. We might very well find they cannot do what we want unless the nation is willing to surrender Medicare. No one needs to tell me the politicians regard that as political suicide, because almost no one is willing to face the fact we cannot pay for it, to the degree it is itself probably a bigger problem than the rest of the population's healthcare, and almost no one will face it. I won't repeat the mathematics here, but Medicare is 50% government subsidized. Think it over. Even I am forced by public opinion to soft-pedal the facts, hoping other people who have nothing to lose, will start to speak up.
We are going without a metal gold standard, substituting 2% inflation targeting because we don't really know what else to do.
And we seem to be getting away with it, although most people don't trust it. And indeed we have the shock of discovering that the Phillips curve (inflation and joblessness balance each other) doesn't work because we just can't get inflation to rise. By the way, this includes Milton Friedman, who blamed it on the Federal Reserve, but that can't be right, either. Don't listen to experts -- no one knows why this is true. I have a solution which hasn't been tried: we could use index funds as a new gold standard. They would be a real currency backing, which would flexibly respond to inflation and deflation. Come back in a century, if you want to find out how that works.
We have too much paper money. That's another way of saying the banks have thirty times as much paper money as they have hard currency (safe) reserves to back it up. We started out with banks making it two to one, two centuries ago, and gradually raised the ratio. No one knows what the right ratio should be, so we push the envelope and watch. One day, it will be too much, but it will then be too late to do anything about it. Thirty to one seems to account for most of our prosperity, but we have several billion of the world's population still living in poverty, but with atom bombs to blackmail the rest of us. So we apparently are going to inflate the bubble until it breaks. Then we will know what the right ratio should have been. Along comes Stephan Moore of the Heritage Foundation, with either the greatest trial balloon in history or else the best idea. Who cares why interest rates are so stubbornly low, just take advantage while that is the case. He suggests we take advantage of stubbornly low rates to have the federal government issue long-term bonds until interest rates rise, possibly paying off our national debts with the profits. And also bankrupting almost everyone whose survival depended on continuing low rates, and will surely oppose the move. At least, the argument may surface the reason the Phillips Curve stopped working.
Along a different line, James Madison was scared to death poor people will outnumber rich people, so in a democracy, poor people will win. They will vote themselves free college, free medical care, free wealth they didn't earn. We will then be tempted to substitute dictators for leaders, sacrificing democracy permanently to have the joys of a dictatorship temporarily. We may try everything else first, but what we need is something which will work, not demagogues, and probably not college professors, either. God help us if we start electing newspaper columnists. Even Ben Franklin learned that much.
Just remember how long we have been tinkering with bankruptcy solutions. Instead of cutting your heart out if you don't repay your creditors, we improved things somewhat by putting defaulted debtors in prison. Morris the billionaire showed George Washington how to strip all personal wealth from the defaulted debtor in exchange for extinguishing their debts; it's called bankruptcy. The banks figure out how many defaults they will have in bulk, and add that charge to the interest rate they legitimately charge substandard risk debtors and illegitimately charge a lesser amount to non-risky debtors. Unfortunately, lots of people have figured out how to cheat on their bookkeeping, and with cell phones, soon tell their friends. Just have the government bail out bad debts, and then tax the rest of the population to pay for it. It's that last step which makes it socialism. In Philadelphia, someone a century ago thought it was a good idea to have a city/county consolidation, with sheriffs sales to pay the bills. Today, hundreds of millions of dollars are skimmed off this arrangement by corrupt politicians, and the current --allegedly non-corrupt-- Mayor is running for re-election on the promise he will absorb this revenue for worthy causes, like education. In most cities in this country, this corruption goes on, because it pays off. We have had this corruption for a century, and keep electing the same people to continue it. Yes, I know we have a drugs problem, but we voted for this scam and the taxicab medallion scam. We need a few more people to get mad, but they soon turn into elected crooks, if the rest of us let experts seem to run things. Our Constitution assumes half of the public are inherently honest and the other half are inherently bad apples, seeing its job is to maintain a balance between the two.
In short, the Supreme Court could easily fix this, by fixing enforcement and penalties. Let's see if they try. Congress could also fix this, but it would be opposed by others in Congress. The overall potential might be to lower consumer and retail interest rates, because bonds average 5% return over the long run, while equities average 10% for the same risk. If stocks and bonds returned an equal amount, as they should, there should be a doubling of effect. Bonds are mostly purchased by insurance companies, forced by state insurance commissioners to limit equity purchases to 10%. Presumably, insurance commissioners are holding down the cost to the state of municipal bonds, so the cost of this subsidy is not visible. But the net effect is to have the municipal taxpayer subsidize the defaulting debtor. The tax exemption of municipal bonds is yet another feature of this subsidy, in this case drawing the federal government into the process.
Simplifying somewhat, raising the permissible insurance commissioner's permissible level of insurance company's purchase rate from 10% to 11% would double the permissible stock purchases by insurance companies. Not enough to pay off the national debt to foreigners, perhaps, but demonstrating the opportunity just waiting for a presidential candidate to exploit in his campaign.
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.
