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

Barron's recently invited 1000-word summaries of radical change proposals.

Health insurance financing is a gigantic wealth transfer system. Politically, it is described as a transfer from rich to poor. But it really is a transfer from one age bracket (working people) to two non-working ones, children and retirees. Add thirty years of longevity by curing the diseases of one age group faster than another, and the balance between age and wealth distributions gets bent out of shape. Socially, it's dangerous. It gets even worse to base one-year casualty insurance on employment, tempting employers to dump a system which ends when employment does patch together by tax incentives. Average employment duration is around three years, so almost every condition soon becomes a pre-existing one, whenever employees lose their insurance. Insurance companies see what's coming, and cannot be blamed for getting out before it collapses.

More revenue would help, but existing sources are almost exhausted at 18% of GDP, while a rapid change in health delivery would flirt with disaster. But one thing remains: using the idle money in pay/as/you/go to fund a transition matching a change in spending incentives, or even scientific research eventually eliminating the disease. It would work with income returns of between 3-7%. Compound interest on money already collected would pay the deficit. Extension of the age limits on Health Savings Accounts would stop the borrowing, and trust funds would extend the compounding for 21 years past the average age of death upward, to the point it would far exceed the need for retirement funding through taxation or borrowing. Transfer of $4000 of each grandparent's HSA surplus (at death plus 21) to the HSA of one grandchild would add another 21 years to compounding downward, leaving several millions of dollars per person for retirement, curing a number of social turmoils in the process. That probably wouldn't happen completely, but a Medicare surplus rather than a deficit would allow any transition to be much speedier. The present 2.9% employment tax presently collected from working people would equal or exceed what is needed if compounded. Since the new fiscal limits would be enforced by the laws of mathematics, there would be far less temptation to spend it on battleships. Further extensions of longevity would increase revenue faster than inflation could undermine it. Essentially, it would be asked to match 104 years of compounding--with what took 42 years to accumulate. There's plenty of slack if you try those simple numbers on a free compound interest calculator, found on everybody's Internet. A second chance to do what we should have done in the first place.

True, the necessary change in incentives would come from unifying three systems into one lifetime one, incentivized by noticing the remarkable savings already created by millions of Mid-Western subscribers to HSA. A few sentences of amendments to existing law should be all that Congress needs to struggle with since these are existing programs. Whereas the R's need to see a single-payer system has become a single-saver system, the D's can save face by asserting they are the same thing.

George Ross Fisher MD 3 Haddon Avenue South Haddonfield, NJ, 08033 Cell 215-280-6625 office 856-427-6135 Email:

Originally published: Thursday, June 22, 2017; most-recently modified: Wednesday, May 15, 2019