Philadelphia Reflections

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


Health Savings Accounts: Steps To Lifetime Health Insurance
From 1981 to the Present.

Consolidated Health Reform Volume
To unjumble topics

Front Stuff: Health Savings Accounts: Steps To Lifetime Health Insurance

To Modify Obamacare, First Revise Medicare.

Front Stuff

...Also by the same author:

The Hospital That Ate Chicago, Saunders Press, 1980

Health Savings Accounts: Planning for Prosperity, Ross & Perry, Inc. 2015

Surmounting Health Costs to Retire: Health (and Retirement) Savings Account. 2016

Pearls on a String: Further Extending Health (and Retirement) Savings Accounts, 2016

Health Savings Accounts: Steps To Lifetime Health Insurance (This Volume),2016


Ross & Perry Book Publishers

3 South Haddon Avenue

Haddonfield, New Jersey 08033



Health Savings Accounts: Steps To Lifetime Health Insurance, 2016 Copyright:

ISBN #: (978-1-931839-69-3)




For advice and support about the thrust of this much-revised book, I owe new debts to the many people who read the first versions and commented. The first book was written as ideas developed in my mind, and rather in a hurry. The second revision was written so later thoughts might be introduced earlier in the argument. This one was written and rewritten to rise above the twin possibilities that either, the Affordable Care Act would be completely repealed, or it would essentially survive forever. I still don't know its future, whether it is too big to fail, or too big to survive. Either way, I think it failed to reform some things which should be reformed. The best way to defend that position is to propose an alternative which is much simpler, but more radical.

In particular, I am eternally grateful to John McClaughry for his help in the basic formulation of Health Savings Accounts, to my son George for his extraordinary computer skills and his Wall Street insights, to my book designer Elaine Lanmon, to my entire family for its support even when they were initially dubious, and to my secretary Torie Affrunti, who relieved me in the endless drudgeries of producing a book. ----------------------------------------------------------------------

Front and Back Flaps


Foldback, Front Cover

This book further expands the hidden advantages of Health Savings Accounts (HSA), which the author had a hand in creating in 1981, along with John McClaughry of Vermont when John was Senior Policy Advisor in the Reagan White House. Temporarily skipping a confrontation with the Affordable Care Act (ACA) for lack of certainty about where it stands, we expand the horizon to lifetime health insurance and discover that Medicare poses the most important obstacle. HSAs had more advantages than we had realized, but Medicare poses more issues.

By turning HSAs into healthcare-plus-retirement funds, they are unchanged except for adding retirement as a new incentive to save. By simplifying reimbursement, they expose the ineffectiveness of third-party policing, and instead, gather money to be multiplied by investment. They offer a potential vehicle for subsidies to the poor, a Christmas savings fund for the frugal, and interstate mobility for the rich. For retirement, Social Security is an overlap, while Medicare is a direct competitor, beginning simultaneously with retirement and dominating the same funds.

Finally, the idea dawns, the simplicity of HSAs provides excellent avenues for a gradual transition to new programs, plus an easy escape hatch if they fail. Beads on a string, as it were, with a common healthcare-and-retirement fund, as a unified incentive for savings in both programs. It might take fifty years to implement every step proposed. But then, it took fifty years to get into this situation, except now we must start with the biggest expense first -- Medicare.


Foldback, Back Cover

George Ross Fisher III M.D.

George Ross Fisher, MD, the author of this book, graduated from the Lawrenceville School in 1942, from Yale University in 1945, and from Columbia University, College of Physicians and Surgeons in 1948. After postgraduate training at Pennsylvania Hospital, Thomas Jefferson University, and the National Institutes of Health, he spent 60 years practicing medicine in Philadelphia and consulting in New Jersey and Delaware. During that time, he spent 25 years as a delegate to the American Medical Association, and as a trustee of a number of medical organizations.

Following retirement, he formed a publishing company, Ross and Perry, Inc, which has published several hundred books, mostly reprints. He is personally the author of eleven books about Philadelphia history, from William Penn to Grace Kelly. He is the author of the following three books about medical economics:

The Hospital That Ate Chicago; Health Savings Accounts: Planning for Prosperity; Surmounting Health Costs to Retire: Health (and Retirement) Savings Accounts and Beads on a String: Further Extending Health (and Retirement) Savings Accounts


Book cover back page, possibly in conjunction with above box and introduction, possibly omitted:

Health savings account

From Wikipedia, the free encyclopedia

This article is about medical savings accounts in the United States and their connection to Medicare. For international uses, see medical savings account. Health care in the United States

It's also about the Centrality of Medicare in any major healthcare reform, for whatever age.


Back Cover


Foldback, Front Cover

This book outlines the hidden advantages of Health Savings Accounts, which the author had a hand in creating in 1981, along with John McClaughry of Vermont when John was Senior Policy Advisor in the Reagan White House. HSAs had more advantages than we realized. By turning them into retirement funds at the end, not a word was changed but they created a new incentive to save, by adding a new reason to save. By simplifying reimbursement, they exposed the ineffectiveness of third-party policing and saved money to be multiplied by investment. They were a vehicle for subsidies to the poor, a Christmas savings fund for the frugal, and interstate mobility for the rich.

Finally, the idea dawned that such simplicity provided an avenue for a gradual transition to new programs, as well as an escape hatch if they failed. Beads on a string, as it were, with a common retirement fund at the end, as a universal incentive for savings in each program added. It might take fifty years to implement every step proposed. But then, it took fifty years to get into this situation.


The waste in the medical system is mainly a result of poor coordination of its finance design with its central -- medical -- functions. This, in turn, is partly a result of adopting specialized independent functions and greatly exaggerated by imposing the third-party (insurance) system between them. And partly it grows out of a mistaken business-school doctrine that all businesses are the same, regardless of their product. The consequence has been the interposition of two business-school organizations between the patient and his doctor. An unexpected but visible consequence has been a spectacular widening between costs and prices. It symbolizes the collision between the business plan to make a profit, and the Hippocratic Oath to place patient benefit ahead of personal gain. Like a spoiled child, the public demands unreasonable success with unreasonably low prices. The bizarre result has been an unsustainable set of internal cross-subsidies, held together by the illusion that moral justification is a permanent justification for economic absurdity.

This book has attempted to devise a goal and a way to reach it with stretched-out pre-payment in the hands of the patient. But the longer a change is drawn out, the more chance of misjudgment and what you seek most to avoid -- the pain of sudden collapse. The implicit cost has grown so large it could require a century to absorb it. And so the central question emerges as to how much shorter for safety the transition really needs to be. If we crash along the way, it is proof we waited too long. So what we might attempt needs to be better understood. We have developed a system of intimidating our leaders, to the point they are afraid to do the right thing. So the public demands even more vigorous creative destruction. This is your last chance, is what they seem willing to threaten.

By way of answer, it is impossible to answer in advance how long the transition should be before we take the final leap. It is only possible to estimate, by experience, how much steady progress toward the goal is possible. It is only possible to know what rate of progress toward the goal, for what sustainable spurts of time, is enough to satisfy the public, that their leaders even approximately know where they are going.


Dedication Page


Dedication Page

To Senator Bill Roth of Delaware, who demonstrated the road between private and public sectors, need not be a one-way street.




Without having such intention in the slightest, I find myself writing a four or five volume essay on Health Savings Accounts. The HSA concept originated in 1981, with a letter to me from John McClaughry of Vermont, who was then Senior Policy Advisor in the Reagan White House. He had read my satirical book, The Hospital That Ate Chicago, and also was aware that Senator Bill Roth was working on a tax-exempt retirement fund, now called an Individual Retirement Account (IRA). John asked me if I thought two linked concepts might be of any value in paying for medical care.

Since it was exactly the idea I had been looking for, I began pressuring the American Medical Association, where I was a member of the House of Delegates. Executive Vice President Jim Sammons wrote me he had read my letter three times and still didn't understand "it". But one thing led to another, and the AMA endorsed the Medical (later, Health) Savings Account, firmly intertwined with catastrophic (high deductible) health insurance. The dual concept attracted the notice of people in Indiana and Texas, prompted a book by John Goodman, and was enacted into federal law when another Texan, Bill Archer, became Chairman of the Health Subcommittee of the U.S. House Ways and Means Committee. John McClaughry went on to run for Governor of Vermont, I went back to practicing Endocrinology in Philadelphia, while Health Savings Accounts with high-deductible insurance backup, quietly went on to enlist subscribers in the millions.

And Hillary Clinton emerged with her secret health plan, which I have been given to understand was mostly a national HMO, and later Barack Obama pushed his own version past an obedient Congress. Many young physicians endorsed the motives of the Affordable Care Act, but most established practitioners hate the product. Nobody yet has satisfied me where it was planning to go. Meanwhile, although the dual Health Savings Accounts and catastrophic insurance saved 30% according to the American Academy of Actuaries, it was rather quiet about it; and still grew to thirty million subscribers. Originally most popular in Indiana and Texas, its present leading popularity is in New York and California. How bi-partisan can you get?

So, after discovering I was too old to be included in its coverage, I decided to write a book about it. The book's theme, as you might guess, was the age limits ought to be widened. Soon, a second book was needed to expand its horizons to retirement funding, and a third one to show how easy it was to link it to almost any other age group. The ACA bill got stalled by the death of Senator Edward Kennedy, Nancy Pelosi rammed the Senate version through without any mitigating features the House of Representatives might want to add, the reconciliation was never reconciled, and President Obama was stuck with it. So its flaws had to be examined. But then followed two bewildering Supreme Court decisions, the disastrous computer failures of the enrollment process, and the even worse failure of the Electronic Medical Record. Dr. Robert Wachter wrote a book called The Electronic Doctor , which describes how Mr. Blumenthal diverted thirty billion of the two hundred fifty billion dollars of Stimulus Package to mandatory "meaningful use" of the Electronic Record by doctors, now widely hated by them. For example, numerous fairly young physicians, including my daughter, her husband, and another comrade in a Philadelphia club, dropped out of flourishing practice before they reached retirement age, complaining they just couldn't stand it. The Obama administration tried to patch it up, but now it seems on the verge of collapse.

So, although you can see why I might want to write a book, it was unexpected that I could never complete one as planned. Some unexpected event would come along, invalidating some premise, and I was blocked from one attempted revision after another. The experience taught me just how wonderful the many hidden features of Health Savings Accounts really were, but it sure made it hard to write a book. And, although I twice started a second book the day after I sent the first one to the printer, approximately the same thing happened again. I discovered the HSA's roll-over feature (that had frustrated my hope to join my own plan) effectively solved a much bigger retirement problem. But I had to re-direct because Mrs. Clinton announced she was going to run for President using healthcare as a central issue, once again in secrecy.

As the reader will soon see, lengthening the insurance term limits causes a considerable cost reduction, I had to publish that. But immediately a Supreme Court decision upset my plan. Lifetime health insurance, I had discovered, is much cheaper than insurance in bits and pieces. But now, by golly, I find the possibility is very real for the Affordable Care Act to be thrown out by a new President. So, back to the drawing board. I decided to publish around Obamacare, rather than confront it. Reconciling the unreconciled ACA with Health Savings Accounts would have to become a project, not a book. Meanwhile, the public can evaluate what becomes possible for healthcare financing, if people just leave politics at the door and try to fix the problem.

George Ross Fisher, MD

Philadelphia. December 9, 2016

Martin Feldstein Does It Again: Eliminate Tacit Tax Exemption for 70% of Workers Denied To the Rest

Headlines in the Wall Street Journal announced collapse of Congressional healthcare reform. In the same edition, a small short article buried in its depths described a possibly major step toward its reform. Martin Feldstein calmly observed, a tax exemption for healthcare insurance of 2.9% really amounts to a wage increase whose elimination might go a long way toward paying for the eighty-year mess Henry J. Kaiser had created. (In fact, it was effectively taxable income of 4%.)

It was all so simple: healthcare extended longevity, created thirty years of new retirement cost. In turn, exempting the premium for healthcare became a tax-exempt increase in wages -- for the 70% of employees getting insurance as a gift. Maybe not at first, but wages adjust to expect it during eighty years. Social Security could not cope with an extra thirty years, so SSA was going broke, while health insurance was actually the main cause of increased longevity.

But notice how unused Health Savings Accounts automatically turn into retirement accounts (IRAs) for Medicare recipients. So if you are lucky and prudent with healthcare, or if you overfund an HSA, unused healthcare money makes a reappearance in retirement funds where it belongs. If you have used up the money, you have probably been sick, and maybe won't need so much for a shortened retirement. Increasingly, expensive healthcare hits the elderly hardest, so there are many years during which compound interest overcomes inflation. At the rate things are going, retirement may become four times as expensive as Medicare, so let's consider that future.

Medicare doesn't save its withholdings, it uses "pay as you go" and spends the money on other things, like battleships. Therefore, to make any use of this windfall, it is necessary to save it, invest it, and use it for retirement. Just doing that much might redirect the other 30% of the withheld tax to its intended purpose. So the economic effect would be considerable, just by stirring around in that corner of it.


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Front Stuff
New blog 2016-11-23 00:16:24 description


Front and Back Flaps

Back Cover

Dedication Page


Martin Feldstein Does It Again: Eliminate Tacit Tax Exemption for 70% of Workers Denied To the Rest
The Henry Kaiser tax exemption for health would pay toward Social Security, indirectly paying for retirement, which health insurance prolonged.