Philadelphia Reflections

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

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Other Voices: Rethink Lifetime Health Finance


Medical finance is an inter-generational funds transfer. Sickness costs migrate later, workers age 18-64, get less sick. Retirement seemingly replaces sickness, but -- so far -- merely displaces it later, without added revenue. One-eighth of lifetime medical cost now transfers between generations by payroll taxes, another quarter must be borrowed. Nine million disabled-under-65 are paid revenue originally intended for the elderly. The rest is roughly balanced, or was before the Affordable Care Act raised alarm about government's indifference.

Since 1965, Medicare collects 2.9% payroll deductions, immediately spent for their parents as "pay-as-you-go ", gathering no income. Lifelong debt concentrates into Medicare debt, as healthcare migrates toward the elderly. Politicians, terrified to touch "the third rail" of Medicare, respond at the wrong end of life. Thirty years are added to longevity, while healthcare debt evolves into retirement costs. And then, the money runs out. Statistics are rough, but retirement deficits equal Medicare's laundered debts getting worse as healthcare improves. Talk about conflicted incentives.

A solution: view one eighth of revenue as accumulated over 42 years, whereas a quarter of costs could be more than recovered by compounding the same idle money over 104 years. Try it free on the Internet. This achievable result comes from 1) extending age limits of Health Savings accounts down to birth and up to a trust Fund's perpetuity, defined in common law as a lifetime plus 21 years, while using an unfunded HSA to unify unspent compounded income for his own retirement, not for demographic groups of strangers. 2) Investing the payroll tax at no less than total market index funds, assuming a 3-7% lifetime return. 3) applying grandpa's surplus $4000 to grandchild's underfunded $4000 shortfall. (Please read that twice).

The compounding period is extended upward by post-mortem Trust Funds escrowed for Medicare-related costs only, extinguished when transition debt ends. It is extended downward 21 years by grandparents transferring approximately $4000 to one grandchild or equivalent, as HSA to HSA. Trust funds finance the transition deficits. This has the advantage of terminating Health Savings Accounts around age 18 when medical costs are lowest. Add the additional possibility of transferring the mother's obstetrical costs to the child, thus reducing premium costs for the 18-45 year age group as well. Much of this magic lies in the superiority of compounded rates over inflation rates. Long-term solvency appears likely, and borrowing is ended.

George Ross Fisher MD
3 Haddon Avenue South
Haddonfield, NJ, 08033

Cell 215-280-6625
office 856-427-6135

Originally published: Sunday, June 11, 2017; most-recently modified: Wednesday, May 29, 2019