George R. Fisher, III, M.D.

Obituary

George R. Fisher, III, M.D.

Age: 97 of Philadelphia, formerly of Haddonfield Dr George Fisher III

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.

SECOND FOREWORD (Whole-life Health Insurance)

This second Foreword is a summary of a radically modified proposal. It cannot be implemented without further changes in the law or at least some clarifications of the Affordable Care Act. To state the issue, it is that increasingly larger proportions of American lifetimes are not employed, and therefore are not able to take full advantage of an employer-based system. It becomes increasingly doubtful that thirty years of employment can sustain sixty years without earned income if you include childhood. Further, there is every reason to expect further migration of illness out of the employable age group. And finally, while there are signs of reasonableness, the mandatory stance of Obamacare is not greatly different from a package of mandatory "benefits" imposed on all attempts at innovation before they can be tested. If changes in the law are required before implementation, liberalization might as well be in place before innovations are proposed. No private company could proceed at arm's length without advance assurances resembling cronyism. Everything else is negotiable, but the notion of mandatory pre-approval of any modification must be softened to something less sovereign.

Sickness itself has moved into the retiree age group and will continue to migrate there. The means of payment cannot move from the employee group, so a two-step process is resorted to, with the middle-man government controlling the flow of money between age groups. If we are ever to remove middle-man costs, this feature must be removed, as well. Meanwhile, the paraphernalia of medical care, the medical schools, hospitals, and doctors, remain largely in the urban areas where employment formerly centered. So the government once more becomes a middle-man, and the system begins to resemble a virtual system, based on computer systems which do the job without actually moving. Until everyone stops moving, such duplication increases costs degrade the quality and start riots. We must move people less, and move money more. At one careless first glance, that sounds like shifting money between demographic groups, but picking winner and loser demography has repeatedly been shown to be too divisive; almost a prescription for a second Civil War. In short, we have fallen in love with a computerized virtual model, based on the faulty assumption that it is without cost. Here and there it might be tried experimentally, but it is far too early to make it mandatory. Consequently, it proves much easier to re-design the payment system, shifting money between different stages within individual lives, than to make everyone find a new doctor, just because the insurance compartment changed. It is absurd to make everyone move to Florida on his 66th birthday. Even redesigning transaction systems is not easy, but it is by far the easiest choice. Nevertheless, there is still too much friction in the various systems to make such improvements mandatory.

The best model to adopt is that of the university president who ordered a new quadrangle to be built without sidewalks. Only after the students had worn paths in the lawn along their favored routes to class, did he cover the paths with concrete sidewalks.

The issue at the moment is that money originates with employers, supporting the whole system, but their employees no longer get very sick. To reduce complaints, they are given benefits to spend which they really don't need, raising the cost of transferring the money to retirees who do need the money but are covered by Medicare. We are in danger of repeating that whole cycle with Medicare, piously calling it a single payer system, when in fact it would be a single borrower system as long as the Chinese don't collapse. Expensive sickness now centers in the retirees, but within fifty years a dozen diseases will be conquered, and we will then need the Medicare money to pay for retirement living. Constructing massive systems without that vision will just make it harder to replace them. We are, in summary, in great need of a gigantic funds transfer system, since moving the people and institutions to match the funding is preposterous. But as long as the system has two champions (Medicare and the Employer-based system) in possession of all the money, we flirt with collapses in order to force rearrangements.

All of this is divisive, indeed. For years to come, the easiest thing to move around will be money. Eventually, institutions and clients can sort themselves out for geographical unity, and probably improved efficiency. But a financing system with the money for sickness in the hands of people who aren't sick, plus a governmental, system dedicated to an age group with almost all the coming sickness but unsustainable finances -- is a wonder to behold. Therefore, we offer the Health Savings Account as having the flexibility to collect money from the young and healthy, invest it for decades, and use it for the same people when they get old. It can cross age barriers and follow illnesses, or it can remain with survivors and pay for their protracted retirement. If Medicare is modularized, it can supply the money to buy pieces as they begin to appear less desirable. It can redistribute subsidies to the poor if an agency gives it money, and it can adjust to changes in geography and science, since all it works with, is money. And it avoids redistribution politics by giving the same people, their own money.

For all these reasons, Health Savings Accounts on a lifetime or whole-life model seem the logical place to fix the broken vehicle, while we somehow keep its motor running. If successful, it will grow too big, so it should remain modular from the start. It has feelers in the insurance, finance and investment worlds. It could easily arrange branch offices for retail marketing and service. It should have networks for research and lobbying. But as long as it retains the branch concept and avoids the imperial one, it should manage to keep the doctors, patients and institutions functioning as the whole universe rearranges itself -- at its own speed. The first major step in this process would be to clear up some regulations which did not anticipate it. With Classical HSA adjusted for the interim role, the design stage can be undertaken to link the pieces of a person's health financing. Variations of lifetime Health Savings Accounts can be tried in demonstration projects, perhaps staying out of the way of the Affordable Care Act by unifying parts other than age 21 to 66, as the New Health Savings Account. And then seeing which version of lifetime HSA survives the squabbling. That isn't all. The really big picture is to absorb the pieces of Medicare, one by one, as sickness retreats from being the central cost, and the cost of retirement becomes the real threat.

Foreword: Children Playing With Matches: Investigating and Debating the Healthcare System

The Federal Reserve is an example of an argument between two viewpoints, better left unresolved than settled in favor of either extreme. In that particular 1913 case, it was a question whether the national currency should be a total government function or a totally private one, and we finally settled on a hybrid institution. It searches for the merits of both viewpoints, continuously and permanently. Healthcare seems another example of a vital function best managed by continuous tension, not by anybody's victory. Look at the question of the uninsured, which quite naturally many insurance companies describe as a disgrace. It was however soon discovered that many people didn't want health insurance enough to pay for it. In the background, a small group of insurance actuaries began to mutter that it gets to be a problem if no one is left uninsured since insurance depends on market prices to establish their premiums. Insurance was never designed to set prices, it was designed to pay them.

Furthermore, there is that thing called Moral Hazard. There are reasons to believe the medical cost is already 30% too high, just because nobody spends his own money as freely as somebody else's money. A large pool of uninsured medical transactions establishes a standard that invisibly constrains people with insurance from spending recklessly. Remove that, and spending volume will increase, followed by prices.

And finally, if everybody could buy insurance at the same price no matter when they bought it ("Community Rating"), you would find that people will hold back until they are in the ambulance before they sign an application. It's like buying fire insurance when the building is already burning. Healthy people won't buy it, so again the price has to go up.

For these reasons-- prices, the volume of service, and Moral Hazard -- universal health insurance at Community rates is a bad idea. Because no one likes to be pushed around, compulsory universal health insurance is an even worse political idea. The Republicans convinced themselves it was such a bad idea, that they could just let the Liberals go ahead with getting badly punished when the public came to its senses. It is not the function of this book to explore why things didn't work out their way or didn't work out that way, soon enough. We did have a problem, misleadingly called the uninsured problem, of thirty million people presenting themselves at hospitals without the money to pay. It wasn't their fault, it wasn't the fault of the insurance, it was just a problem. Somehow, it was decided to go ahead with compulsory universal health insurance to solve it.

Obamacare began with a stirring call to help the forty million uninsured Americans obtain healthcare insurance, by subsidizing them if necessary. When an enormous proposal was finally laid out in detail, the Congressional Budget Office estimated that after spending a trillion dollars, thirty million people would still remain uninsured. In rough figures, there would be eight million in jail, another eight million too mentally impaired to support themselves, and twelve million illegal aliens.

If I had been faced with this problem, and given a trillion dollars to deal with it in ten years, there is no doubt I would have deep-sixed the insurance proposal, and proposed three programs, a program for Prison Inmates, a program for the Mentally Impaired, and a medical program for Illegal Immigrants. After that, I would have turned my attention to a devastating stock market crash, several wars, and the struggling inner-city school systems. If I handled all that, there wouldn't have been time for much else, so I would probably have left everything else to my successor in office.

But unfortunately that isn't the way things turned out, so I devoted my retirement years to health care reform, real health care reform, instead of to improving my golf handicap. Most of what I have to say is drawn from sixty years of practicing Medicine, in eleven hospitals, in three neighboring states as a consultant, and thirty years in AMA medical economics activity. I am still more or less on the faculty of two medical schools and have been elected to my share of positions of honor in the profession. In 1980, I wrote a book called The Hospital That Ate Chicago , was invited to White House functions, and together with John McClaughry, devised the concept of Health Savings Accounts.

As to this book itself, it was very hard work for almost a year. I apologize to Leopold von Ranke, the father of historical documentation, for not living up to his standards. But it has been too much of a scramble to keep up with breaking events in the Compulsory Health Insurance field to worry about that; there are undoubtedly some unintentional mistakes, no harm intended. I wish I could live long enough to look back on this perplexing episode with more balance and write a sequel that would satisfy my critics. At my age, it probably isn't in the cards.

------------------------- No matter how it is accomplished, a program designed to solve these three problems would contain three different approaches, which have very little to do with each other. The other three hundred million citizens are right to be concerned about disrupting the program which addresses their needs fairly well, even though it is not denied that thirty million others fall through the cracks. The dominant healthcare system has many defects, but they remain mostly unaddressed. The thirty million do not have their problems addressed at all, because the sources of the deficiency are not primarily financial. It certainly seems we needed three programs to address three specific problems, and we needed a fourth searching examination of the program design for the remaining three hundred million. Because medical care is constantly changing, mostly for the better, single pieces of legislation are surely destined for obsolescence as soon as they are written. One big law, or even forty little laws, cannot possibly anticipate the discovery of a cure for cancer, or the appearance of a new epidemic like HIV, capable of killing millions of people in every walk of life. We need an institution, not a political victory, or defeat. Nor do we need another century of legislative turmoil.

The components of this institution should include an appropriate voice for government with links to the oversight committees in Congress and the judiciary. It should include a voice for persons trained in the science of medical care, with links to organized medicine. And it should have the power to investigate the scientific and economic issues, utilizing the resources of the National Institutes of Health, the Food and Drug Administration. No doubt, other power centers will demand representation. At first, this organization should be given time to sort itself out, investigating and reporting, but leaving regulatory action to existing institutions until the new organization can persuade the nation it is ready for enforcement powers. Even then, it might be better to create new agencies with enforcement power, leaving a national medical advisory Institution whose power derives from its demonstrated ability to suggest the right approach. If it does not quickly acquire such prestige, it has been poorly designed.

Perhaps it should be left vague and sketchy. Why don't we begin with a Medical Constitutional Convention, allowing them to battle it out behind closed doors for a few months? And reminding them from the outset, that the 1787 Constitutional Convention achieved its best design features after it had been returned to the people for ratification.

Re-funding Medicare, Pearl #2, Part 3

So we end up funding Medicare mathematically, but with misgivings about both the politics and the economics of it. It would not be the first time America launched an adventure without the money to finance it, as we do almost every time we start a war or face a depression. However, both the ACA is in doubt, and linked with it is the idea of a single payer with Medicare as a model. Although I have grave misgivings about consolidating delivery systems as a first step, it could be a decision that is beyond the suggestion of a citizen.

Under the present uncertain circumstances -- of wishing to put the ideas forward but lacking the ability to control the environment -- it seems better to hold back on grander designs than just saving a little money. The linkage of Medicare and its secondary insurance is both tight and of long standing. By just eliminating the second insurance policy, we might eliminate a large and useless expense as well as suggest a few ways to save more. Isn't saving several billion dollars worth some effort? The factors which would lead America to embark on a financial crusade as radical as suggested here, are not to be found in mathematics, or even in one-man logic. They are cultural and emotional, mostly evolving out of endless simplification and repetition. The public might be persuaded to try something on 20%, which they would be afraid to try out on a whole program, however floundering it might appear to be.

How Would This Particular Approach Make Medicare Solvent? It wouldn't, but it would help. And it would provide a demonstration of the practicality of some of these ideas for worthy motives, and still leave room to back down if they unexpectedly fail. Most people do not trust their own judgment of complicated math, so we have made it simple. It is surely not the case that every single solution is either too complicated to understand, or too simple to be believable. Every grand proposal, from Otto von Bismarck's social security through the European systems to Blue Cross/Blue Shield, followed by Harry Truman, Hillary Clinton's foray into HMO, to Barrack Obama's ACA, has proved to be overambitious at the beginning, and woefully inadequate at the end. It seems there ought to be better ways to do things, but this is our way.

Medicare's original design has become so over-extended it has exhausted conventional insolvency approaches. Like any other proposal that might work, our own plan relies on approaches which are usually thought to be best avoided. So the first fundamental is to keep the core of it simple and be willing to discard the embellishments if circumstances undermine them. The doctors should devise the medical choices, the patients must control the finances, paying only for what pleases them. Government has a limited role in market failures, but a very little role in defining them. The goal is to eliminate the disease, ultimately reducing its cost to a framework of the first year of life and the last year of life. Anything more must defend itself against efforts to improve, then eliminate it.

And there is another idea which needs testing. Alexander Hamilton persuaded George Washington that "A national debt if it is not too large, is a national treasure." In 2006, we may have discovered what is a little too large to be sustainable, by permitting banks to convert mortgage debt to stockholder equity and then watching banks topple over from the sudden shift. Up to that time, it was quite legal to rebalance excess debt that way, which is why no one has gone to jail for doing it. And now we have the uncertainty over whether to encourage more of it (as a safety valve) or punish it (as toppling over the entire economy). It does not help matters for the two political parties to take extreme positions without more evidence. Pre-paying for medical care instead of borrowing to pay for it, is an indirect way of testing this thesis.

First of all, our own proposal depends on such long time periods that unexpected events could be the rule, not the exception. Nevertheless, many Congresses of many political parties would have to understand the basics and leave them unharmed for a century. Secondly, such huge amounts of money are involved that tampering, embezzling and fraud are not merely possible, but inevitable. These problems would confront any reformer. From them emerges the third one. Multitudes of individual Health Accounts would have less risk overall than gigantic single payers because small ones can only be converted into bigger ones, not defeated in a single pitched battle. Inevitably some individuals in charge of any system will prove to be stupid, reckless and venal. The real question is: Compared with What? If you make up your mind in advance that you will rescue everyone who doesn't succeed, the whole system will be no better than a single gigantic reinsurer overseen by either an idiot or a crook, and probably both, from time to time. Index investing is itself a triumph of everyman against the experts, after all. For long periods, single payer systems may be run by saints, but diversity is more resilient in the long run. The more important issue is to define how you will respond when you detect the "imperfect agency". The opportunities for illegal gains will inevitably exceed the individual opportunities for honest managers, in size if not in frequency. Therefore, smaller decision units are better than bigger, simpler is better than complicated, and success should never be guaranteed. The irony of the role reversal between the political party of individualism and the party of diversity is not to be overlooked.

Medicare financing could possibly be eventually covered by this approach, retirement income financing, probably not. To do the quick math in your head, it is useful to remember money at 7% doubles in 10 years. Current interest rates do not achieve that, but then current rates seldom do. During the eight years of the Obama administration, the low-cost total market index averaged 11% gain. Most people would never have guessed that outcome in advance. Much of it never reached the average stockholder because the government (taxes and inflation) and the finance industry absorbed it, but public restlessness may change things. The pharmaceutical industry may possibly be over-compensated, but that's not necessarily permanent, either. In this proposal, we are proposing to make the average patient become an average stockholder, with little voice in management perhaps, but ultimate ability "to talk with his feet", to buy and sell. Let's take the six components of the proposal:

#1. The co-pay feature. We've offered our opinion that co-pay has a little restraining effect on spending, and is only a device for adjusting the amount of insurance to the buyer's budget. So let's take it like that, and use the amount of the copay as, not 20%, but whatever fits our budget. We advocate the accordion principle for predicting future revenue uncertainty. Furthermore, we would abandon the pretense that it is a second insurance policy, and simply pay the carriers a fee for administrative help in running Medicare. That opens it to a bidding process related to work actually performed, eliminates the State insurance commissioner as an actor in this drama, and eliminates a huge source of confusion with the public. Imagine, one statement of benefits instead of two.
#2. The Contingency Fund. is designed to be overfunded for contingencies, so it is hard to say what its upper limit should be. And although on paper no one gets paid off for ninety years, banks are accustomed to rearranging the terms of a loan to shorten the time period for a fee. Dealing with transition periods is an old story for Congressional staff since otherwise nothing would ever be upgraded. The most conservative investment period would terminate at death, but expand to whatever age is necessary to pay it off, up to age 105. That implies the initial deposit never varies. Congress might, however, decide to vary the initial deposit but devise a shorter fixed time period. It makes no mathematical difference, but its political difference might be considerable and we do not propose to weaken our case by getting into such weedy details.
Eventually, a "sweet spot" should emerge. But let's not drop the argument with a confession of modesty. An officer of a large paycheck company recently declared to be the revenues of essentially all government programs have nothing to do with expenses, and everything to do with politics. True, we operate under a general mandate to balance new appropriations with new revenue sources. But the current payroll deduction for Social Security is five times as high as the deduction for Medicare, with only about 25% difference in expenses between the two programs, for example. The accounting rules for appropriations could be made considerably less political without significant impairment of flexibility. In the long run, it is not good politics for the public to discover you have been doing outrageous things. Over and over, you discover the Constitution is a cultural document, intolerant of judges who are obtuse.
#3. Delay Liquidating the HRSA at death. Although things get a little threadbare beyond this point, there is no reason to hold back borrowing for observed volatility. We are at the point in the compound interest curve, were holding the funds for ten years after death would multiply the original subsidy by 128 instead of 64; even 256 is conceivable. We are paying the Chinese much less than that for the Treasury bonds, and they would probably be relieved to see a way of recovering their investment. #2 may not sit very well with some people, but it would surely guarantee repayment, which at the moment, looks rather chancy.
#4. Investing the Pay as You Go. The problems created for others in the payment process have to be reckoned with. We propose the individuals continue to pay/go temporarily for half of the withholding tax receipts. That's effectively unchanged because half the cost has been transferred, but the withholding tax revenue remains constant. What is essentially involved is to balance the problems of the current administrative staff against the problems of passing acceptable legislation. But once more, the mathematical "sweet spot" is comparatively easy to calculate, but the political effects are more intangible. It is probably impossible for an outsider to have a firm opinion.
Additional unknowns in this equation are how much nursing home costs from state Medicaid plans would eventually emerge in the form of Medicare deficits. It is common knowledge that although custodial costs are not allowable costs, states have found ways to make them a federal responsibility. We also understand the HRSA owner might get less than 7% income on his deposits. Although the Chinese debt would stop rising, past indebtedness remains unpaid. Current Medicare bills would have to be paid for probably another decade, and may well rise in size. Ultimately, the way to balance the books is to raise the contributions. So, privatizing Medicare might or might not make it cost less, but would greatly relieve its present costs. Funding of retirements will have to come from other sources. However, right now contributions from the two contingency funds could easily be increased.
#4. The Last Four Years of Life Half of Medicare costs appear in the last four years of Life. By reimbursing Medicare for the last four years from other sources, Medicare's average cost is cut in half. but the withholding tax remains the same. Therefore, we come closer to breaking even in several decades, although we still probably won't quite make it. The essential feature of carving off terminal care is that it is half the cost of Medicare, and therefore reduces the burden on the other contrivances to reach the final goal of financing it.
#5. Simplicity, Simplicity. To begin with the opposite of simplicity, two quite unacceptable new ways to manage the medical payment system have been suggested by others. One alternative is to consolidate the whole industry, with one corporate administrative arm assuming the payment tasks for everybody, along with the whole delivery system. That scarcely seems appropriate management for a health complex which is already too big to manage. But it seems to generate many current proposals, especially those coming from the bureaucracy itself. Another idea, based on its resemblance to whole-life insurance, proposes a giant company or government department to concentrate on health finance, doing it for everybody. It might seem suitable for an insurance company, a medical school, a computer company, or a medical society. That seems to be what these organizations would like, but it immediately creates additional complexity, because computers only work if you specify some response to every contingency in advance. In a sense, this version of "Single Payer" would be a throw-back in thinking to the days when only a big company or a big government could afford to own a computer.
Is medical finance really so complicated most people couldn't handle it by themselves? Let's remember the anguished words Tzar Nicholas: "I don't run Russia. Ten thousand clerks run Russia." What the Tsar was saying, was the problem isn't individual complexity, the problem is the huge volume of simple problems. For example, if we proposed to butter everybody's bread, it wouldn't be hard to do, it would be hard to manage.
#6. Linking the New Medicare with Health Savings Accounts.. Probably the most important feature of putting pearls on the string is to avoid tangling the string for the convenience of the pearl. The purposes of the linkage are to acquire a connection to the retirement feature and its incentives to save and to lengthen the time period of any compound interest. It is not to generate inter-plan borrowings or conveniences, particularly for the early entrants to the string of pearls, at the expense of the later ones.

Is medical finance really so complicated most people couldn't handle it by themselves? {bottom quote}

For Health and Retirement Savings Accounts --- Transfer Slips, and Monthly statements, Only. So, yes and no to computers, which is what all this amounts to. Abundant cheap computers tempt us to use them for simple tasks, at the risk of making the simple task complex and losing the truth in a huge pile of statistics. (In another generation, a self-correcting code may conquer this problem, at the same time it will widen the opportunity for vandals.)

The proposal made here instead is a confederation of otherwise free-standing organizations (The Pearls), each hiring its own experts, feeding into a common channel of Health Savings Accounts owned by individual patients (The String). Individuals could hire consultants if they pleased but the decisions should be so simple the average high school graduate could cope with them.

One consolidated lifetime account form, which serves as a transfer vehicle for a single person's various balances. Sort of like a lifetime check-book. It provides a common incentive to be frugal for future retirement, and a common way to multiply such savings.

If that won't suffice for some tasks, we are traveling down the same path as the income tax and should re-consider such high-handed laziness.

There might be many networks, as long as their balances are uniformly transferable and they each link ultimately to a transferable retirement fund (The Goal) and a transferable investment fund (The Multiplier). Such networks might grow very large, but still, remain quite simple, and decisions which belong to the patient would remain within his control. The only outward purpose of such paperwork would be to transfer credits of the owner, to debts of the same owner or vice versa, with the adjusted balance ultimately coming to rest in his retirement account, creating a common incentive to be medically frugal. This would maintain adequate "records" (which mostly no one ever reads), an information source, and a designated HSA representative, but their outward form and unit would remain a transfer slip. You are striving for a good retrieval system, not a good archive system. If you want a simple system, give it to individuals who have an incentive to keep it simple. Don't give it to people who have a graduate degree an incentive to make it complicated.

If you want a simple system, give it to individuals who have an incentive to keep it simple. {bottom quote}

This particular feature has a political element. The American public now imagines it gets a bargain with Medicare, somehow getting a dollar of healthcare for fifty cents, and therefore a treasure they are unwilling to surrender. In all probability, no organization except the government could function long with such a deficit, so taking the deficit away from the government necessarily places it in the hands of someone who must balance his books. Somehow, legal protections for the patients against the debts of organizations which participate in the confederation must be established, so they can occasionally provide benefits at a loss, but only within stated limits. Called a "loss leader", the situation is a common one, but the effect is quite different from making the government a payer of last resort. Two additional savings multipliers must be added, although they will be explained shortly, along with two important investment designs.

Investment Mechanisms.We promised to discuss two investment mechanisms which might help matters. The first is the tendency of compound interest to rise with time. We have already shown above that adding another decade to the example will have an exaggerated effect on the outcome. This is an inherent quality of compound interest which crept up on us as science has conquered early death, and should have wide application in the future. As we learn how to avoid borrowing and learn how to be successful creditors, it should become a commonplace to rearrange financing to optimize it.
The second new model is index investing. As international borrowing has vastly increased the money supply, interest rates seem to have settled at a new low. Bonds have always been a zero-sum investment, but recent trends seem to set an even lower boundary. Common stock has more risk and volatility, but John Bogle and others have shown that it is practically useless for an ordinary person to buy anything but low-cost total-market common-stock index funds ("passive investing") since the fees charged by intermediaries tend to wipe out the profit from active investing. We recommend a heavy emphasis on this method. Beyond that basic approach, other strategies may be considered as a way to add fractions of a percent to total returns, but best avoided by people without experience, or lifetime years to recover from investment misjudgments.

In Final Summary of Privatizing Medicare. The public sector has been allowed to turn "privatization" into a term of contempt, when in fact it is a goal for the public sector to emulate. Very few people begin their careers in the public sector without spending their whole career there. In that sense, they are natural monopolists and act like them. We should strive for more varied career paths.

Even with considerable twisting, Medicare is so underfunded, no way can be found to self-fund it without adding several hundred dollars per person as a pump-primer. Of course, that's a great bargain compared with a hundred thousand dollars of medical care later on, but it will meet far more resistance than five hundred dollars is worth. Even then, it might require forty or fifty years at the most optimistic, to show a profit. In the Pearls on a String concept, the deficit might be made up by surplus generated by other programs, but Congress is unlikely to be willing to identify such a donor, and indeed it is a slippery path. The Affordable Care Act does not look as though it is going to generate a surplus, for example.

Transition Issues

Sickness costs have migrated toward the end of life and will continue to migrate, as we have repeatedly mentioned. That's what makes pre-funding so attractive, but unfortunately, the sequence is reversed for a simple transition, placing the biggest costs temporarily at the head of the line to be paid first, not last. If we can't fully afford one set of beneficiaries, we certainly cannot afford two sets on top of each other. For twenty years, people would be showing up for Medicare coverage, protesting they have either already paid for it, or have no means of earning the cost of it.

Bond Issuance. At first, there seems no way to cover the transition except by a bond issue of twenty or thirty years, and then there still remains the problem of paying off the bonds. Or waiting forty years for the revenue to catch up with expenses, a proposal which is unappealing to people who have to be re-elected before the fruit ripens. But both reactions are too dismissive. Eventually, there will be an enormous fund of money building up in the accounts, and therefore plenty of money to pay off bonds. Just when that will occur is a matter of complicated mathematics, but I hope I have convinced readers it will happen.

Voluntary. Therefore, it is at least essential to make the transition voluntary and perhaps even a little unattractive for the first generation of beneficiaries who have already achieved Medicare eligibility, inducing them to shift some of the burden of transition (limited in the Medicare case to the escrowed funds) until later when the country can afford it. A quota system may even be necessary, but more probably the conservatism of old age will impel most Medicare beneficiaries to ask why they should bother to demand something they have already been given. The issue largely goes away in twenty years, unlike pay as you go, which stretches to infinity. And the funds required to begin at only half of what they originally were, before removing the expense of the last four years of life.

But on the other hand, not every elderly person has ferocious medical expenses. The trick is to figure out how many there will be at each stage of transition, figure out what proportion they represent, and phase in the cheap ones first. That calculation, which is beyond my capability without dependable ACA data, will establish the point at which it is safe to phase in the expensive residual people. Or the sort of disorders it is advisable to delay. There's a risk in this, that the scientists who discover cheap cures will, instead, be overruled by the administrators of the drug and insurance industries, who feel their charge is to produce business plans to make a profit. That is, a combination of circumstances may thwart a fixed transition plan. At this point, our only hope is to use force, negotiation, and pleas -- essentially, to delay profits in return for enhancing them later. A dull refunding plan might then suddenly transform into a skillful negotiation of conflicted self-interests. Unfortunately, we must first determine the hidden costs incurred by the Affordable Care Act.

Cutting the Problem in Half With Last-years Reinsurance. A big hurdle is the group of people who are just stepping into Medicare, and an equal hurdle is a group just entering their last four years of life. Those people will cost the bulk of transition money but have no way left to repay it after death. That's where the reinsurance to repay Medicare for the last years of life really serves a purpose, and the concept of post-mortem trust funds might have to test its viability, including any bad precedents it might set. Repayment would then be guaranteed, so there is thus likely to be less objection to removing it from transition planning. And if it is sufficiently foreseen, terminal care might already be pre-funded.

Staggered Transition.If, after we pay off both the first and last years of life, we then divide a lifetime of health financing into five twenty-year segments, it should be possible to complete the transition in twenty years. That assumes we start everything at once, placing everyone into the system simultaneously, at whatever stage the person's last birthday determines. That approach is pretty disruptive, as Lyndon Johnson discovered in 1965, but cowboy that he has just plunged ahead and eaten the costs. His method was the one we are trying to escape, which is to adopt a pay-as-you-go approach and kick the can down the road. Eventually, the borrowed interest cost builds up, and people start talking about never paying anything back. So, if a transition of even half of Medicare is too much to absorb, the transition can be further segmented, waiting for compound interest to build up in the last 4 years of life funds but holding off the number of transitions until it does.

If we do plan to start everybody's transition all at once, we must plan to pay each year as it comes along. That amounts to twenty mini-transitions every twenty years because that's how people were born. Although we start with a plan which pays for itself, it does so by diminishing the cash cost through investing in total stock market index funds. Some years you make 20%, and other years you may lose 20%, but at the very least, taxing investment funds in anticipation of a financing gap before reserves build up.

Forty-year Transition Segments.Just to remind everyone, the evolution of this process over a century could be shown in a single table, which displays phases of a single life, with the exception of dividing the 40-year working period into two 20-year segments--except for the fact we cannot be certain how the Affordable Care Act and employer-based insurance are to be handled. That uncertainty segregates the low-cost age 25 to 45 segment from the somewhat higher-cost segment from 45 to 65; balanced roughly by increased income from salary raises, promotions, etc. The cost difference between the two segments will be heightened if the cost of obstetrics is shifted from the "family" to the infant, as we suggest, and shifted a second time from employer-based years to the retirement ones when our plan finally reaches a surplus. The result is the virtual creation of two mega-segments which, combined, are roughly two segments of about forty years apiece, one low cost and the other high cost.

Twenty-Year Transition Segments.The contrasting advantage of suggesting a twenty-year transition is that each twenty-year segment has about the same cost, once the whole system reaches a steady state. That is, each segment is expected to borrow, as one compartment, the full income earned. Any shortfalls can be covered by segmenting the bond issue we mentioned. The medical cash costs will balance internally in each segment, except the first one must find the cash to prime the pump for twenty years. During that first twenty years, the stock market has to behave itself and produce at least an average return. So that's the proposal to a lender: if we encounter a normal twenty-year market, the loan is easily paid off, on time. Otherwise, the loan must extend into a second segment. Selling the HSA program voluntarily to early adopters lessens the transition impact, but stretches out its resolution. If lenders rebel at these conditions, we await their counter-proposals.

So, what we are describing can be fit into a twenty-year bond issue, but thirty years is more comfortable. It's a whopper, all right, coming to roughly a half million dollars for each of millions of people for several years paid back over perhaps thirty years. At the moment, bond interest rates are at historic lows, so the timing would probably never be easier unless some major diseases happen to find an inexpensive cure in the meantime. That's not impossible, but the longer we stretch the bond issue out, the likelier it becomes. Meanwhile, the population gets older, and expensive sickness is pushed later, too. In the meantime, we can expect a profit, from a spread between 3-4%, and the 7% we need to strive for, in the stock portfolio. This is an expensive buyout of a faulty system, but in the long run, it should prove to be a sound investment, just by itself. We financed bigger issues in each of our last few international wars, so there is a good deal of history to review and consult about, with investment bankers. And consult with the Treasury Department, which does a very credible job of funding bonds.

But the awkward fact remains, you cannot devise a comprehensive transition without knowing the true financial condition of ACA, and employer-based health insurance. Except for Medicare, so we start with eliminating the biggest hurdle, first. You might discover this data with subpoenas, but cooperation is preferable.

FOUR PRESCRIPTIONS: Proposals For Reform of Health Care Financing II Last-Year-of Life

REFERENCE COMMITTEE A

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.

Philadelphia Reflections

The musings of a physician who served the community for over six decades

Obituary

George R. Fisher, III, M.D.

SECOND FOREWORD (Whole-life Health Insurance)

Foreword: Children Playing With Matches: Investigating and Debating the Healthcare System

Re-funding Medicare, Pearl #2, Part 3

Transition Issues

FOUR PRESCRIPTIONS: Proposals For Reform of Health Care Financing II Last-Year-of Life