The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) 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.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay 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!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut 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.
Sixth and Walnut over to Broad and Sansom 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.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) 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.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
... William Penn's Quaker Colonies
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
For a concept supposedly working moderately well, the Diagnosis Related Groups (DRG) system for inpatient reimbursement has a bizarre history. It has led to some unconfessed, and widely unrecognized, disastrous results, and should be thoroughly reworked as soon as possible. In a scholarly sense, the story begins eighty years ago. The American Medical Association decided all of the diseases, ultimately all of the medical care would be better understood if reduced to a systematized code. Originally, the code was visualized as a six-digit complex, with the first three digits defining an anatomical location, followed by a second set of three digits specifying the cause of the disease affecting that location.
SNODO That 6-digit structure limited code to a thousand diseases in a thousand locations, or a million "disorders" just for a beginning. Roughly half those theoretical combinations have no biologic existence, although even fanciful codes had some value for detecting coding errors. Other regions of the code exceeded the number of conditions actually found to exist, but originating in a digital structure then allowed virtually unlimited expansion, but sacrificed the significance of a particular position within the code. IBM was enlisted as a consultant, who advised the AMA to stop worrying about it; just provide a numerical code for everything, in the finest detail possible. Mathematicians could later easily make it usable for calculating machines, the forerunners of computers; and non-existent conditions created no harm. Some of those consultants had worked with a system which produced great success for the U.S. Census and perceived no advantage to limiting the code numbers while planning for them to be manipulated by machines. The third group of three digits was soon added, making a nine-digit Standard Nomenclature of Diseases and Operations , familiarly known as SNODO, which could identify a million different operations, whether actually performed or not. Actually, groups of three or more digits separated into groups of three digits by hyphens transferred the significance of code-position to the cluster level, which proved adequate.
SNOMED The pathology profession subsequently added still the fourth set of digits, for microscopic features, so the potential was soon up to a hundred million microscopic conditions. The team of physicians who worked on coding the medical universe contains many names now famous, notably including Robert F. Loeb and Dana Atchley of The College of Physicians and Surgeons of Columbia University. For at least thirty years, the Joint Commission on the Accreditation of Hospitals (an AMA and AHA joint affiliate) enforced a rule: every discharge summary from every accredited hospital in America must code and index every discharge diagnosis in SNODO code. It was tedious work, kept alive by the glittering future prospect of developing an Electronic Medical Record by 1940.
Robert F. Loeb
ICDA After twenty years or so of this enormous task, the Medical Records Librarians rebelled. The labor effort was burdensome, and the librarians were in an occupational position to observe how little use was being made of it. On their demand, an alternative simpler coding system was adopted, called the International Classification of Diseases (ICDA). At first, it was limited to the one thousand commonest discharge diagnoses , therefore limited to the charts which the librarians could confidently observe would be used. In time, it was expanded to ten thousand commonest diagnoses. Limiting medical codes also limited the cost and effort of coding and was considered an important retreat from over-enthusiasm. Meanwhile, expansion of the SNODO code by a handful of true believers continued to fill up the coding gaps, soon using and exceeding the capacity of the 80-column IBM punch card (originally, ten digits plus metadata), one card per diagnosis.
Unfortunately, the code was in danger of collapsing from this unanticipated expansion, since computers had not yet advanced to the point where they could rescue SNODO from the limitations apparent to its users. It was a classic case of a hypothetical system appearing to be better than the one in actual use, but not living up to its promise when both systems encountered actual use. The ICDA coding scheme did suffice for immediate purposes, and the "calculator" system was at least a decade away from evolving into the more flexible "computer" which could skip around the limitations of a punched card input system.
The professional difference was this: the doctors roughly understood the coding logic and could devise an understandable code for most charts through the logic of a structured language. The record librarians had not been trained to encipher (or even dither, as photographers say) the code by logic; a thousand codes was about the limit of what anyone could memorize. The burden of manual coding eventually overran the code design, before practical results could defend its utility in other areas of the hospital or the profession.
All the medical record world promptly abandoned SNODO; except for the pathologists who intuitively recognized ICDA could never approach their own greatly expanded needs. Eventually, pathologists took SDODO over, expanded and redesigned the basic framework, and produced what they are rightly proud of, an elegant codebook called SNOmed which obeyed meaningful internal coding rules. It still came, however, as a large and expensive book, which most practitioners were reluctant either to buy or to use.
Dana Atchley
DRG Meanwhile, a group at the School of Hospital Administration at Yale under the leadership of John Thompson lurched in the opposite direction of drastically reducing the ICDA code (initially expanded to 10,000 entries, which proved too large for some purposes, while still lacking specificity in many others), back down to only 468 of the commonest "diagnosis clusters". The purpose was to find clusters of diagnoses with common characteristics, which could be used by unskilled employees to identify diagnosis submissions which normally fell within certain bounds, but who in a particular case were sufficiently deviant to warrant investigation as "outsiders". This gross sorting by machine was then examined by the PSRO (Professional Standards Review Organizations), especially in the central feature of the length of stay. They termed their product Diagnosis-Related Groups (DRG) , which made no pretense of being complete but was complete enough to encompass the majority of outrider events. The computer version of their concept was called Autograph, which had some attraction to hospital administrations as a way to predict outriders. To summarize what happened next when Medicare adopted DRG for payment purposes: both DRG and ICDA started to expand, and SNOMED was relegated to the role of the codebook for Neanderthal pathologists.
Two million diagnoses are compressed into two hundred payment groups.
Diagnosis "Related" Groups
Using the standard diagnosis codes, one-size-fits-all did not help the hospital and insurance accountants a bit, since my habit they tend to believe all businesses are about the same, no matter what the business produces. Their complaint was coded with thousands of codes were too big and complicated. Simultaneously the medical professionals were finding them much too small for the job. Meanwhile, ICDA was fast losing its reputation for being compact and inexpensive, while the opposite feeling immediately developed: the DRG was far too small for what physicians could now realize was going to play a very large and important role in everybody's finances. Two vital areas of the hospital had difficulty communicating from the beginning; now, there was no longer even a common language to use. There was no quick fix, either, because both DRG and the underlying ICDA designs were based on the frequency of occurrence, rather than precision and logic. Furthermore, the copyright was owned by professional societies who had little interest in finances, and considerable interest in reducing their burdensome coding workload. In the background, however, computers had made the task of code translation a trivial one. A third profession, the computer department, scarcely knew what the other two were talking about, but they came closer to affinity with the accountants.
Like the three bears of Goldilocks, some codes were too large and some were too small, but at least there were three of them, each crippled in a different way. Comparatively few doctors understood what was going on, and in spite of their vital interest at stake, had trouble getting over their hatred of the boring coding task. Since this whole issue of data coding and summarization has taken on major importance to the success of the Affordable Care Act, in some circles the uproar has become a political war dance. Let Obama do it if he likes coding so much. Basically, the librarians were saying they resented being criticized for making important mistakes in a task they didn't understand very well. In summary, everybody hates coding.
Overview of the Future.One a faction of the small field of those who are interested in such matters has decided to expand both the specificity and the reach of ICDA, which is now up to its tenth edition of revision. Unfortunately, it does not seem to some of the pathologists to be a sensible approach. We have an elegant code in SNOMED, they protested, which is arguably too big to use; expanding ICDA seems destined to reach the same destination, on the rebound from being too small. We now have ample data on what is common. The most efficient approach would at first seem to be condensing the highly specific SNOMED to a useful size, based on the frequency of use. The approach would stand in contrast to making a list of diseases by frequency, and then subdividing their specificities. While such a condensed volume could be printed as a book, we are now at a point where every record room within the hospitals of the nation is equipped with several computers, so the elasticity of the code should no longer be anyone's problem. Let the machines do the drudgery.
This whole process could now rather easily be automated for much more than its original purpose of classifying disease populations, and in a pinch it could even substitute 26-digit letters for 10-digit numerals, imparting some clues in the process. Further condensation of an already condensed version began to be used for payment purposes, adding still greater amounts of practical nuance. You might suppose everyone could see paying the same amount of money for treating the same disease (tuberculosis, let's say) of two different organs (let's say of bone, and of the kidney) was either going to bankrupt someone or enrich someone else. And that's only money. Any scientific or diagnostic decision based on a code of "All other" will make computerized medical records sprint faster toward worthlessness. At the rate it's going, lumps of "all other" will have no relation to each other, except to justify the same reimbursement for treatments of vastly different value. Or difficulty. Or cost. Or contagiousness.
SNOMED
In automated form, SNOMED is quite ready to be revised still further in other directions for other purposes. It could, for once, integrate the accounting and demographic functions with the rest of medical care. But a great many other useful functions can be imagined, once computers have a stable platform on which to build, and the task of coding can be safely undertaken without much physician input burden. Safe, that is, from the danger, the whole coding framework will get changed, again and again. In a certain sense, this is similar to the brilliant choice by Apple of the Unix skeleton, when Microsoft Windows seized on quicker expedients. A great many sub-professions seem to wish to have their own codes for their own purposes and resist the idea a physician code should be imposed on them. When you encounter such obstructionism, it is easy to suspect motives. But the general rule is: when it comes to a choice between scheming and incompetence, it's incompetence, nine times out of ten.
However, medical care and hospital care are medical functions, and their accounting and demographics will always eventually return to their medical professional core. Meanwhile, notice what happened to DRG, a code so crude it relegates most refinements to the category of "All Other". The fact of the matter is, it is a crude approximation, some cases paying on the high side, some on the low side of true costs. If the hospital loses money on inpatients, well, just build another wing to the outpatient department. Underlying this response was the enduring misconception that outpatient care is inherently cheaper than inpatient. If it's the case, well, we'll just have to fix it.
The surprising lack of chaos from such experience has almost nothing to do with medical content, and almost everything to do with having insufficient case volume to remain in balance. That is, the big hospitals smudge it out, and the small hospitals don't understand it. The highly prized profit margin of 2% or 3% can easily be achieved by admitting slightly more cases of a profitable kind (ie hire a surgeon expert in certain profitable operations), or by the government adjusting just a few DRGs to profitable status (like reducing tariffs on behalf of favored industries in Congress). Meanwhile, the rest of the enterprise becomes progressively more expensive, because there is no fixed relationship between service benefit prices and audited costs, and now an even less regular relation, to cost-to-charge ratios.
It is a precarious thing for institutional solvency, to depend on a financial balancing of a particular caseload within one set of four walls, and then complain hospitals are too small to survive. Between their accountants and their record librarians, this outcome drives the smaller institution into a futile chase after higher patient volume. Of course, we need to change with the times. But some basic truths never change, and one of them is every ship should be able to sail on its own bottom. You don't approach that by giving every ship a new hull.
Let's get specific. In the first place, allowing only a 2% profit margin during a 3% national inflation is to walk on the edge of a dangerous cliff. If some fair profit margin could be agreed to, it is only an average among hospitals. You might as well reduce the DRG to four payment levels, and reimburse hospitals on the basis of which of the four walls the patient faces. With enough tinkering, you might arrive at the desired total hospital reimbursement to match any profit margin you establish, totally disregarding the diagnoses of all patients. Quite obviously, you must code the diagnosis to whatever number of digits it requires to identify the unique condition. You could match up all of the hundred dollar cases and all of the fifty thousand dollar cases, call the two codes, and pay only two prices.
But such an effort is just a delusion. Somebody-- or some machine-- has to go to the trouble of coding every single diagnosis down to the point where the code is no longer meaningful to costs and assign relative values among them. Only at that point would it be legitimate to assign a dollar amount to each relative value. You have to maintain the code as treatments change, which will be quite frequently. You can do it, and you can computerize it. A computerized version of this process would scarcely be any different from copying the English description and, like a Google search, getting back a number to copy; it might even be done by voice transcription. But there is still no guarantee charging itemized bills wouldn't turn out to be cheaper, and at least have a different meaning. DRG in its present form is nothing but a crude rationing system; get rid of it, or spend the money to make it work. I can't guarantee if you put a doctor in charge, it would work. But I can guarantee that if you don't put a doctor in charge, it won't.
Proposal 5: Congress should be asked to commission a computer program to translate English language diagnoses into SNOMED code, preferably by voice translation. Suggested format: a search engine where English variants of discharge diagnoses are entered, and a SNOMED code number returned, along the general lines of entering common phrases into Google and receiving file location numbers in return, except it returns the SNOMED code. If the code is not found, the computer accepts a manual entry by a trained person. verified by an expert over the Internet to become officially entered into a master list which is periodically circulated as an update. The search program and its supplements should be produced on DVD disks to be used on hospital record room computers by other professional users. It should provide "hooks" so the Snomed codes and patient identification can be transferred electronically to related programs, such as payment codes and billing.
So that's how DRG got to be what it is. It's perfectly astounding such a crudity, devised for other purposes, could be so "successfully" employed to pay for billions of dollars of Medicare inpatient care, such that payment by diagnosis-lumps threatens to spread to all medical care. There is even another way to describe it: inpatient hospital care has been lumped into a rationing system which constrains national inpatient care to a 2% overall average profit margin. That's just as surely true as if someone deliberately tried to make it that way.
Payment by diagnosis ignores both cost and content, based on the mistaken assumption those features have already been carefully accounted for. It does not matter in the slightest how long the patient stays or how many tests he gets, or how many expensive big hospitals swallow up inexpensive little ones. Meanwhile, emergency rooms and satellite clinics also do not affect the cost inherent in a supposed linkage between the diagnosis and the cost. The failure to link drug prices into this modified market system is particularly noticeable.
The exciting potential has been lost to have the patients who can shop frugally as outpatients, set the price for inpatients who are helpless to act frugally. Their much more generous profit margins support what is essentially a hospital conglomerate. Any corporate conglomerate executive could tell you what happens when one department is subsidized, while another is treated as a cash cow. And the fun part is this: squeezing physician income against an unsustainable "Sustainable" Growth Rate creates the "doc fix", which annually blackmails physicians into acquiescence past the next November elections.
SGR: Sustainable growth rate, earmarks by a different name. SGR is a term borrowed from financial economics, signifying the rate at which a company is able to grow without borrowing more money. It is easily calculated by subtracting dividends from return on investment. Any variation from this definition will produce different results. A sustainable growth rate in Medicare is calculated by a formula, modified every year in special ways which closely resemble "earmarks", but contain special adjustments for changing work hour components, malpractice cost components, etc. It is a large task for the Physician Payment Commission to determine yearly changes in thousands of services, and it must be frustrating for them to see their painstaking calculations tossed aside every year by Congress, in response to howls from the various professions. Whenever this occurs it is a fair guess the calculation has been misused. The discussion has long since transformed from a simple calculation to a simple threat: physician reimbursement will be cut. Each year it is cut, and each year Congress relents on the cut at the last moment. But ultimately its design will prevail: on the pie-chart of healthcare expense, physician reimbursement will shrink, and hospital reimbursement will expand, as physicians migrate to salaried hospital employment, and enjoy an instant 40-hour week amidst a physician shortage. This keeps the AMA in a constant state of agitation, and physicians in a constant posture of supplication. At the end of 2013, the proposed cut in reimbursement had grown to 26%. When almost every physician has an overhead of 50%, a cut of 26% is beyond meaningful. And every year the financial attractiveness of joining a hospital clinic for a dependable salary grows, with consequent improvement in the overall power of the hospital conglomerate, and steadily decreasing relation to market-set pricing readjustments.
Insurance Reimbursement, The Missing Item on the Itemized Bill. The DRG system threatens patients, too. After discharge from a hospital, the patient is sent a multi-page itemized bill, which purports to be what the patient would owe without insurance. Such bills traditionally omit any mention of the insurance reimbursement, which is the only payment the hospital receives if it has contracted to accept "service benefits" as payment in full. Since that is almost always the case, the "total of service benefits" is exactly equal to the "total patient responsibility". Since the patient will pay nothing if patient responsibility is limited to service benefits, and service benefits are exactly equal to whatever the patient received, the explanation goes round and round without ever revealing what has been paid. The illusion that you have been told something worth hearing, is maintained by providing an almost endless list of itemized charges.
Most hospital employees do not have the foggiest idea why the list is even produced, and its accuracy is therefore questionable. A variety of specious explanations, therefore, emerge, usually with a focus on billing a handful of uninsured people, or insured people whose service benefits have expired as "outsiders". There may be a particle of truth to this, easily refuted by showing the supposed items on the bill were often fabricated by employees who know very well they are seldom used for anything. Most likely, the purpose is to conceal the true insurance reimbursement from competitive insurances who might undercut them. As profit margins shrink, it becomes increasingly dangerous to let competitors know what they are. As margins widen, it is even easier for competitors to undercut them. As a matter of common observation, most retailers in any business are less than forthright about their profit margins, so perhaps this concealment can be forgiven as normal commercial behavior. It becomes more questionable when seen as an industry-wide practice, intended to defend a system of double-pricing. In this case, it defends the employer tax discount as the lowest price around, when compared with those rascals, the uninsured or the insured but fully taxed.
The DRG payment to the hospital is not zero, but it is far less than the total on the itemized bill and is seldom revealed. One central message it sends is however pretty clear: "This is how much you would be charged if you didn't have Insurance X." The shortfall in revenue is made up by overcharging the emergency room and the outpatients, who are unsuitable for anything resembling the present DRG. If the hospital does not have enough outpatient work to sustain the inpatient losses, its only recourse at present is to call the architects and build a bigger outpatient department. To fill it, just buy up a neighboring group practice or two of neighborhood doctors. Fix the DRG, and it would be hard to say what would eventuate.
Bottom Line: Who is Injured? For a long time, service benefits insurance was the only thing supporting the hospital industry, and commercial behavior by the hospitals was justified as the only way to support their charitable mission. Now that Health Savings Accounts have reached 12 million clients, with assets reaching $22.8 billion, a viable way to provide indemnity insurance has definitely arrived. Not only are HSAs cheaper for the customer, they very likely provide higher payments to hospitals. This last point will only be clarified when we learn what discounts the catastrophic high-deductible insurance have been able to extract, but hardly anything else will affect the answer. To the extent one competitive method receives major discounts and the others generally do not, this service benefit discount is probably only of benefit to the insurance companies who enjoy it. A personal episode in my family illustrates.
My son went to a well-known Boston hospital for outpatient colonoscopy and received a bill for $8000.00. When told that was outrageous, he protested and promptly received a bill reducing the charge to $1000. He was delighted to send a check for that reduced amount, even though I told him a fair price was probably around $300. He reminded me of a comment from a famous surgeon now deceased, whose name is emblazoned on a tall pavilion in another city. The old surgeon growled, "The only reason to carry health insurance is to keep the hospital from fleecing you." In a sense, that growl applied directly to the colonoscopy, which that hospital had converted from markup into a holdup.
Discounts for Health Savings Accounts? HSAs scarcely have to penetrate the market much further before they have the market power to command an equal discount. That may still take a little time, because some states have hardly any penetration, while California has a million subscribers. In the meantime, the patient needs to be careful to ask for prices in advance. Almost every health insurance has started to impose high deductibles, so their proper stance is to insist on equal treatment. The old system of "First-dollar coverage" was responsible for making outpatient care a target for this sort of thing. The next advance, after making all outpatient care match market prices, is to insist a hospital charge the same thing for the same service for inpatients as it does with outpatients. To make that possible, it has to return to fee-for-service billing, and management of Health Savings Accounts should settle for no less. That's the main reason DRG billing offends me, although there are lots of other reasons, and lots of other people are injured in different ways.
Well, it's all called the Health Savings Account, Classical Version. John McClaughry and I invented it as the Medical Savings Account in 1981, and we both consider it to be on the short list of things we want to be remembered for. The central feature of these accounts is they pay your medical bills with a special debit card, and they get every tax deduction we could find, except one.
Proposal 79: The law says they must be linked to catastrophic health insurance but are forbidden to pay the premium. This omission should be repaired, by changing the law or regulation; with this change, they would become superior to the discriminatory employer-based tax abatement discussed below, because that could extend the income tax relief equally to everyone, regardless of employer.
Since almost everyone would agree, why not adopt it and get on to other business? The essence of the whole remaining debate is how to pay for comparatively low-cost care, especially for people with low incomes, neither impoverished nor affluent. Some people will have to be subsidized, and the rest are mostly able to save enough to pay their medical bills. We can ease things for borderline cases with tax deductions, and the rest is mostly a routine drawing of lines. The concept is discussed in greater detail in later sections of this book. Right now, all it immediately needs is a revision of those two regulations of the Affordable Care Act.
An HSA should be overfunded. Any surplus can be used as a retirement fund.
That's all there ought to be to this fuss, and we already have most of it enacted into law. Whether called the Health Savings Account or the Medical Savings Account, it is a combination of two things: catastrophic health insurance and tax-deductible savings account for smaller health costs, and it could just as easily be regarded as a Savings Account with re-insurance backup, as Catastrophic health insurance with an account for the deductible. In practical use, one part customarily pays for hospital inpatient care, the other largely pays the deductible and miscellaneous outpatient services. When you get right down to it, it seems amazing so many people resisted the idea of full coverage, with imaginary objections. Since this simple issue has a history of being twisted for partisan purposes, it illustrates how unwise it is to call opponents names, when a little persuasion might convert them to becoming friends of the concept. But if you read between the lines of the next section of this book, it should be no problem to surmise who has opposed this perfectly legal alternative.
Instead of confronting, let's out-bid them, with a Lifecycle Health Savings Account (L-HSA). The dreams of the future usually include legalizing a few radical advancements which become normal parts of the landscape in time. By adding passive investing and the power of compound interest, the HSA becomes a Lifecycle (multi-year) Health Savings Account, providing the balance can be legally carried forward for a lifetime or even longer. The out-bidding already takes the form of adding a new revenue source, not by reducing the benefits.
Proposal 80:At this point, it probably would be wise to add some legislation clarifying the ground rules since several professions would have to cooperate in allowing a new line of business for whole-life insurance.
In effect, it could become a do-it-yourself whole-life insurance company, which pays for health insurance instead of funerals. I'd love to see the whole-life insurance companies adopt the idea, which comes close to imitating their business model. There's no reason why stockbrokers and/or investment managers couldn't do much the same thing in competition--it all depends on what the enabling statutes happen to enable. Whole-life insurers could manage the money professionally and would create much-needed competition for old-style health insurance companies, now operating on the "use it or lose it" principle. The large amounts of money the savings account approach would generate, seemingly almost discredit the idea as exaggerated; we'll, therefore, let the reader do some of the math. Perhaps you do need to dangle astonishing incentives to get people away from the something-for-nothing term-insurance approach which is now threatening to shoot itself in the foot. The full transition is a fifty-year project, but long-term progress usually doesn't seem so long looking back on it, and it gives everybody a chance to claim some credit. Remember, it's only long-term lack of progress you really need to fear.
Let's not quibble. It might even be legally or financially possible to adopt one approach, year by year, or the other, spread over a life cycle; and hurry it all up by making it into a mandatory monopoly. But it is inconceivable for half of a whole unwilling country to tolerate a mandatory health system they widely resent. However, it seems possible to implement parts of both approaches voluntarily right now, without major disadvantages except extra cost. You can do that, or you can read the Lifecycle-HSA as just an alternative proposal to consider. The main dream offered here prefers to cut average lifetime health costs in half ($175,000) but might be expanded to full lifetime coverage of $350,000. Or reduced by individual vendors to some more affordable fraction, such as by a reduction of average costs by only a quarter ($85,000) or a tenth ($35,000). To do this requires some legislation, but $35,000 times 300 million population is scarcely trivial. Even Bill Gates isn't worth half of that.
Over-investment in Health Savings Accounts -- The Retirement Alternative. Because it's a new program, with financing uncertainties, we advise everyone with an HSA to consider overfunding it as a precaution. If you could use resulting surpluses for something else, it should reduce the hesitation to overfund. One alternative is to use Medicare exclusively after age 66 and transfer the surplus to your IRA retirement fund. That's legal and essentially cost-free. Consider all the foregoing to be a short introductory look at the theory of Health Savings Accounts; we next display an actual example, using actual numbers which just came across our desk from a large and local insurer. To keep it simple, we assume the client had no serious illnesses at all and paid for minor illnesses out of pocket. That will rarely be the actual case, but its use here is to illustrate the safety of over-investing in the product in order to fund a healthy retirement with the overflow. Although it will provoke extensive discussion later, we assume the deposits into the HSA will earn 6% compound interest.
Example One. Assume an average employee aged 21 receives $750 yearly from the employer and deposits $3300 into the HSA account, adding the personal supplement permitted of $2600 extra, until age 66. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
Example Two. Assume an average employee aged 21 receives $750 yearly from the employer and deposits $3300 into the HSA account, adding the full supplement permitted of $2600 extra, until age 26 when he/she retires to get married. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
Example Three. Assume an average employee aged 61 receives $750 yearly from the employer and deposits $3300 in the HSA account, adding the full supplement permitted of $2600 extra, until age 66. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
You pay income taxes when you make the transfer to the IRA and on IRA withdrawals. Most of the investment return is tax-sheltered, however. Assuming 6% tax-free earnings and a 15% blended income tax rate, your investment of $132,000 would be worth $698,000 pre-tax, and $482,000 after income tax, at age 66. At that point, suppose you pay your HSA tax and re-invest the proceeds in an IRA. Assuming a life expectancy of 88 years at that point, you would leave $1,638,000 when you die, or $1,493,300 after income tax. That's assuming you actually spend nothing out of the account, but since it's a surplus, it also represents how much you could have spent without affecting the retirement. Be careful of this point, however, because the age at which you spend it will markedly affect the outcome. That's unlikely to be sure, but if you consume it all you have paid for all your lifetime healthcare, as best we can estimate it. The point of this calculation is not to make everyone rich, but to demonstrate the financial power of the approach. With a little management, it easily covers the actuarily projected lifetime cost of health care of $350,000 per person and leaves enough slack to be comfortable about it. In case anyone questions the ability of a poor person to save $3300 per year, lifetime savings would amount to $440, per dollar invested at the beginning. That's too attractive to brush aside on the grounds you might never be able to do it, even for brief periods. It's quite honest and legal, starting today, but an additional reason to show it here is to demonstrate how little anyone has to lose by investigating it today. In fact, over 12 million people have already started such arrangements. If the rudiments of the plan are that attractive, just imagine what a few legal clarifications could accomplish.
What's the secret? Instead of paying 10-15% to service your bills, you earn 5-6% interest by pre-paying them. The swing between those two is the difference between comfort and worry. There are other swings, but that's the main one.
Read on, to see how the passage of a few relatively harmless laws, might offer poor people a way to get a rich man's health care. Getting rich in this sense amounts to funding your medical bills in a radically new way, but it does not imply any change in the kind of care you receive. Otherwise, it certainly will cost somebody $350,000 per average lifetime, as calculated by Michigan Blue Cross, verified by Medicare.
But it doesn't imply that no one will be worse off. There are 1,500,000 employees of health insurance companies, but there are only 800,000 licensed physicians. Doesn't it seem excessive that for every doctor you see, there are two insurance employees handling the bills? It's probably conservative to guess that every doctor hires another insurance employee, and every pharmacy hires several. Every hospital probably hires a hundred, and every laboratory or x-ray laboratory hires more; it just seems to go on, and on. Five or six clerical insurance employees per doctor don't seem like a wild guess since a lot of doctors aren't actually practicing. Those who want to continue with this sort of thing can pay for it. Surely, the rest of us deserve some other choice.
Because this book is written during a confusing period where both Health Savings Accounts and Obamacare have been enacted, but the position of the Supreme Court has not been clarified, nor the regulations coordinated, -- what an individual should do is highly specialized to his age and situation. We cannot predict what upsets the November 2016 elections will bring, or what the result of their reconciliation will be.
Essentially, this particular health plan offers its groups the choice between an Obamacare with, and Obamacare without, a Health Savings Account. Into the HSA version, the employer effectively contributes $750 but gets a lower premium from raising the deductible. Never mind the economic argument that the cost ultimately comes from the paycheck; most people will say it feels like a gift. The compound interest in the future dictates that every young person should enroll in an HSA at the earliest possible moment, and supplement the employer contribution to the limit of his ability. A young lady, for example, should go to work immediately after graduation from school, even though she plans to drop out of employment when she gets married. An older employee, on the other hand, is far less expensive to the employer than he appears to be if the retirement benefits are considered. If a person reaches age 61 without provision for retirement, there is little to be done about it.
Commentary. The high deductible portion of Obamacare serves as the catastrophic link required by the HSA enabling act. The employee is annually allowed to contribute up to $2600 to the savings account additionally. (There's a family plan, with different contribution rates.) There's no way to know how long an employee will remain with the same employer, or whether a new employer would continue the same coverage; but at least an individual's HSA has been established, provided you go ahead and do it. If an employee starts this plan at age 21 and continues it to age 66, the outside potential is to transfer $159,550 to a regular IRA at age 66, assuming 6% interest, but no personal supplement, and only out-of-pocket health withdrawals. Never mind theoretical economists; it's a very good deal, and it almost feels free.
But don't get carried away; you can't spend the money twice. The example shows the financial benefit of being lucky with your health; it could also be said to reflect the cost of being unlucky or careless if your health is bad. Its success depends on young healthy people saving their money and generating extra income before they become older people getting sick and having to spend their savings. Meanwhile, scientific progress will exaggerate both the savings and the attained age before the spending begins. In the past century, that added thirty years of longevity, and hence thirty years of compound interest. If some scientific miracle should add more cost than longevity, a mid-course correction might have to be applied. Some future generation might have to answer the question, "Didn't you want to live an extra ten or twenty years?" I would have to say the medical profession has been pretty good with this juggling act in the past when we were in control of it; one of the ponderable dangers of upsetting the system is the danger of upsetting this balance in the future if control of the payment system falls into other hands.
The foregoing should suffice as a summary of this book's proposal. The next section describes some of the other serious problems with healthcare and how they got that way in the past century. Sometimes more funding will help these problems, sometimes it won't. The section following that will describe some of the nuts and bolts of Health Savings Accounts, and sketch in some more elaborate variations which might be possible. By far the most important new concept to be thoroughly absorbed is the approaching wrestling match between the health industry and its finance partner. Recall that we have estimated the Health Savings Accounts would earn 6% compound interest income during the long lifecycle between healthy youth and sickly elderly. Actually, that is likely to be an under-estimate.
Stock Market Issues.For the past century, the foremost student of the matter, Roger Ibottson, has shown the equity stock market has averaged about an 11-12.7% total return. Investors in index funds of the same stock have received about 5%. Three percent of this attrition is ascribed to inflation, leaving another three percent unaccounted for. Money managers use the residual 3% for expenses and to buy bonds as a safety measure. While the law of large numbers will ordinarily account for the ordinary jiggles of the stock market, there is some other cycle at work causing a severe crash every 25-30 years. It is thought wise to set aside 25-40% of the portfolio in bonds to ride out such "black swan" storms. This, in essence, is the central issue of the third section. The final section describes other variations of the Health Savings Account concept, particularly as it involves transitions from other funding mechanisms.
If the preceding chapters have done nothing else, I hope they have at least acquainted the reader with the fact that the current federal deficit is currently made worse by seventy billion dollars through the tax exemption of health insurance premiums, the largest American tax loophole ever recorded. Further, this tax exemption is inequitably distributed and is a source of societal friction which could express itself in unpredictable ways. And therefore the politics of dealing with it must be very carefully handled. This chapter is a serious description of a proposal for dealing with the issue. I believe it contains nothing which would injure a component of society, and it would not increase the federal defeat. It would slowly remove health costs from employer budgets, and it would ultimately nudge them considerably.
The idea of a Health IRA had its beginning at a dinner for the White House policy staff which I was invited to address in 1980, and the Provocateur was John Mc Claughry, then Senior Policy advisor in the Reagan administration. It must be remembered that the IRA (Individual Retirement Account) law had not yet been passed, but John must have heard about it, and suggested an extension to health costs. Since Mc Claughry’s main intent was in agriculture, he never did much with the health idea. But I was electrified by the idea and took it back to the American Medical Association. Curiously a relatively similar idea was independently brought to the AMA by Dr. Michael Smith of Thibodaux, Louisiana (he called it The CHIP program) the AMA took quite a while to digest the idea but it was eventually adopted by the AMA House of Delegates as an official AMA policy proposal. Somewhat later, but entirely independently Peter Ferrara of the Cato Institute and John Goodman of the Institute of Policy and Research came on the idea and pushed it forward as a replacement for the Medical program. My own views are more expansive. I believe that all health insurance should be eligible for the IRA approach. with a voluntary conversion provision any time after age 65..
Funded Insurance.
Having rattled the cage about tax deductibility in the previous two chapters, it is necessary to make another digression before discussing the Health IRA. It relates to the second flaw in the tax laws affecting health insurance. Employer- paid health insurance premiums are tax deductible, but it is forbidden to carry the benefit forward beyond the year in which it is earned. There were probably good uses for this limitation which are obscure to me, but the essential fact is this limitation made it impossible to build up cash value within a health insurance policy the way you normally build up a cash value within a whole life insurance policy, except by HSAs. Using the reasoning of life insurance, all health insurance is term insurance. Using the reasoning of social legislation, health insurance is a pay as you go scheme. Any way you look at it, health insurance is by law hampered in using the massive power of compound infected to reduce its ultimate cost. Here is the appeal of IRA for Health in the eyes of Peter Ferrara and John Goodman: forty years of compounding where it could greatly reduce the cost of Medicare when the individual reaches age 65, and the existence of the funded reserve would make the insurance promise a lot more secure. Alternatively, just allow everyone to have two policies, one for the current expense,
and one for saving for the future.
Portability.
I like that thought, too but for me, an equally important need is to build up a reserve within the policy so the individual could experience periods of unemployment without losing his health insurance. To lose your insurance when you lose your job crippled the Clinton Health Plan, and preventing a pre-existing condition limitation crippled the finances of the insurance companies because the average time between job turnovers was 3.5 years Obama plan, almost all chronic disorders were excluded unless the Obama administration was willing to raise premiums. Some hidden hand was unable to concede the point, and Obamacare costs spiraled out of control. Either the insurance must transform from term insurance to permanent insurance, or else cost would be insupportable. Apparently, those speaking on behalf of employers were unable to concede either point, so the situation just drifted and got more expensive. I have repeatedly seen patients who became sick while they were unemployed. And then became they had developed a “preexisting illness†they became uninsurable even if they got a job. Or they couldn’t get a job because employers recognized they were expensive to hire. To me, the linking of health insurance to employment was a concept which needed re-thinking if individual tragedies were to be avoided. Somehow, it was easier to characterize such opinions as insensitive, than to do anything to repair the underlying problem.
Furthermore, part of my job is to listen to people’s troubles. Many times I have heard patients complain they hated their jobs but were afraid to quit for fear they would become unemployable during the change-over. For practical purposes, health insurance under the employer-based system is not portable between jobs. It has not already collapsed because so many diseases of younger people have been cured, adding thirty years to life expectancy. If the new employer provides group health insurance, it is on his own terms and those terms may be unfavorable to the individual. I have just once in sixty years of practice, encountered an employer who changed the benefits of his group policy and was thus able to terminate the ongoing payments to the dependent of one employee. Employer casual group health insurance is a reasonably good system. But as the health of the nation improved it developed lots of flaws which might have been corrected. They weren't, because the health part was never the main concern of enough employers, so they permitted the health companies to resort to short term patching.
To me, it is a flaw that the employer sets the terms of the policy. It seems much better if a way can be found for the employee to own his own policy, raise, lower or change the benefits as he is willing to pay for them and carry his policy with him as he chooses his own employment circumstances. The employer is mainly interested in the cost of the employee benefit, so let him restrict his interest to how much he is willing and able -- to pay.
The American Medical Association feels unappreciated and misunderstood, and that is indeed a pretty accurate appraisal of things. In 1976, when I was offered an opportunity to be nominated to the AMA House of Delegates, I naturally was flattered to represent a thousand physicians. But I must admit that an extra incentive was the opportunity to learn what the AMA was all about. Since that is not exactly a superior qualification for election. I kept it quiet until now, but I can tell you that it is a very common feeling among new delegates. Even up to the time of being invited to give this lecture, my thoughts were formless or subliminal, and it is actually a welcome opportunity for me finally to coagulate my thoughts in order to say something useful to you tonight. Some would say, it is about time I made up my mind.
It seems helpful to begin with a broad historical perspective. Most of you know that the AMA was founded in Philadelphia in 1847 and that this Philadelphia County Medical Society is older than the AMA, and older than the Pennsylvania Medical Society. That was entirely natural, since Abraham Lincoln was then a small child in a log cabin in the forests of Illinois, whereas Spruce Street was lined with mansions, and the Pennsylvania Hospital was one of less than a dozen hospitals in the whole country. Things changed dramatically during the Nineteenth Century, but it would be important for you to recognize that by the year 1900, only seven percent of American physicians were members of the AMA. The AMA was founded as an elite brotherhood, adhering to a Hippocratic Code of Ethics, protected by stringent entrance restrictions, and internally disciplined by active boards of censors. If you were a member of the AMA and had not yet been thrown out, the public could be assured that you pledged active allegiance to Code of Ethics.
Well, as you know, the news media now jeer, and the AMA now despairs, that membership has declined to slightly less than half of all practicing physicians, a fact which is probably correctly attributed mostly to the rather high dues. Again, you should know that at the peak of membership in the 1930s, when it is fair to say that almost every physician was a member, the dues were free.
What happened to the ama was the Flexner Report in 1914. At that point, the AMA enlarged its traditional posture of self-discipline in a naughty world to active involvement in the processes by which medical excellence is produced. The Flexner report was devoted to examining the scientific content of the medical educational process and membership in the AMA came to stand for scientific as well as ethical excellence. Without intending for it to happen, the AMA had stumbled on the real secret of medical prestige, and after that, the AMA had no problems with attracting membership.
Throughout the Nineteenth Century, the major accomplishment of the AMA had been to establish the state licensing process. As a result of its formative activity in lobbying legislatures to create state boards of medical licensure, and it's later spectacular success in specifying the best medical educational process, the AMA has long played an influential, indeed dominant role in both areas. The Joint Commission on Accreditation of Hospitals was another AMA project, and so was Blue Shield. None of these secondary power centers (now dominant in licensing, education, hospital regulation, and health insurance) was established as an AMA vassal,but their formats were established from the beginning using the AMA model, their early leaders were all AMA leaders, and to this day, the AMA is certainly where to be if you want to learn the ropes. It must surely be frustrating to the enemies of the AMA to see how fruitless it has been to resist the power of the AMA in these areas, because so much intangible power rests in the experience, savvy, and contacts of the AMA in these areas, because so much intangible power rests in the experience, savvy, and contacts of the AMA leadership. They know where the bodies are buried, and they know all about the personalities and politics of the process. You could spend three lifetimes as an outsider just trying to learn what is going on. By the time you learned, the situation would have shifted just enough so the information wouldn't do you any good.
So, you can see that in some ways the AMA is an object lesson in the way that society often gives power to idealistic leaders, and then Idealism struggles to check the corrupting pressures of Power. The ancient Greeks thought it was a good idea to have philosopher kings, but history teaches us that even they acted more like kings than philosophers. Since this seems to be the universal nature of human behavior, it is vital that we search for self-regulating mechanisms in our institutions. The one I suggest for the AMA is the very unpopular suggestion that we be careful how we lower the dues, and we must never achieve automatic membership of the entire physician community. We must be cautious of defining success in the Morris Fishbein sense of getting rid of all dues because then the staff and leadership won't need to solicit membership. When we stop scratching and scrabbling for members, the members lose their ultimate power to impose their wishes on the organization. No one now needs to sign a petition or make a speech, and it is definitely counterproductive to threaten the leadership that you are going to resign. Rather, the invisible hand of the perceived wishes of the membership is raised in every vote at every Trustee meeting we must care of this or that, we must be careful of our image, else the membership might not like it. The paradox is that the AMA is now much more representative of members than it ever was in its heyday. When Morris Fishbein was coining a fortune in cigarettes advertising in the JAMA, the wishes of the membership be damned.
The thought I would next pursue is that the bumper stickers, paraphrased as "If you don't like the AMA just try to practice medicine without it." The . AMA is the largest medical publisher in the world, and while New England Journal has more prestige at the moment, it wouldn't take a charismatic editor more than five years to put the JAMA back on top of the prestige heap. The AMA News is by far the best medical newspaper in the world, and it supplies an absolutely unique information role.
The AMA has a program in the health care within our prisons which has almost no visibility, but which I can assure you is something you can be very proud of as a humanitarian effort conducted for its own sake. The AMA is extremely active in such abstruse but vital projects as creating medical nomenclature coding, uniform insurance billing forms, medical manpower surveys, health economics monitoring, and clearinghouses for personal exchanges. Whenever we have had a war or physicians draft, the AMA has been the only organization capable of coordinating the civilian and Military medical needs of the country. The AMA seems to be the only organizations which give a hoot about the Veterans Administration or military medicine. There is a very large building in Chicago filled with a thousand salaried people doing many other very necessary things, and doing them quite creditably, without getting very much public credit for it.
The United States of America is a republic, not a democracy as we sometimes tend to say. The American Medical Association is a much purer form of a republic, and its retention of some republican forms which the National government has lost has been a very useful political education for me. I take my seat in the House of Delegates by presenting a little yellow card, signed by the current president of the Pennsylvania Medical Society. If I have the card, I am seated; no card, no card. The cards are given to the State societies in the proportion of one card for every thousand AMA members. The AMA sees to it that the State Society Presidents are in person at the meeting to adjudicate credentials disputes. States may elect their delegates in any way they like and there are several methods. In Pennsylvania, the election is made by the Pennsylvania Medical Society House of Delegates, where membership is roughly one for every hundred members, sitting by countries. Philadelphia County has 30 delegates, and three AMA delegates, although there is nothing official about that.
The AMA House of Delegates meets twice a year for a week. Since you cannot retain your seat without tending to the political fences, a delegate must also attend the state and local meetings. A delegate must thus expect to devote four full weeks a year to the experience, and he need not expect to be influential at the AMA until he has been there at least five years. The AMA delegates feel very strongly about personal commitment; you can be tolerated if you are pretty eccentric, but if you don't come to a meeting, you are instantly ostracised, and probably will be quickly replaced.
The delegates have two main duties. They are an electoral college and they are a legislative body. The House of Delegates elects the President of the AMA and the Trustees, who run the organization between meetings of the House. The House also elects the members of four Councils, who are the specialists in matters of science, legislation, medical practice, and governance. The 70 officers, trustees, and councilors are the leadership, the Curia so to speak, and House of Delegates meetings are highly charged with the politics of these elections as well as the shadow of elections coming in future years. I am inclined to think the candidates take the elections too seriously and the delegates do not take them seriously enough, but it is a matter about which you cannot be entirely certain. There is absolutely no doubt that every delegate has ample opportunity to know every candidate very well, and it is likely that the House makes relatively few mistakes in its choices.
Acting in its legislative role, the House of Delegates usually receives a very thick handbook of agenda, two weeks before every meeting. Most newcomers are overwhelmed by the unexpected volume of detail and are quite unprepared for the ensuing experience of holding up their hands and voting on two or three hundred issues in the course of a week. There is a knack to mastering the process, of course, but mostly the knack comes from making the awful acknowledgment that you really must spend all evening studying the handbook, every evening for the two weeks before each meeting. You don't have to do it, of course, and some members are obviously bluffing. But if you expect to be effective you must do it, and if you want to get effective you must do it, and if you want to get effective you must do it, and if you want to get promoted you have to be seen to be effective. Business starts at 7 AM sharp, often in a city where you must cope with three hours of jet lag, and it goes straight through to midnight. The fact that you are eating breakfast o at a reception does not change the business nature of the day. Only a profession of workaholics could produce three hundred delegates and three hundred alternates, the majority of whom will put up with this grind for ten or fifteen years. Some of our decisions may be wrong, but we sure try hard to make them right.
In closing, I think I should say something about the AMA lobbyists. The AMA is rightly known as having the most effective lobby in Washington, but you ought to know what that means. Since we are a national organization, and every congressman has a doctor, and every congressman lives where there is a county medical society, it is possible to create an organization which can influence the entire Congress, but only with a massive organizational effort. Congressmen too are overload with work and live in a constantly confusing environment. Just to be able to get them to listen to your story is an achievement, and it is necessary to work very hard at repairing this network of contracts. AMPAC raises campaign contributions, and this is one way of reaching some congressmen. Knowing who is on what committee, how he leans, who can influence him, and when the timing is right is an enormous organizational job. Sometimes extraordinary measures are needed, was true in April 1984 when mandatory assignment of Medicare benefits looked as though it might pass. The AMA flew in 125 state medical society presidents and other key contracts and led each one up to the appropriate doors at the critical moment. As you know, the effort was successful.
Most lobbying, however, is far less dramatic. The Federal Register is published weekly and averages seventy thousand pages a year. Perhaps a twentieth of that fine print pertains to medicine in some way, and it must be culled out, studied, decided about, and lobbied with the staff assistants and bureaucrats who are producing it. here are no major victories in this sort of work and you lose a lot of arguments. But there is little doubt that the steady pressure, the constant alertness, and the presentation of superior information have the effect of pushing this avalanche of legislation in directions which are much more favorable to medicine than if the effort were not undertaken.
And fellows, it all takes money. We can raise money by forming captive malpractice insurance companies, or getting advertising in our journals, or charging for computer networks, or speculating in real estate. But who pays the piper calls the tune. In the long run, the member will only control their society if the society remains heavily dependent on their dues. You really must choose between three alternatives. You can have no one represent the profession in an era when everyone else is represented. You can be represented by a bureaucracy which constantly reflects your wishes because it constantly hungers for your dues. The decision is yours and you can expect, in the long run, to get what you pay for.
Since Benjamin Franklin's time and before, there has been little dispute that saving for a rainy day is a generally good thing. The big problem has always been that to save more, you must spend less. True, spending more and saving more is hard to imagine, but quirks in health insurance might indeed make it possible to save more while spending about the same. The lucky circumstance that major health costs cluster toward the end of life provides a long preliminary period when compound interest could be at work. It should also be possible to persuade even the revenue-hungry Congress that allowing health benefits to be tax exemptions and allowing their internal interest income to be tax-sheltered, represent no greater revenue cost than is now accorded the pay-as-you-go system. Taking before-tax income and compounding it, tax-exempt, for a long period of time can generate astonishing sums of money.
But you must start with some seed money. The heart proposal for a relatively painless transition to funded health insurance is to abandon the insurance mechanism for small medical costs. Health insurance would not pay anything until a person's health costs totaled, say, $500. In insurance jargon, we would abandon "first-dollar" coverage and impose a subtab=ntial "front-end deductible". Please don't get hysterical; just listen how money gets taken from one pocket and placed in another in this way. Quite obviously, the premium for $500-deductible insurance is smaller (by about 25%) than for first-dollar coverage. Equally obviously, the subscriber then has to pay out of pocket for some medical costs which formerly seemed free. However, if the employer contributed the same amount the employee hasn't lost money, just undergone forced saving. Since some medical care then has less illusion of being a free lunch, there will be some "utilization" saving. (see Table A) That's one true saving which contributes to the seed capital we're trying to build up.
A second real saving generated by high deductible insurance comes from the way the employee makes interest-free loans to the system. Whenever he digs into his pocket and pays medical expenses which do not total up to the annual deductible, an equivalent sum (which first-dollar insurance would have paid out) continues to earn interest within his funded insurance. His employer is paying for the medical expense, but the payments get locked into the investment fund. The double payment might otherwise have increased personal savings, or it might have been "squandered on drink"). If the money would have been saved, it earns a greater return in a tax-sheltered account. If the money would have gone for luxuries, it is no matter. However, if it actually deprives a marginal income producer of true necessities, some readjustment must be made and the ultimate result will probably be increased cost to the employer. Since at most we are talking about $5 a week, this obstacle does not seem as serious as the problem we are trying to solve. Excluded from all this discussion, of course, are those truly poor people whose medical care is destined to come from private or public charity. A funded system will reduce the number of charity cases, but it does not pretend to address their medical payments directly.
The third source of cost saving, hence seed capital for investment, comes from eliminating the rather horrendous costs of processing insurance forms and checks for millions of little medical expenses which aggregate to less than $500 a year per individual. The fourth section of this book ("Tangles") deals at length with the complexities going on inside those big insurance company buildings. Suffice it here to say the national cost of insurance administration and processing is at least $xxxx billion, a sum equal to 1/xxx of the federal deficit or 1/xxx of the loss in the international balance of trade. It makes no sense use insurance to pay a five-dollar claim with a bank check, because it costs at least $1.50 to produce, send, credit, deposit and reconcile the check. It makes no sense to require a claim form to be filled out, mailed, received, opened, verified, and processed because it costs from two to six dollars to do it. To go through all this processing for a five-dollar charge essentially doubles it into a ten-dollar cost. This sort of thing happens every single day in my office, and it must happen millions of times a day nationally. The cost in extra mail bags alone must be appreciable. So, a large front-end deductible health insurance policy is definitely less costly to society than a first-dollar policy which pays for exactly the same medical care at the same prices. The savings would become part of the nest-egg saved up in the funded insurance.
Proposals For Reform of Health Care Financing: AMA Resolution, No loss/No Gain Clauses in Group Health Insurance
WHEREAS a "no loss / no gain" clause in a group health insurance contract assures employees that an employer who transfers the group to a new insurance carrier will not create "pre-existing illness" exclusions or loss of benefits under an ongoing claim under the old carrier.
AND WHEREAS some states (Arizona, California, Connecticut, Florida, Georgia, Minnesota, New Hampshire, New Jersey, North Dakota, New Mexico, Rhode Island, South Carolina, Texas, and Wisconsin) require the inclusion of "no loss/no gain" clauses, state do not.
THEREFORE BE IT RESOLVED that the AMA review the experience in states which require "no Loss / no gain" . clauses in group health contracts, with recommendations as to whether AMA activities to promote that concept or some alternative, might be appropriate.
Typical language for no loss/no gain:
Benefits are payable for pre-existing conditions if you or your dependents were insured for all of the benefits under the old plan on the date it ended. Benefits will be the lesser of the benefits payable under the new plan as if there were no pre-existing conditions section; or the benefits that would have been payable under the old plan.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.
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.
