The musings of a Philadelphia Physician who has served the community for six decades

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Obamacare: Spare Parts for a Book
Maybe these should have been included, but it was decided to leave them out.

An originator of Health Savings Accounts describes their advantages over the Affordable Care Act. Six improvements are suggested, plus a lifetime HSA version, which substitutes whole-life approaches for pay-as-you-go. This new version would require legislation, but reduces health costs considerably.

.American and European Unions, Compared
The (1648) Treaty of Westphalia created the modern nation-state by respecting sovereignty within agreed boundaries. Soon, everyone had a sovereign King. Today, Europeans live in republics, but wish to unite for economic benefits. Like others however, they found that hard to do, and so began with monetary union, alone. Unlucky timing: world monetary crisis suddenly struck.

Health Savings Accounts, Regular, and Lifetime
We explain the distinction between Health Savings Accounts, Flexible Spending Accounts, and Lifetime Health Savings Accounts. Sometimes abbreviated as HSA, FSA, and L-HSA. Congress should make it easier to switch between them. All three are superior to "pay as you go", health insurance now in common use, only slightly modified by Obamacare. It's like term life insurance compared to whole-life. (

Confederation Congress, 1781-1789
New topic 2012-08-06 12:22:08 description

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Philadelphia Reflections is a history of the area around Philadelphia, PA ... William Penn's Quaker Colonies
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Welcome to Welfare

{top quote}
Percent of Their Hospital Cost Reimbursed: Medicaid 70%, Medicare 106%, Private Insurance 150%, Uninsured 400% (?) {bottom quote}
Hospital Cost Shifting

There's lots more; in politics there always is. The Pew Foundation, which now includes public opinion polling in its tasks, has pointed out 80% of the public does not share the polarization now so blatantly agitating the political class. Hence, some commentators have questioned the prevailing opinion of gerrymandering as the main source of it. These observers point to a world-wide decline in party affiliation; "independence" of party affiliation is claimed by nearly half of American voters when asked. Perhaps we have things backward, and gerrymandering is merely one effort, along with growing dependence on financial contributions by wealthy donors, to rescue party power. Television (and especially the Internet) prompts the voter to hang back before making decisions, hoping to decide something without pressure from party leaders. The growing tendency to vote straight party ballots is not taken by a few commentators as evidence of true voter wishes, but rather as evidence of the futility of resisting a two-party system. Some sophisticated observers feel straight ballots result from plurality ("first past the post") counting of votes, but this (unfortunate) trend seems more likely to be stimulated by (too) early voting by mail.

Since a two-party system favors moderate candidates over extremist ones, it may not be a bad system, but rather a good system adjusting to circumstances. A hidden cause of the present crisis in health care financing comes from the Medicaid programs, run by the states, but mostly (and inadequately) financed by federal taxes. A two-party system disciplines the nominating process by raising doubts about the ability of extremists to win the general election. Consequently, the final two candidates are often so similar the chance of a loser bolting the process, becomes small. In a proportional voting process, splinter parties cannot be silenced in the primaries, because political deals take place after the election, when the public has become irrelevant to the voting outcome. Threats of public disaffection are therefore disregarded. This hidden feature went unrecognized at the Constitutional Convention, as indeed was the whole party apparatus. But it has to be counted as one of our greatest strengths, placing a much higher value on unity than dogma. If you follow this reasoning, you would have to conclude the present level of divisiveness will not persist. Because each generation has to learn its own lessons, it may recur, but it will not persist.

Nursing homes were not originally included in the 1965 legislation, but most states receive strong pressure to pay for elderly indigents in nursing homes, stranded by running out of savings. Perhaps it would be a good thing to include nursing home coverage in a reform bill, but nursing homes bear too much resemblance to work-houses to generate much demand to be in one. In variable degree the circumvention has grown up of paying for nursing homes with money intended for hospitals, but necessarily underpaying the hospitals. The hospitals make up the deficit by overcharging for outpatient services, as everybody will recognize who has been charged for the same service, both as an inpatient and an outpatient. By prevailing estimates the Medicaid programs only pay hospitals about 70% of their actual costs. Hospitals escape insolvency to minor degree by raising reimbursement demands on Medicare (to about 106% of costs) and more appreciably through private insurance (to something approaching 150% of costs). Teaching hospitals have some opportunity to raid funds intended for indirect research overhead, for resident stipends, and for disproportionate shares of indigent, "self-pay" patients. Various accounting tricks account for the rest. For example, the transfer of schools of nursing from hospitals to universities has emboldened universities to seek the equivalent of traditional hospital reimbursement schemes, merely and mostly triggering new arenas for dispute, because the hospitals had hoped to profit from the transfer. Since Medicare somewhat overpays hospitals for its own patients, in recognition of the underpayment by states for indigents, current jargon blames the "government programs" for underfunding hospitals. A better summary of the situation is: Medicaid under-reimbursement is the largest source of hospital financing problems, but other problems are less resistant to change. That's pretty significant, in view of the Obamacare plan to put millions of uninsured into Medicaid, some of whom never asked to be insured at all, and most of whom have no previous experience with "welfare", so they need to start reading some books by Charles Dickens.

Governor Christie of New Jersey

The outcome of all this is nursing homes are in effect supported by Blue Cross and other private insurers of younger people, raising premiums to employer groups and individuals by something estimated like $900-1500 a year per subscriber. That's because Medicare is busy subsidizing Medicaid's hospital patients, the main source of hospital deficits. Because this juggling lacks straight-forwardness, results are inefficient; only about 42% of hospitals actually break even. As might be expected, knowledgeable employer Human Resources departments and hospital administrations know about and object to this system. They are cooperating with Obamacare more than might be otherwise expected, probably in the hope this cost-shifting can be adjusted more in their favor, when it is less in the public eye. Mandating all employers to participate would of course increase the base of people sharing this exaction, but would ultimately link corporation treasuries to government deficits. The dream of the service unions would be to use this excuse to mandate unionization of hospital employees. Governor Christie of New Jersey quickly saw a way to split the Union movement into public and private compartments through this. "Every time they get a raise, you get a tax increase," he told the unions of the private sector.

The participation of physicians in the Obamacare effort is riven by their own politics. For surgeons, the premiums for Malpractice insurance can sometimes run to $200,000 a year. An appalling proportion of obstetricians have been sued by their patients, to the point where women have no doctor to deliver their babies in certain parts of the country. For doctors in this high-risk category, relief from the plaintiff lawyers is the most pressing of all problems. On the other hand, many physician specialties have almost no malpractice risk, and are much more exercised about the SGR reimbursement freeze, which has been in effect since the administration of Lyndon Johnson, and has been severely undermined by inflation ever since then. With physician ranks divided by two different priorities, the way is open to promise both and reward neither.

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The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. {bottom quote}
Tenth Amendment

Urban-rural differences remain important in health care. Senators Baucus, Grassley and Snowe come from sparsely settled states. Former Senator Daschle is from South Dakota; there are perhaps twenty states potentially in this category. With a sparse population, it is difficult to develop sufficient insurance business for the law of large numbers to establish actuarial safety; these states need to combine into regional areas to reduce the competitive size of their loss reserves. On the other hand, populous states like New York, California, etc. are often adamantly opposed to regional groupings, for opposite reasons. These population disparities create differing attitudes about modifying the 1945 McCarran Ferguson Act, which limits federal insurance regulation and enables state regulation, thereby making it difficult for small states to agree to interstate health insurance sales and portability. The fact that large employers have already achieved this freedom through ERISA also makes them unwilling to see the problem, or waste political capital achieving it for others. And thereby diminishes the power of low-population states to resist national healthcare insurance, which is their natural position.

And finally, Obamacare raises some questions about judicial remedies. Certain Op-Ed commentators have raised a question of the constitutionality of federal mandates or pre-emptions of state laws, depending on how they are phrased. The U.S. Constitution was only narrowly ratified in 1789, in large part because the states were fearful of federal government getting bigger and more powerful than necessary. In response to this strong feeling, the Tenth Amendment reinforces in no ambiguous words, that anything not specifically assigned to the national government is to be in the province of the state or local governments. If ever there was original intent, it was that one.


Never Enough: America's Limitless Welfare State amazon

The Republican Court

{Ann Willing Bingham}
Elizabeth Schuyler Hamilton

A popular legend of our founding fathers depicts a sudden 18th Century flowering of talent, even genius, establishing a new nation. More recently, historians have searched for personal material about the individual founders, humanizing them with warts, so to speak. A question nevertheless arises how a nation with the present population of Detroit could produce such outstanding leadership in what was then a scattered colonial frontier region. Men, that is. In our legends, the founders were all men.

Long before the feminist movement gathered momentum, historians like Rufus Wilmot Griswold and Abigail Adams Smith had chronicled the impact of the high society of George Washington's term of office as president, which was in part a conscious effort by Washington to show the new republic to the world, cutting just as fine a figure as the nations of old Europe. Martha Washington, soon called Lady Washington, was an uncomfortable central figure in the new social scene, and her dismay at being the President's wife, her anxiousness to retire from prominence as soon as his term was over, suggest the idea for a Republican Court probably did not start with her. Elizabeth Schuyler Hamilton, Alexander Hamilton's wife, might seem more likely but the real originator is not known. For present purposes, a plausible theory is that soldier George Washington and bachelor James Madison had the concept but couldn't pull it off; and then some determined ladies of the court soon showed them all, what was what.

{Ann Willing Bingham}
George Washington

George Washington began the process by instituting formal receptions for visiting males, and Martha cooperated by holding Friday evening receptions, at which she was introduced to the wives of important political figures. The regular weekly events of the Presidency soon consisted of a reception by George Washington for new foreign ambassadors and other important foreign visitors, with a formal state dinner with a politically balanced invitation list on Thursday evening, and Lady Washington's reception on Friday with primarily a social purpose, leaning somewhat in the direction of letting the wives of important politicians shine in the social limelight. While the receptions were usually conducted with scripted formality, some notable exceptions were thought worthy of comment. Over twenty years earlier, Washington at Valley Forge had danced for three hours with Cathy Greene, the wife of Nathaniel Greene. When the widow Greene passed through one of the much later presidential levees, Washington suddenly bent over and kissed her, as "an impromptu act of spontaneity." The effect of the levees was to unite the elites of wealth and power, coming to Philadelphia from all thirteen colonies, now risen to statehood. Plantation owners from the South, ship owners and merchants from the North met the daughters of socially prominent families, and quite frequently married them. A courteous and civilized environment unified the new nation at its pinnacle by having local leaders mixing with other local leaders, becoming national leaders in the process. A politician in this new nation could rise to being someone of consequence socially. To be skillful in the social graces, particularly if there was wealth associated, was to advance in politics; to be boorish or loutish was to drop down somewhat in the scale of politics influence, slowly but surely losing power to those who did have such graces. Put a backwoods politician into new formal clothes, force him to behave in an unaccustomed way in the midst of those more skillful at it, enlist the fearsome pressure of his ambitious wife to shine in the spotlight; and the fear of looking foolish soon enough pushes him toward conformity.

{Ann Willing Bingham}
Anne Willing Bingham

After the first year, then the developing Republican Court. Martha Washington of course had her own mansion at Mount Vernon, but Anne Bingham, had one within easy walking distance of Independence Hall. The Wife of the richest man in America, Anne Willing Bingham was the daughter of Thomas Willing the head of the most prominent merchant family in Philadelphia. Anne's husband William Bingham had achieved richest-man status at the age of 28 (by running a large privateer fleet in the Caribbean)and was not only able to build a splendid mansion patterned after that of a London aristocrat at 3rd an Spruce Streets,but had taken his young and beautiful wife on an extensive tour of the royal courts of Europe which lasted several years. It is said that Robert Morris later contributed to his own bankruptcy by attempting to match the Bingham mansion with a Morris mansion at 7th and Market, which had to be torn down for lack of money before it was completed. Since most of the wealthy hostesses attempting to achieve prominence in the newly forming Court had never been to Europe, there was no choice but to accept the judgement of Mrs. Bingham in such matters, especially since she had the biggest showplace in town. While the truth of a story about her is uncertain, it accurately illustrates the flavor of the social atmosphere that it could be said that the Dauphin, heir to the throne of France, once went to her father to request her sister's hand in marriage. The young prince was then living in exile at 4th and Locust, in temporarily impoverished circumstances. Old Tom Willing, as the story goes, said No. "If you do not become the King of France, you will be no match for her. And if you do become the King, she will be no match for you."

It does seem to be true almost every prominent lady in the Republican Court was described by contemporaries as astonishingly beautiful, but at least in the case of Anne Willing Bingham, her surviving portraits support this description. John Adams, who had his brilliant wife Abigail for comparison, was overwhelmed by Mrs. Bingham's ability to hold her own on political subjects at the dinner table. And George Washington, who loved to dance with the prettiest lady available, greatly favored Anne as a partner. In time, she asserted herself to the extent of pestering Washington into having his portrait painted by Gilbert Stuart when the painter was in town. Washington ordinarily disliked having his pictures painted, avoiding it when he could. There are nevertheless a great many pictures of Washington on display, crossing the Delaware and whatnot, all showing the same grim face. After his death, it became necessary for most of the many new pictures of him to attach the same Gilbert Stuart head to a variety of imaginary depictions. Benjamin Franklin, by contrast,seemed to enjoy the experience of being a sitter so there are many more portraits of him actually drawn fro life. Add Washington's social sponsorship an almost unlimited personal budget for parties, and Anne Bingham quickly established herself as the reigning queen of the court without even provoking Martha Washington's hostility. This was a busy ladies' world; one new arrival in Philadelphia described herself as exhausted by having to return the courtesy visits of ninety different ladies during her early weeks in town. The expense of such competition emerges from brief reflection on the variety of clothes needed to keep up with changing styles, and the elegance of carriages, footmen, etc.

{Ann Willing Bingham}
The Chew Sisters

Anne Willing Bingham was soon joined at the center of things by two Chew sisters,naturally referred to as astonishingly beautiful, who not only had their own mansions, but also Cliveden the summer place in Germantown as available venues for parties. It was commonly stated to be "social suicide, not to be home when the Chew sisters came to call." Delicious gossip was of course a strong undercurrent in such a social whirl, and Harriet Chew Carroll made a significant contribution. This daughter of Benjamin Chew the former Chief Justice (and Son of William Penn's personal lawyer)had married the son of very rich Charles Carroll of Carrollton, Maryland, but had to drop out of society because of notoriety associated with her abusively alcoholic husband. Similarly, Catherine Alexander Duer, who had married the son of the New Jersey patriot Lord Stirling, lost her social standing when her husband got deeply into debt in ventures with Robert Morris to the tune of today's equivalent of $40 million. As a Treasury official, there was a question of Duer's using public money to speculate privately,although he died in debtors prison before matters were completely clarified. His wife, who was known for having fifteen different wines on the dinner table, ended up her days running a boarding home to support herself. No doubt other transgressions were suppressed or covered up, while the political process was sufficiently advanced even in the early days of the Republic, to introduce some deliberate falsehood into the gossip mill. No doubt, one of the strongest drinks at the receptions was the bubbly wine of knowing all the inside scoop. And meanwhile, the potential disgrace of falling from favor was immensely powerful in enforcing conformity among those who might otherwise think themselves immune to it.

Some People were left out for various reasons, even if they could keep up financially or politically. It's always a little hard to identify why some people are social duds. Abigail Adams Smith seems to have been one of these, a constant source of adverse commentary about the extravagance, hypocrisy, etc., etc. English literature at this time has Jane Austen and William Makepeace Thackery, Pope Swift, and Dr. Johnson to satirize and constrain the social whirl, but American seems to have produced little more than correspondence and hushed remarks. The feeling of resentment was constantly growing in Republican circles, however, feeding a growing undercurrent of hostility undermining something so elitist and therefore somehow UnAmerican. After ten years in Philadelphia elegance, the District of Columbia was discovered to be scarcely more than a dismal swamp when the capital moved there, a place quite unsuited to high society. Dolley Madison revived things somewhat while acting as hostess for the widower Thomas Jefferson, and when her husband became the next President, opened her receptions to the general public. One can easily imagine the intense hostility of Andrew Jackson to any of this, however. Washington DC has since evolved a pallid political social whirl, because America still has politically ambitious rich folks, and plenty of money for indirect lobbying. But it hasn't ever been the same as the glory days in Philadelphia, and probably never will be. Present members of the financial/political elite who now work in Washington are in a great hurry to leave town every weekend, abandoning its empty office building to the tourists and civil servants.

The Republican Court

The Republican Court served an important role in helping America unify thirteen colonies into a single nation. Because Philadelphia was for a time the center of the country, economically, socially and politically, all people of prominence in here, wanted to know each other. Variations of wealth and breeding stratified the women somewhat differently from the Variations of wealth and power of their husbands, ad constant mixing of the two strata unified the leadership of the new nation in ways that would have developed more slowly without it. The forced conversations of the receptions, stratified independently, but helped all the newcomers to the scene to adapt to the realities more comfortably. Each group, private and public watched a constant parade of aggressive climbers sort themselves out and searched for how they had made out; wealth got you to the top in one group, private and public, watched a constant parade of aggressive climbers sort themselves out and searched for how they had made out; wealth got you to the top in one group, power got you there in the other. But in both groups the cruelties of social striving made the iron rule clear that such things as wit, gracefulness, physical attractiveness, education and breeding were qualities that floated you to the top of the soup of any flavor. When you are forming a new nation, perceptions of that sort are important to acknowledge. The American aristocracy could be circumvented among the many ways to the top, could be sneered at by those who lacked its unattainable features, and could be sniggered at by real aristocrats of real aristocracies in Old Europe. But it served well enough as a role model for a constant stream of new immigrants, and set a pattern for new communities of the interior, also seeking a sense of cultural direction. Like the breeding of horses and dogs that is such a constant upper class avocation, there is a genetic message, too. Rich men marry beautiful women, so their children or grandchildren tend to be handsome. Handsome or not, gracefulness in social circles is learned at home. Darwin teaches you one thing, Adam Smith's hidden hand teaches another; both are worth attending to. Given eight or ten generations, this sort of evolutionary pressure forms a community, then a nation. It has certainly left major imprint on Philadelphia.

Abigail Adams Smith

On the rest of the nation as well, but in different ways. Along the east Coast, first families tend to persist, and went to school so to speak in Philadelphia during Washington's presidency. Mary Ann Goodrich was a witty and Wealthy wife of a Connecticut political leader. Elizabeth Schuyler Hamilton was the famously vivacious wife of Alexander Hamilton of New York. Alice De Lancey Izard was the toast of Charleston, South Carolina. Patsy Jefferson Married Thomas Randolph of Virginia. Mary White Morris of Philadelphia had a bumpy trip as the wife of Robert Morris. In East Coast high society, all the ladies have middle names.

Over three centuries, three main streams of immigrants plodded their way across the continent to the West, and then merged. There were westward pioneers from north of Philadelphia with a certain kind of accent, from South of Philadelphia with another, and from Philadelphia with the normal way of talking. Each of them was following role models within its own cultural pattern, but the significance of middle names is now only a tip-off to insiders. There are patches of country, like Appalachia we are Texas, which brush off any allegiance to distant origins. But to the degree we are unified, the Philadelphia mixing bowl of the Social Scene during George Washington's presidency is big part of how we got that way.

Redesigning Old Age

A friend of mine, treated as my contemporary but probably only sixty years old, was recently speaking of a club picnic he unfortunately wouldn't be able to attend. His mother was now living with him, and since she was 84, obviously neither of them could go to a picnic on a sailing vessel. The club committee, listening to this regret, chuckled that of course we shouldn't expect him. My thoughts were somewhat different. Since I'm 86 myself, I was wondering if she was available for a date. And of course I am going to that picnic, why shouldn't I?

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Most of the old fatal diseases have been cured, and guess what --People are living longer. {bottom quote}

This little encounter is offered to illustrate how realities change faster than attitudes. But attitudes better start catching up, because some grim financial realities are just safely predictable as the demographics. Biblical prophets declared mankind was destined to live for 70 years, until threesome and ten. But American life expectancy at birth has been average American male can now expert to live beyond 80, women a little longer. But that will be eight decades from now, and must be an underestimate. If life spans continue to extend at present rates, average life expectancy at birth will reach 104 by the time today's newborn reaches 80.

Scientific colleagues feel that's only an unrealistic example of the extrapolation fallacy. To them, the human apparatus is programmed to wear out at age 100, so advancing life expectancy must taper off abruptly between now and then. There's a concept called apoptosis stating that cells will only divide a certain number of times before they quit. Human protoplasm thus seems programmed to reach the apoptosis point a around age 100. If the scientific article start describing big advances in delaying apoptosis then of course the rest of this article will need to be modified. In the meantime when friend or family member dies at the age of 90, it might be an appropriate stance to deplore a regrettable loss of ten years of life potential, before that apoptosis thing would have set in.

Pennsylvania Hopital

Six decades of practicing medicine do confirm these statistical whimsies. But experience does not exactly match present predictions of constantly rising costs of medical care. With no difficulty at all. I can recall several dozen diseases which commonly shortened life expectancy in the past, but which have now largely disappeared Tuberculosis comes first to mind: in my student days we saw several new cases every day, and experienced difficulty finding vacant beds to house them in the several tuberculosis hospitals of Philadelphia. Every single medical student in my graduating class of 1948 had a positive test for "TB" and it seemed almost every class contained one or two students who had to drop out for a year or two to have active TB treated. Typhoid fever offered similar experiences to the generation before me. My teachers would point out a forty-bed ward at Pennsylvania Hospital that in their day as interns had once been reserved for typhoid cases exclusively. I had been practicing for fifty years when it suddenly became simple to treat duodenal ulcers. Ten percent of the population used to have ulcers, which would bleed on perforate or penetrate or stenose and cause thousand of patients to eat disgusting soft tasteless diets taking handsfull of chalky pills. Rheumatic fever and the associated bacterial endocarditis no longer fill our hospitals but I can remember a time when there were always one or two cases lying around. Syphilis is gone poliomyelitis is gone small pox and lots of less common conditions. Pneumonia with a former mortality rate of 10% is now treated with an office visit or two. The death rate from heart attack and stroke is down 50% with a vast backlog of already semi-clogged arteries still waiting to mature: the mortality rate will come down to rest at a much lower level. Fifty percent of the drugs in use today were unknown seven years ago so all that education and re-education is redundant a cost eliminated. In my medical lifetime, I probably discarded two full medical educations. Surely all this progress ought to reduce the cost of medical care.

Cancer Cells

Looking ahead I can only see three or four major diseases that still lack a cure. Cancer is certainly number one an Alzheimer's Disease is probably number two. Add to that schizophrenia and manic-depressive disorder and when those four are cured, it becomes difficult to state what will cost Medicare very much or shorten life expectancy very much below the promised 100 years. So you can't scare me very much about the future medical costs of medical care. Insurance and administrative costs are something else of course. If the problem of foolish borrowing put Medicare out of business, it;s hard to see how that could be the fault of my profession, unless perhaps something or other undermines our traditional system of ethics.

Where the ethics thing comes in is in the obvious conclusion that we are spending a lot of money treating diseases we crusty old docs once wouldn't have thought were worth our time. We are fast approaching the time when substantially all the medical catastrophic costs are concentrated in the first year of life and the last year of life. Increased life expectancy is a matter of widening the interval between those two years. Medical care between those years consists of treating disease successfully preventing disease and managing complaints we once would have dismissed as 'that's nothing'. But even the cost of doing this kind of medical care should decline: patents should expire equipment should simplify treatment should become standardized or even routine. But we notice people won't leave us alone: our government has just spent $27 billion forcing office computers on doctors who don't see the need to be bothered with them. People persist in using our time to inject botulism toxin into wrinkles and to complain how lonely they are. That is to say the public is beginning to insist on substituting their own view of what they want for what doctors have traditionally thought was worth treating. This is an expensive way to enjoy freedom of choice and it is only a matter of time before bureaucrats figure out the least obtrusive way to curtail it. Only when forces come to an equilibrium will it be feasible to extrapolate future health costs.

What should appall us is the cost of paying for a progressively protracted retirement of so many unemployed people and the absolute impossibility of of paying for it by continuing on our present funding path. Maybe that's what all this obesity means. maybe people are trying to store up enough fat when they are forty, so they can go without eating from age sixty to ninety.

More Work for the U.S. Supreme Court: Revisit Maricopa

Chief Justice John Marshall

The Judicial Branch took much of its present form from Chief Justice John Marshall, several decades after the Constitutional Convention of 1787. Somehow, the fact of being last branch to set its boundaries gives the Judicial branch the last word in certain circumstances, including the possibility that its last word may need some reconsideration. Sometimes not, of course, since if the other two branches make a mistake, the Court can overturn them; but the other two branches can regain control by seeking to change the law. That's the sort of balanced power which the founding fathers envisioned. But if the Supreme Court itself makes a mistake, it remains pretty much a mistake in residence, until the Court itself re-examines the matter. It would be indelicate for anyone else to cite a list of examples of this observation, so they are usually taken up, one at a time. The example with the greatest application to Healthcare is the 1982 decision in State of Arizona v. Maricopa County Medical Society.

Maricopa County is where Phoenix is located, and its County Medical Society was one of the pioneers in what were then called Foundations for Medical Care. These were organizations in which local physicians took the lead in organizing and managing health insurance for the local community. There is no doubt the rules and policies of the Foundations were conceived and implemented by physicians, who felt empowered by the defects of health financing which they saw in daily practice. It is also true these physicians were impatient with both the government and the health insurance companies, who seemed to resist helping the sick poor by implying it violated a per se technicality intended for business corporations. And furthermore, on the topic of business corporations, they are not exactly an enumerated Constitutional power of the federal government. At the same time, "Foundation" physicians could easily see opportunities for reducing waste in the local hospitals which would only be exploited if physicians were in charge, because physicians could usually judge the cost/benefit more readily. Having recently returned from World War II, these doctors knew that medical care could be excellent even without such a thing as health insurance, and indeed even when hospitals were only a collection of tents. Perhaps a few of them were overly influenced by the TV serial, "MASH", whose central theme is that if doctors take the lead and do the right thing, much can be forgiven. That's a sort of Hollywood restatement of the latitude of ancient Courts of Equity, intended to cover a situation where obvious harm exists, but no law exactly addresses it.

The Maricopa Medical Society

Accordingly, the "better sort" of doctor in Arizona perceived that the respectable ones would readily consent to care for the poor at lower rates, whereas the shirkers in their midst would ruin things for everybody by refusing to do their fair share of pro bono work. Like labor unions, the doctors resented the free rider phenomenon.The idea of a two-class system of medical care was also abhorrent to them, however; if there wasn't enough money to spread around, a "good" doctor would just agree to lower his fees unilaterally. This moral quarrel often conflicts American business, which characteristically takes the view that it doesn't really matter what costs or taxes or burdens are imposed by government. What matters is that competitors mostly agree to abide by the same handicaps. When handicaps are roughly equal, the difference between success and failure is -- talent. To a considerable degree, talent rising to the top summarizes the aspirations of the anti-trust statutes, where it is both a simultaneous source of cost escalation and price suppression. Physicians are ultimately expected to find their highest duty is fiducial to the patients' best interest, particularly when the main conflict is only a financial one. In the anti-trust arena, particularly the per se violations, the difference between a business corporation and a medical society is sufficiently wide to justify considerable professional latitude. As it is not, in the case of insurers, and as it only partly remains, in the case of hospitals. The Maricopa Medical Society responded with perhaps excessive enthusiasm to the challenge of making local sense out of the price-fixing dilemma, but it was never given the opportunity to make its case.

At one time, local healthcare costs were held down by imposing competition on the hospitals, treating insurance administration in particular as clerks to pay the bills, rather than as big business's cup-bearer of fairness in a naughty world. Needless to say, the hospitals and health insurers had long chafed at the ability of physicians to change hospitals, and the patients to change insurers, when their Attorney General seemed to suspect a return to Robin Hood notions of a special right to defy the law. What disappeared was an ancient concept of professional latitude. In certain parts of the country, big business was already reconsidering its control of hospitals and insurers as their agents in both assuring low-cost medical care, and suppressing its cost. With the defeat of physicians by the Maricopa decision, plus the approaching withdrawal of big business, the way was opened for hospitals and insurance companies to go to war for monopoly control of their own finances. Thirty years later, hospitals and insurers are now universally merging, and applying monopoly controls to admit favored physicians as their employees. The Affordable Care Act is the mechanism by which government means to control the victors, thus making government itself into the hidden battlefield. It's a far cry from leaving medical decisions in the hands of physicians and their patients, to chose the treatments, and to agree on the price.

Sen. John Sherman

The Attorney General of Arizona, himself a colorful character, soon brought suit for anti-trust violation, since price-fixing had been declared a per se violation, or confession of the absence of competition. These were additions made to the Sherman Anti Trust Act by earlier Supreme Courts, who found that an Act first written on the back of an envelope was difficult to administer. Further strictures were imposed by the Clayton Anti-Trust Act, but these might be remedied by subsequent Congresses. The important consequence was that the District Court of Arizona found it quite unnecessary to hold a trial or hear the evidence. The Court found against the doctors entirely on the basis of a motion for summary judgment. The matter passed through the Court of Appeals to the Supreme Court, which on the theory that price fixing is price fixing, by a vote of 4 to 3, upheld the Arizona suit. All the way from a writ of summary judgment in a district court, to the United States Supreme Court, without formal examination of the facts.

Perhaps, strictly on lawyerisms, that was safely correct. But in terms of the effect on medical care, it won the war for control of hospitals and the insurance companies. Somehow it was interpreted to mean that a hospital or an insurance company might do a great number of things which were forbidden to organizations run by physicians. The consequence is that Foundations run by physicians were under constant threat of what might happen to them if they did what HMOs were seen to be doing every day. The whole Clinton health fracas revolved around this particular case and its implications. From the physician point of view, if you had medical training, you were disqualified from running an HMO, because a change of leadership shifted the antitrust issue to a different level for two identical organizations. And that was true even if the physician had been trained for the role, while the administrator had not. What was particularly galling was to be tarred with the same brush of antitrust whereas others would describe their identical behavior as self-disciplined in the public interest. Self-imposed financial restraint was taunted and abused by aspirants for the same job with the same temptations, with multi-million dollar incomes but without adherence to the same code of ethics. The joke is that after all the Clinton Healthcare Plan's uproar, the public decided they disliked HMO's intensely, mainly because they couldn't choose their own doctor, and the doctor was being hampered in doing what seemed professionally best for the patient. None of these legal issues had arisen for physician-run HMOs. While of course that might happen, such disputes would be settled by physicians, using medical arguments, followed by a change in management if the medical community widely disagreed with the decision.The only substantial difference was that doctors were running one, but subservient in the other, and the Courts had found that when doctors were in charge it amounted to price-fixing between competitors.

It now remains for some case to be found and carried to the Supreme Court which would allow an examination of the facts of this matter, perhaps remanding the case back to the District Court to hold a trial. That would seem a bare minimum after thirty years, and it now no longer get precisely to the issue. Somehow, another way must be found to examine which of two rather extreme theories of the Wild Wild West needs to be laughed off. Either we must re-examine whether, always and everywhere, price-fixing is such an undiluted evil that it never even needs a trial. Or whether we should continue to lynch price-fixers, and declare that medical care is too important to be left to people trained in its complexities, even when disciplined by self interest in the exercise of its power.

Henry J. Kaiser

While on the subject of mixing business practices with professional standards, we might as well direct judicial attention to the unfair and probably unconstitutional (equal justice) tax preference for employers who purchase health insurance for their employees. An unnecessary grievance is created for millions of self-employed and unemployed people. Now seventy years old, this grievance has dubious evasions at its historical origin, has resisted multiple efforts for repeal, and benefits only one large group: big business. Henry Kaiser claimed he had difficulty attracting employees to his war industries because of wartime wage and price controls. Persuading the War Production Board to look the other way, he cloaked inducements to employees as something other than employee compensation. The fringe-benefits circumvention has since grown entirely out of control, but is fiercely defended by business and union interests. As it grows, however, the inequity for the self-employed and unemployed to remain excluded from it also grows. Instead of addressing this problem directly, it might well be conjectured that recent regulatory attempts at forcing individual policies into group policy eligibility might be a way of exacting a price for cooperation, and for lobbying silence.

Summary of the Maricopa Case

From a legal standpoint, the uncomfortable feature of the case of the Maricopa Medical Society is that it went all the way to the Supreme Court without any trial of the facts or real opportunity for the defendants to present their case. That is, the whole HMO movement was effectively removed from the hands of physicians by a motion for summary judgment, on a Supreme Court decision, 4 to 3.

To hold a trial of the facts by remanding the case for trial, would seem to be the only way to introduce the defense that the doctors would have made. It is improper to suggest to their lawyers what the defense should be, but certain facts are now public knowledge. The Medicaid Act was passed in 1965, requiring state consent for a joint program. By 1972, Arizona was the only remaining state not to have agreed to Medicaid, which by then was widely recognized as the worst medical program in America. In 1982, Arizona adopted a small portion of Medicaid, and it was only in 1988 that it fully adopted the program. In 2001, Arizona's governor was offered 7.9 billion dollars over four years, as matching money for the insurance exchange feature of the Affordable Care Act. The governor recommended to the Legislature that they accept the offer, because at least it was "better than Medicaid". There can be little doubt the Legislature of Arizona was adamant on the issue.

What were the doctors expected to do with the sick poor people? No doubt, there was a wide divergence of opinion, but it seemed likely only a handful of saintly volunteers would come forward, and none of them would be able to afford to pay hospitals what it cost. They felt that only by bullying a substantial majority to take the cases would it work, and the only weapon they had was to make it a condition for membership in the medical society.

Under these contentious circumstances, surely the Supreme Court could find some words to create a better outcome. Price fixing is a per se violation of the act, and there is little doubt that all HMOs fix prices. But only a physician-run HMO could be accused of fixing prices for competitive reasons, although it is arguable how strongly they would compete for indigent patients. The Supreme Court may be reluctant to overrule the price fixing part, and the Arizona politics of this case are surely thorny. But at least the Court could find some clarifying language about physician-run HMOs. The opportunistic response of the non-physician-run HMOs was to exploit the opportunity to eliminate the competition of physician-run groups. In the meantime, HMOs run by non-physicians have become contentious in the extreme, whereas the earlier physician-run ones were tolerated by most physicians, and embraced by quite a few. The matter is one of the important threads in the Obamacare controversy, so the Supreme Court has an opportunity to improve quite a few situations by writing a clarifying paragraph or two.

SECOND PROPOSAL:Spending Accounts into Savings Accounts

Flexible Spending Accounts

For many years, Health Spending Accounts (now called Flexible Spending Accounts) were confused with Health Savings Accounts. In this section, we propose employers consider merging the two. Spending Accounts have a use-it or lose-it feature, whereas Savings Accounts allow the individual to roll all unspent money over from one year to the next. HSAs are only permitted if you also have a high-deductible health insurance. Recently, regulations have begun to permit Spending Accounts to roll over $500 per year. Unfortunately, the roll-over can extend only one year, firmly putting its foot on the idea of transforming Flexible Spending Accounts into Health Savings Accounts, at the employer's expense, just by going ahead and doing it. However, there is no reason you couldn/t switch, or even have both of them, if the employer is cooperative. Health Savings Accounts are more popular in politically "red" states, where self-insured persons are more often concentrated, while Flexible Spending Accounts are more popular in politically "blue" states which are more union-dominated because of heavier industrialization. This is not entirely a political matter; large-group employer based plans have been traditionally inclined in the direction of first-dollar coverage and therefore enjoy more income tax deduction, and so have less incentive to seek one. However, as health costs rise, so has the proportion of employer-based plans with high deductibles. Therefore, there will probably be more attention given to exchanging Spending plans for Savings plans. That would be most exciting news, and could well result in a sudden increase in the steady but slow growth of Health Savings Accounts, since the number of participants in Spending accounts is considerably greater. It only requires the employer's agreement to make a complete switch. Employers recently saved money by raising deductibles, some of it could be repaid to the employee by switching the form of the accounts. Self-employed persons would be unlikely to have Spending accounts, but of course they could switch programs, because they are paying for them.

Deliberately Overfunding If you are going to spend employers' money, you really must ask if they agree, listening to what they demand in return. Furthermore, while $100 a year from age 28 to 65 can be calculated to suffice for generating average lifetime health costs of $300,000, that can only be an estimate. If lifetime health insurance becomes the ultimate goal, $250 annual contributions generate a more comfortable margin of safety for all of the contingencies imaginable under a sixty-year horizon. The after-tax cost of such a proposal is not unbearable, and a general shift from Spending Accounts could quickly transform Savings accounts into a truly significant vehicle for funded health care. A yearly contribution of $250 (to a liberalized roll-over fund) will generate more than a million dollars in thirty-two years, if the money continues to compound at 10% to a life expectancy of 90 -- and nothing is spent from it. The amounts are estimated and cannot be guaranteed; they may turn out to be less than that. But they are derived from Ibbotson's demonstration that investment in the total stock market from 1926 to 2006 would have averaged 10 % growth overall, and if low-fee index funds were used to accomplish it. HSAs would soon generate the market power to demand equal discounts from hospitals, particularly market prices for Emergency Room care. Under a voluntary system, no one could be sure how many employees would elect to do it, or how many employers would agree to it. There remains the problem of transition, since many employees would be older than 28, but there would be fewer years for them to get sick. HSAs are tax-sheltered and transportable between jobs, and the pre-existing condition issue gets absorbed within the concept of lifetime health coverage.

{top quote}
The goal is not to pay every last penny of healthcare costs, it is to pay for a great deal of it. {bottom quote}
Money is Money
Merge or Replace? Merging spending and savings accounts then only leaves the transition problem of those who are already too old to get much out of it, but would greatly narrow the employee age band where the HSA proposal makes strict economic sense to the employees. That's in a matter of speaking; it might take about 20 years of employment, starting at any age, the younger the better. Don't take these numbers too seriously, however. The present health system is so riddled with cost-shifting that it would take a serious accounting effort to be certain what the past and present spending trends are, to say nothing of projecting future trends. Aggregate lifetime spending is fairly well defined, but important uncertainty remains. For example, what proportion of future costs will be caused by chronic disease, and what proportion by acute illness? Generally speaking you only get an acute illness once, whereas you never completely recover from a chronic one. The best that can be said with certainty is that funding the cost by index investing would save a lot of money, compared with the present system called "pay as you go". If national ambitions are to save a lot of money for healthcare costs, this will definitely do it. If national ambitions extend to lifetime coverage, it would be regrettable if it failed, but the country would still save a lot of money. The proposed mechanics for achieving that goal, are explained in a later section.

Brief spells of Employment The Human Resources person, attempting to persuade the employees to switch, is likely to encounter two conflicting arguments of resistance, one from the young employee who is planning to move on to a better job soon, and the older employee who feels there is no time left. However, if a person 28 years old makes a single payment of $250 and then leaves the company, at 10% it will rise in value at age 90, to $ 83,732. The impending retiree, with a single payment of $250, could watch it grow to $2,709. In both cases, the money would be taxable except for health expenses. It's a creditable investment at either extreme, but the real power is in leaving it unspent for many years. And while 10% return seems to be available to anyone who invests in U.S. Total Market stock index funds, it is only available if you leave it untouched through ups and downs, for a long time. Therefore, it is safest if it is used at the end of life, and progressively less safe as the spending gets closer to the present. Lots of people have lost money on stocks they held for a year or two. Hardly anyone loses money on diversified stocks held for 62 years. The problem is having the self-discipline to do it.

Employer viewpoint. Why should employers be willing to spend more money, by giving some of it to the employee health accounts, rather than taking it back at the end of the year? In the first place, it would initially extend the amount of employee compensation which becomes tax exempt. The existing tax exemption is unevenly and unfairly extended, and probably should be phased out in some manner. But rather than have an angry populist wave of voters phase it out by brute force, the proposal creates an area where one advantage could be phased out, while a more justifiable advantage gets phased in. Secondly, it generates investment income for huge insurance programs which now exclude it through using the Pay-as-you-go design. Third, the whole concept of lifetime health insurance opens up some unexpected benefits, although laws would have to be passed to enable it.

I want to thank you for this wonderful resource. I find it fascinating. May I offer one correction? In the section "Rittenhouse Square Area" there is reference to the Van Rensselaer home at 18th and Walnut Streets and its having a brief fling as a club. I believe in 1942 to about 1974/5 the Penn Athletic Club was located in the mansion. The Penn AC was a good club, a good neighbor and a very good steward of the building - especially the interior. It's my understanding that very unfortunately later occupants gutted much of the very well-preserved original, or close to original, interiors. I suppose by today's standards the Van Rensselaer-Penn Athletic Club relationship could be described as a fairly long marriage. The City of Philadelphia played a large role in my life and that of my family, and your splendid website brings back many happy memories. For me and many others, however, there is also deep sadness concerning the decline of so much of the once great city and the loss of most of its once innumerable commercial institutions. Please keep-up your fine work. Your's is a first-class work.
Posted by: John D. Mealmaker   |   Aug 14, 2014 2:24 AM
Dr. Fisher, The name Philadelphia University was adopted in 1999, as you write, but the institution dates to 1884 and has been on School House Lane since the 1940s. It acquired the former properties of the Lankenau School and Ravenhill Academy, but it did not "merge" with either of them. I hope this helps when you update your site.
Posted by: David Breiner   |   Jun 11, 2014 10:05 PM
Hello Dr. Fisher, I was looking for an e-mail address and this is what I could find. I must tell you my Mother who you treated for years passed away last May. She was so ill with so many problems. I am sure you remember Peggy Marchesani. We often spoke of you and how much we missed you as our Dr. You also treated my daughter Michele who will be 40. I am living in the Doylestown area and have been seeing the Dr's there.. I just had my thyroid removed do to cancer. I have my fingers crossed they get the medicine right. I am not happy with my Endochronologist she refuses to give me Amour. I spoke with my Family Dr who said he will take care of it. I also discovered I have Hemachromatosisand two genetic components. I have a good Hematologist who is monitoring me closely. I must say you would find all of this challenging. Take care and I just wanted to convey this to you . You were way ahead of your time. Thank you, Joyce Gross
Posted by: Joyce Gross   |   Apr 4, 2014 2:06 AM
I come upon these articles from time to time and I always love them. Is the author still alive and available to talk with high school students? Larry Lawrence F. Filippone History Dept. The Lawrenceville School
Posted by: Lawrence Filippone   |   Mar 18, 2014 6:33 PM
Thank you for your articles, with a utilitarian interest, honestly, in your writing on the Wagner Free Institute of Science [partly at "" - with being happy to post that url but the software here not allowing for the full address:)!] I am researching the Institute, partly for an upcoming (and non-paid) presentation and wanted to ask if I might use your article's reproduction for the Thomas Sully portrait of William Wagner, with full credit. Thanks very much for any assistance you can offer here. Josh Silver Philadelphia
Posted by: Josh Silver   |   Jun 2, 2013 1:39 PM
Thank you for your articles, with a utilitarian interest, honestly, in your writing on the Wagner Free Institute of Science [partly at "" - with being happy to post that url but the software here not allowing for the full address:)!] I am researching the Institute, partly for an upcoming (and non-paid) presentation and wanted to ask if I might use your article's reproduction for the Thomas Sully portrait of William Wagner, with full credit. Thanks very much for any assistance you can offer here. Josh Silver Philadelphia
Posted by: Josh Silver   |   Jun 2, 2013 1:39 PM
George, Mary Laney passed away last November. I was one of her pall bearers. She had a bad last year. However, I am glad that you remembered her and her great work. I will post your report at St Christopher's and pass this along to her husband Earl. Best wishes Peter Hunt
Posted by: Peter Hunt   |   Mar 28, 2013 7:12 PM
Hello, my name is Martin. I came across [] and noticed a ton of great resources. I recently had the honor of becoming a part of a new non promotional project on We decided to put together a brief guide about cirrhosis, and the dangers of drinking. We have received a lot of positive feedback and I wanted to suggest that we get listed on the above mentioned page under The National Institutes of Health. Let me know what you think and if you have any further requirements or suggestions.
Posted by: Martin   |   Jan 1, 2013 8:51 AM
Posted by: SUSAN WILSON   |   Aug 12, 2012 12:49 AM

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