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MANNA
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On 23rd Street, right next to the home of the First City Troops, is another organization of quite a different character. This is MANNA, which stands for Metropolitan AIDS/HIV Neighborhood Nutrition Alliance. This group was founded in 1990 by members of the Presbyterian Church at 21st and Walnut but has become independent and non-sectarian. It has an annual budget of over $3 million, a hundred paid employees, and a thousand volunteers. They deliver meals to people who have been referred to them by physicians as suffering from AIDS, and agreed by the social workers on the staff, to be poor. Last year, they delivered 650,000 free meals and spent a lot of effort fund-raising to do so. About half of the funds come from the government, quite a bit from private foundations and individuals, and a lot from six annual fund-raising events. One of the six events is to sell pies at holidays, one is a Ballet Performance. There's a black-tie dinner, and so on. So the organization is a curious mixture of Show Biz and earnest volunteerism of the old Philadelphia spirit and style.
One might suppose from all this that Philadelphia is riddled with AIDS, and of course we do have a discouragingly large number of afflicted victims. However, there are a million people in the USA with HIV, and only 20,000 are found in Pennsylvania By contrast, New Jersey has 50,000 victims. And all of that is almost trivial compared with 40 million known victims worldwide with probably a lot more who are unrecognized as sick. The World Health Organization has found cities in Africa, Mombasa for instance, where 90% of the babies born in the hospital test positive. It is reasonable to suppose that Africa will be totally depopulated in a decade if matters continue unchanged.
So, in the meantime, until someone figures out something better to do, Philadelphia is responding to its problem in a traditional and typical way. The writer Susan Sontag has been saying that nothing short of a religious crusade for monogamy will save the undeveloped world, and maybe she's right. At least, people are thinking about the problem and trying to do something, however inadequate, to help.
It has to be noticed that developing lifetime health insurance is hampered by the considerable pregnancy and newborn costs which intrude at the beginning of the earning period from ages eighteen to forty-five. Otherwise, there is a reasonably manageable medical cost at the end of life, potentially preceded by a long period of negligible medical costs where compounded interest could be at work. So the thought naturally arises we might somehow pay for pregnancies in some novel way, essentially borrowing those costs against the future. What's involved here?
Instead of taxing each affected individual working person to subsidize his newborns and terminal care, the necessary subsidy could take place between three insurance plans, assuming the three costs to fall in separate insurances. Everyone owes a debt for being born, and everyone needs to save enough for getting old and dying. Society's benefits and costs of having children are not confined to those who have children. An unhealthy incentive to delay the first child has been created by paying for pregnancies this way, spreading the consequences to higher education and disrupted careers. Instead of regarding neonatal care as an expense of pregnancy (which we currently regard as part of the mother's health cost), just reverse matters, and include pregnancy costs as part of the baby's own debt for being born. Any move assigning pregnancy costs must somewhat fudge the transition cost of getting born without paying for it or even asking for it. Attitudes depend to some degree on whether people generally want children to help on the farm, to help care for their own old age, as entertainment or plaything, or accidentally. The theoretical fact is that pregnancy costs might be judged fairly split between the child and his parents if it were only practical to do it. Once those practicalities are addressed by covering the first and last years of life with entitlement, transfers become relatively easy. If we must have entitlements, birth and death are certainly inescapable ones.
Unfortunately, once the finance is made practical, other issues assume greater importance. Science is beginning to make single parenthood more feasible, while easy divorce makes multiple parenthood possible. Easy sharing of the costs could reasonably be resisted as a moral issue we never had, and now don't need. The longer you live, the more interest you earn on those first 26 years. But the longer you live, the more medically expensive you become, toward the other end of life. There is still a great deal of argument about what is a fair division, and much time will elapse before final resolution can be considered a settled matter. But ultimately, serious savings could occur from keeping the first and last years of life in mind as the only universal medical costs, extracting maximum savings as one argument for choosing accounting tricks to settle the pregnancy part of it. What would be left would be accidents and occasional health calamities, which paradoxically are the only parts of current health insurance which truly fit the current insurance model.
Let's give an example. Lifetime health expenses are said to be somewhere around $300,000. If you have $40,000 in a Health Savings Account on attaining the age of 65, you can passively achieve $300,000 by age 86 (which we hope is at least average life expectancy) by letting the HSA grow untouched. In this example, all other sources of health insurance revenue are available for other purposes -- they are the "profit" from using compound interest, but it is unnecessary for that to be exclusively the case. Now, the problem transforms into achieving $40,000 by age 65. That could be reached by investing $150 at birth, or $2400 at age 26. Both are achievable, neither is easy.
But it's nice to have some choice, which including the first 26 years will give you. You can even do it twice, once in the child's account, and secondly in your own. My guess is that about a third of people could spare $40,000 at age 65 right now, trading a single payment for Medicare for its present wobbly finances. With overlapping populations, 2/3 of people could afford to spare $75 from each parent of a newborn, or $150 for a single parent, in return for eliminating the obstetrical premium within their health insurance. Considering the problems of young parents, some might prefer to combine $150 with $4800 for both parents at age 26 into a financing package of $4950 spread over ten years, from 26 to 36. But notice it gets harder, the longer you wait. Finding $80,000 for both parents now aged 65 gets really hard to do, but at least the child is all paid up. If you wait, it gets pretty hard to do this without extending the retirement age to 70, sacrificing five of your thirty years of retirement, but reducing the amount you need to save by about a sixth. Nothing like these choices would be readily accepted. But the policy axiom remains: the younger you start, the easier it is to stretch the distance. And the more attractive it becomes to treat some or all obstetrical costs as the responsibility of the person getting born.
Before concluding this approach is impossible, try to remember it is quite unnecessary to make lifelong healthcare free to the last penny, although some will demand it. In fact, first-dollar coverage (i.e. making all healthcare seem free) is a big part of what got us into this mess. If we only achieve a quarter or a third of this promise, the national aggregate would amount to a stupendous amount of money. A more realistic goal might be to reduce projected medical costs by a third, offset another third with investment income, and pay a third in cash. All three of those approaches seem comfortably achievable.
As this chapter is being written, Obamacare has been struggling for three years to achieve its twin goals of reducing the cost of medical care, while improving its quality and scope. The public has long been skeptical that the two goals are incompatible. During those three years, we have achieved a cure for Hepatitis C. That cure will save millions of lives and eventually the costs will decline. In time, the public will be able to see the difference between the results of the two approaches. During that time, biological science has discovered the relationship between sleep and the circulation of spinal fluid through the brain, probably the greatest advance in physiology since Harvey discovered the circulation of blood in 1628. In another field, Joachim Frank has identified the function of the Ribosome, making strips of protein the way a zipper works, and very likely the step at the beginning of cellular life, operating at room temperature and without caustic chemicals. These three discoveries are surely less than 1% of the scientific advances of the last three years, giving promise of vast advances in the cheap production of protein drug therapies, saving of lives, and ultimately the extension of life expectancy at a lessened cost. During these past three years, what has Obamacare accomplished, at enormous cost, and widespread turmoil in the medical system?
As we approach the elections which will serve as a national judgment on Obamacare, it still remains difficult to say what it is. It clearly will raise costs, not lower them. It will extend a few subsidies to people who were uninsured, but the subsidies could have been extended without so much uproar. In any event, a number of people will have worse insurance after the dust settles. A regulation factory has been established, pumping out confusion, but changing comparatively little after three years of trying. It begins to seem incredible that there is so little to show for so much uproar, and there is room to doubt anything dramatic will emerge so late in the process. If the goal is to establish a regulation factory to shift control to the regulators, the public is quite right to ask what good will come of that; at the present rate of revelation, the eventual product will just be an expensive nuisance. So it seems fair to compare the final product with the Veterans Administration health system, which has been operating on a large scale for more than fifty years.
The Veteran's Administration health system is in the news, finally. Perhaps we should examine what is the matter with the VA, as at least a source of ideas about the forces which hem in any government health system. For example, whether it is a municipal, state or federal hospital system, it seems to be much better at constructing new buildings than maintaining them. Perhaps it is time to convene a study or a series of studies to address this discrete issue. Why is the system of control by budget relatively successful in an environment of designing and building a project, and so unsuccessful in running it?
Second, is there an inherent problem in setting the rules by the Congress or Legislature, instead of an appointed board of overseers? No doubt, there is an occasional abuse of power by a trustee of any organization, but lower-level administrators do not act as though this a big problem for them in private institutions. So what is it about governance by politicians which encourages the endless intrusion of politicians into the admissions, purchasing methods, hiring and disciplining processes of public hospitals? Does it make a problem to have control at the highest level be unified in a Congress or City Council, or is it the other way around, with too little authority vested in the operating divisions? Every administrator complains about staff physicians intruding into daily operations, but is it possible that the public institutions have gone too far in hierarchy, or else possibly not far enough? Most physicians hate administrative work, allowing a few tyrants to emerge, who do like it. When these would-be dictators are in administration because they are poor physicians, trouble is almost inevitable, and it cannot be improved by giving the power to nurses, pharmacists or other professionals who are normally lower in the pecking order than the professionals who now report to them. There is no good substitute for physician control, but what if all the physicians in a health system would rather quit than do administrative work? Maybe, just maybe, the private sector has something to teach us in this delicate issue.
To go on, politics may play the same disruptive role as professionals harnessed as administrators. Administrators detect and quickly resent a Union or American Legion official placed in a role which can disrupt the official power structure, just as if a pharmacist were appointed, or a nurse practitioner, or even an eminent neurosurgeon.
Finally, some new title should be applied to the type of corruption which is seen when union officials get their way in disrupting the day to day business of a health system. Quite recently, I was forced to hear the Director of local city Veterans Affairs say to an open meeting of strangers that he was totally and permanently disabled with a service-connected disability, and also working full time for $50,000 a year. Furthermore, he had recently declined an offer to work at a higher government level, at $200,000 a year -- plus, of course, his 100% permanent disability payments. There is more than a small chance he was making some exaggerated boasts, but even so, it is appalling to hear such indiscrete remarks being offered, without the slightest sign that he recognized the revulsion such remarks made on his audience. It seemed obvious to all of us that he heard such remarks so constantly, that he regarded such politics (new word needed) as reflecting a normal, legal and desirable state of affairs. If Obamacare contemplates anything approaching what seems to be the normal attitudes prevailing in the VA, it really will not matter much what is written in its regulations. In defense of the VA, a more compassionate history may reveal a plausible explanation.
It is my view that Congress is more responsible than they themselves realize, and the problem is worse than we think. Things have been trending in the present direction for fifty years, but
the adoption of the DRG system of hospital payments came along in the 1980s. It was a brilliant rationing system, but it did not work well in Psychiatry, where the diagnosis has little correspondence to the cost. After a few convulsive experiments, Psychiatric hospitals were offered a payment system so unsuitable they could not exist with it. One by one, inpatient psychiatry disappeared no matter what the patient's finances were, and there is really only the Veterans System left. The situation was so egregious that admission officers simply ignored any rules which prevented admission of a case which clearly needed it. The distinction between service-connected and non-service-connected was most readily shoved aside, since humanitarian and medical urgency so clearly over-rode the rules. After twenty years, the disregard for administrative admission rules spread out to almost every condition, and it is going to be very hard to put the genie back in the bottle, when so many involved participants never wanted such non-medical constraints, from the very beginning.
Building a network of modern buildings in every section of the country, running an organization dominated by unions and their counterpart the American Legion, within a system which most doctors in the country avoid if they can, the VA is a quiet disgrace, slouching along for half a century. The underfunding, the political favoritism, the squelching of pride and achievement and the waste, are all about what you would expect from a union-dominated or politically dominated system. But most disheartening is to watch reform efforts squelched. Under the leadership of Dr. Dan Blain, a system of Dean's Hospitals had been created to infuse the high standards of neighboring teaching hospitals into what seemed like systems similar toward medicine, reformed by the Flexner Report in 1914. For a few years, it seemed to be working, but in time the financial ethics of teaching hospitals seemed, not to raise the standards of the VA, but to be dragged toward imitating their behavior. The medical school doctors assigned to VA hospitals served out their time, then agitated to be transferred back to the teaching hospitals, with difficulties in replacing them with the same quality, slowing winning. When you begin to see elevator operators running the self-service elevators, you can be pretty sure the administrators have lost the battle. There are thank goodness, plenty of exceptions. But nobody seriously expects them to change things very much. If you like what you see at the VA, you are going to love Obamacare.
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.
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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.
Outline:
Summary of Two Beads on a String:
Health (and Retirement) Savings Accounts as a Political Entity: A Lobby for Balanced Budgets
No government should favor one class over another.
Health (and Retirement) Savings Accounts as a Political Entity: A Lobby For An Improved Share of the Private Economy
The present system cannot possibly support adequate pensions for all, at least for decades to come. Since this is more or less permanent, it should be put to use, balancing proposed subsidies. On a small scale, the German and Swiss systems follow this principle, but they have been unpopular without historical disasters to preserve them.
20% copayment absorbtion
Apparently, some regions are self-suporting, some are in constant deficit.
Accumulated debts of the past.
The system cannot possibly afford to carry these debts, and must fight to avoid adding new ones.
Outliers which do not fit the model
This varies by region, which could lead to politicall partisanship.
Adjusting the Existing Pearls to Scientific Advances
A legitimate portion should be established.
The Ultimate Tension: Subsidies vs. Balanced Budgets
Employer-based Gifts
The system of increasing corporate taxes, then expunging them with loopholes, must be stopped, but probably gradually. Since corporations must compete internationally, effective rules are crippling. Therefore, it is possible the only solution is to eliminate corporate taxes (and shift the revenue burden to individuals.)
Balancing Ownership(stockholder) control vs. Corporate Profits
Some way must be devised to keep price gouging under control with taxes for the absence of competition. The patent system is a useful model, but its weakness has been the time limits.
Conclusion: exploiting the curve of compound interest must be protected by 1) special safeguards against imperfect agency 2) special safeguards against rare catastrophes 3) limiting the rules to American residents 4) the substitution of competition for monopoly .
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Spending for healthcare crowds toward the end of life, while money to pay for it is generated before age 65. Potentially, the two age groups could unify their finances and get dual savings. Only the transfers need to be unified, using Health Savings Accounts as the transfer vehicle, allowing compound interest beyond the boundaries of individual insurance programs. The incentive is created to keep what you don't use, for your retirement.
That's not all. There is no way for a newborn to pre-pay his expenses. Someone must give children some money. Indeed, adding children to a new HSA system might add twenty-some years to the compound interest in Health Savings Accounts, if they only had some money. They don't.
So two systems need a change, roughly the opposite of each other. One faces toward the beginning of life and the other faces toward the end. (Even this conception finds the working class in the middle, largely funded by employers who change often and have other concerns foremost.) Working people aged 25-65 support this whole system, but have so many constraints on their financing it is not possible even to discuss them until the politics subside a little. Connect, yes; unify, only when you can.
Essentially, it is proposed: The HSA expanding into a unifying financial bridge between programs, one account per individual lifetime, serving many largely unchanged programs. Phased-in finance, minimizing changes in the delivery system. It's surprising at how simple some dilemmas become, once the individual patient decides what others now decide for him.
Prepare yourself for one big rearrangement of thinking, however. Extended retirement is a direct consequence of superior healthcare. Retirement could become five times as expensive as healthcare itself, and still be described as a predictable outcome of good healthcare. Where are new revenues -- to keep both of them -- to come from? Read on.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
