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
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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.
Improvements in Regular Health Savings Accounts: Introduction.
Health Savings Accounts have always been a good idea since their enactment in 1996 and reaffirmation by Congress in 2003. But they could be vastly improved by six simple amendments, plus one moderately complicated one, to be described shortly. Right now, without such new legislation, they produce roughly 30% savings (for an estimated 12 million subscribers) by providing subscribers an incentive, to use insurance frugally for medical expenses and keep the savings for themselves. That's by contrast with regular health insurance which actually encourages more health spending, as the only available way to get something back for the money. Alone of the options available in American health insurance, HSAs invest "unused" premiums and credits them to the subscriber. Ultimately, it rolls over any surplus to a regular IRA retirement account, at age 65 or whenever Medicare supplants it.
It is mandatory to link HSAs to high-deductible insurance for big medical expenses (so-called "re-insurance"), whereas the Affordable Care Act aims at the same goal by placing a "cap on out-of-pocket expense", in addition to the deductible limit. The approaches are not completely comparable, however, because the cap approach forces the basic insurance to re-absorb such costs, while a high deductible approach actually pays the bill. It is not clear whether there is any resulting cost difference to the subscriber, on this feature. However, the overall net cost is appreciably less for HSAs than traditional health insurance, while with the "metals" plans of the Affordable Care Act, the price differential is even wider because of the subsidies it extends. It is too early to judge whether these subsidies will have to be cut back to maintain solvency.
Traditional insurance requires the complexity of filling out and processing millions of claim forms, whereas the HSA approach has generally been to use a bank debit card for small expenses. For large hospital costs, each high-deductible plan has its own approach but generally seeks to apply Medicare's DRG approach where the hospital will agree to it. DRG stands for Diagnosis-Related Groups, paying by the diagnosis rather than itemized charges.
The higher the deductible, the lower the premium.
Small-cost Items Are Expensive to Process
Alone among insurance alternatives, HSAs permit the growing number who remain fairly healthy during their working years, to transfer any remaining surplus from unused insurance into an ordinary IRA at age 65, where they help finance retirement. Essentially, this means the restriction to use them for medical purposes is lifted. Thus, they can reward healthy people who live too long, just as surely as other people who seem to spend most of their time in a doctor's office. Better stated, the real distinction is between the (shrinking) number who develop serious illnesses while young. And the (growing) number who delay developing serious illnesses until they are elderly.
Before we plunge into the weeds of compound interest, notice the feature which started the idea: high deductibles. The higher the deductible, the lower the premium -- in any kind of insurance. Several decades ago, there was once sold an extreme illustration, of a twenty-five thousand dollar deductible health insurance. Its premium was a hundred dollars a year. That dramatizes the idea, but it was never very popular. Insurance is seldom purchased, as they say; it is sold. There can't be much profit in a hundred-dollar premium.
Reform Proposals for Regular Health Savings Accounts
If they are so attractive, why doesn't everyone choose HSAs for their health coverage? Legalistically, although deposits into an HSA are tax-deductible, the high-deductible reinsurance portion must come from after-tax income. That is, the law specifies, HSAs are not permitted to pay the premiums of health insurance, even though high-deductible insurance is required as a condition for buying an HSA. In practice, the insurance portion is denied a tax deduction unless it is purchased separately by the subscriber's employer . No reason has been advanced for this strange unfairness, but the only party visibly gaining by it would be its insurance competitors, who mostly sell conventional large-group insurance through the Human Relations departments of big-business sponsors.
A 35% Federal Corporate Tax Reduction, plus State Tax.
Understanding Big Business
Probably a more satisfying explanation is that maximum American corporate taxes (state and federal) are stated to be the highest in the world, varying from 15% to 48%, depending on the state of domicile and the size of the earnings. The number of employees is quite unrelated to either the earnings or the state, so the tax deduction for health insurance is also unrelated to those factors, probably more related to the type of business. Generally, corporate behavior is more influenced by differences between competitors than absolute costs. Let's take the average employee health insurance premium as published by the government to be somewhat more than $5000. Let's say the employer has 10,000 employees and pays $50 million a year for the insurance, with a business deduction of $25 million reductions in taxes. Quite often, an employee is asked to pay 30-50% of the cost, sometimes not. Economists are unanimous in the opinion that employees eventually pay all of an insurance benefit themselves, through a gradual reduction in take-home pay. If the corporation is profitable, it is very likely the cost of insurance is reduced at least 40% by tax abatement and an unknown amount by the employee absorption of the cost into his paycheck. In good years, it would not seem impossible for an employer to calculate he pays nothing at all for the insurance. It is safe to say that in a high-tax state with many employees contributing, the employer cost is very little. Even if he fails to make a profit on the transaction, he certainly becomes less sensitive to the rising cost of health insurance. This cannot be a useful ingredient in the battle over health costs. In fact, it even creates a motive to be indifferent to high corporate tax rates, which might even lead to a worse effect on the economy than rising health costs. A major employer thus is faced with some major ambiguities in his stance on these public issues, and very likely feels pressure to resist the idea of even opening up the issue for discussion.
(Proposal #1) We, therefore, suggest this unfair differential could be most easily remedied by providing HSA owners the option of paying the mandated insurance premium of catastrophic high-deductible insurance in two steps: first to the HSA, which is itself tax-exempt, and secondarily transferred by the HSA to the reinsurance company without hindrance or tax. Whether this change could be made by regulation or would require legislation is not clear, because reasons behind the existence of this discriminatory prohibition are not entirely clear. Treasury's revenue loss from extending a tax exemption to unemployed people must, of course, be very small. And since now the Affordable Care Act contains almost no policy without a high deductible, there begins to be legal standing at the Supreme Court for those who are forced by law to pay differentially higher premiums for it.
(Proposal #2)Meanwhile, enrollment in HSAs would be immensely stimulated by permitting Flexible Spending Accounts to roll over unspent balances into HSAs from year to year. Some other small but questionable features of FSA are discussed separately in www.Philadelphia-Reflections.com/blog/2693.htm, For now, it is important to realize they are not the same thing, but they could, and should, be combined by permitting rollovers of the employee's own money to Health Savings Accounts. In the cases where the employer provides the money, his permission is of course required. But it should not be overruled by a rule that has adverse cost consequences.
(Proposal #3) The electronic insurance exchanges proposed by the Affordable Care Act have perhaps begun too ambitiously, but it continues to seem like a good idea to reduce administrative costs by direct marketing of insurance plans, direct premium payments, and direct payment of claims to providers. When such features are implemented, they should, of course, be extended to Health Savings Accounts. As discussed later, small-balance accounts of any sort are an expensive nuisance for banks and investment companies. Perhaps freezing withdrawals until the accounts reach $10,000 would accomplish this, as would the issuance of discounted bonds in lieu of opening accounts until they reach a minimum size. Brokerage houses which issue super-low-cost index funds might consider issuing single-purpose bonds to buy them on a sort of "lay-away plan". The whole issue of reducing administrative costs might need to be deferred until interest rates return to normal levels, and the transition from teller windows to electronic banking is more complete.
(Proposal #4) Because of societal conflict over who is responsible for obstetrical costs, the father, mother or child, there is some uncertainty in health insurance about the same matters. However, if obstetrics and childcare costs could be clarified as joint investments by the parents and the child, it might clear the way for Health Savings Accounts to add an additional 26 years to the duration of internal compounding for HSA reserves of all three persons. More professional legal consultation might be advisable, but the intent is to make a change of ownership cast a long but inexpensive benefit through distant enhancement of HSA value for whoever eventually uses it. The child will usually outlive the parents, eventually narrowing the scope of the adjustment. This change alone might make small single-premium gifts at birth more attractive to people who had never before considered them. With an additional 26 years to compound, discounted lifetime health costs at birth could be in the astonishing range of a hundred dollars. Narrowing the scope to a bond with limited transferability might also help. In the long run, we can expect health costs to narrow down to the first and last years of life. Early recognition of this trend might reduce the cost of migrating to it.
(Proposal #5)The linkage of Health Savings Accounts to high-deductible insurance creates a logical division of payments, into using bank debit cards to pay only outpatient costs, but the high-deductible insurance to pay only inpatient costs, especially where pre-payment can be based on a diagnosis. Since hospitals may well differ, this matter should be clarified in regulations. There is also the problem of emergency room payments, which are often switched to inpatient costs if the accident victim is later admitted to the hospital. Remarkably, this often lowers the payment.
One of the great muddles of present healthcare payment is the translation of Diagnosis-Related Groups (DRG) into indemnity equivalents. The present tendency to collapse many medically unrelated disorders into the same "diagnosis-related" code, should be reversed. The DRG code should be completely revised, utilizing the SNOMED code rather than ICDA, then reconnecting them to indemnity equivalents. At the very least, this would reduce the number of "all other" diagnoses, which are not diagnosed at all. It is suggested that each basic DRG payment should be uniform nationwide but subsequently adjusted to the individual institution, through audited direct and indirect overhead supplements. This might reduce the reluctance to post base prices on the Internet for competitive reasons, thus expanding their detail without significant cost, and facilitating prompt "pre-payment".
(Proposal #6) Add some stripped-down Catastrophic Plans to the "Metals" Plans of ACA. For mysterious reasons, Catastrophic health insurance is one of the options for the Affordable Care Act but is limited to persons under the age of 30, unless they are hardship cases. There may be some conflict between the authors of the legislation and the authors of the regulation, which will require the Supreme Court interpretation of the intent of Congress. To use even the cheapest plan available, the Bronze Plan, adds considerable premium expense and therefore reduces the amount available for producing investment income. At one time, $25,000 deductible policies were available for a $100 annual premium, although that was decades ago. Nevertheless, they illustrate the principle that the higher the deductible, the lower the premium can be. That intention may be in conflict with some other intention.
(Proposal # 7) Segmental, Single-Premium, Advance Payments for Lifetime Health Savings Accounts (L-HSA)
Unlike the first six proposals which are almost self-explanatory, the seventh proposal would provide spectacular cost savings, but at a price of considerable rearrangement, and probably incremental introduction.
The first six, fairly simple, proposals would greatly enhance existing Health Savings Accounts and make them able to compete with the awkwardness which has been patched into one-year term health insurance, over the past century. If Lifetime Healthcare Savings Accounts begin to demonstrate attractiveness, demand will rise for enhanced features which may require further preparation and debate.
Lifetime Health Savings Accounts: Biggest cost reduction, greatest disruptiveness.
...and one big one.
In the next chapter, we speculate about some of the potentials for using HSAs to reduce Medicare indebtedness, finance retirements, and essentially pay for all healthcare with investment income, if the reader can believe such a thing, which sounds almost too good to be true. It is certainly too ambitious to undertake without careful study and adversary debate. Most of the problems which bedazzle the viewer relate to the century-long transition period imposed by everybody being of different age at the beginning of the transition. Our solution is to have multiple solutions, some more suitable for different age groups than others. To this end, our illustrations adopt the convention of imagining single-premium policies, beginning at the start of each natural age period with a different single payment to cover all of the healthcare within the segment, and possibly the rest of the life. Segmentation makes it possible to split lifetime coverage into several layers for transition and illustration purposes. But it is not imagined that very many people would elect single-premium as an actual payment mechanism. As one example, Medicare is not included in the Affordable Care Act at all, but it remains necessary to demonstrate the effect of its isolation, on the economics of the rest of the same life.
It is misleading to make precise predictions, about almost anything, eighty or ninety years in advance. However, predicting the average of millions of people is more accurate than predicting any individual future, whereas mathematical principles like compound interest are precise, forever. But let it be clear; what follows is rounded off, estimated, and largely based on projecting past experience into future performance. You must do so, if you want to talk about it, at all.
Investments are more predictable than health costs. At 10% they will double in seven years; at 7%, doubling investments takes ten years. Ten in seven; seven in ten. From birth to age 91, there will be time for thirteen doublings of investments. At seven percent, only nine doublings. With a focus on health economics, Americans divide into four groups: children from birth to 26, working people from 26 to 65, retirees over 65, and poor people of any age. We assume only people from 26-65 are able to deposit money in Health Savings Accounts; children and poor people are dependent on working people to help them, while retirees must live on money they earned while they were 26-65. Businesses and governments are pass-throughs which sign checks, but in our way of thinking, only individuals make and spend money in the national accounting of it. These are the assumptions, please read them twice.
1. Investment predictions are based on Ibbottson's compilation of actual market performance since 1926 of all investments in all classes. It's safe to assume index funds, now available in the trillions of dollars, will follow Ibbottson's patterns for the next hundred years, only because they were remarkably steady during the last century. Two major depressions and a dozen minor ones, one World War and a dozen smaller ones, were unable to shake the long-term trends for more than a blip in the lines.No such prediction can be guaranteed, of course. Highly diversified, Index funds have management fees of about a tenth of a percent, making them steady passive investments for people who have little investment experience, and probably equalling performances of most people who do. Using Ibbottson's raw data, half the population will do better and half will do worse--by managing their own money, even with professional advice. But if everybody buys the index fund without advice, everybody will perform the same. Collectively, the average common stocks of "small" American corporations (but nevertheless greater than one billion dollars of market value each) achieved a ninety-year performance of 12.2%, which we here discount to 10% by using diversified ETF (index funds) of really big stocks with familiar names.
2. At present, the only realistic source of deposits into a Health Savings Account is by individual investors within the age group 26-65, except for investment income. Contributions made on behalf of children derive from money earned by working parents or by -- somebody else aged 26-65. Retirees invest, but the core of what they invest was earned earlier, again 26-65. We ignore exceptional cases. The population 26-65 supports their own costs and those of everybody else. Nevertheless, it is impossible to make precise predictions about the time and amount of shortfalls in individual Accounts when sudden withdrawals must be anticipated. For the most part, transfers are made from accounts in surplus to accounts in deficit, but particularly during the phase-in period, supplements may be necessary. However, everybody's Health Savings Account is a separate piece of property and not a pool. This difficulty is managed by slightly overfunding everything to keep transfers to a minimum, and pooling these surplus amounts by agreement to reimburse them at some later time for some specific purpose. Furthermore, the principle is announced in advance that if shortfalls are unavoidable, the accounts to be billed for it are to be limited to the working-age group from 26 to 65. The ultimate fallback is the full faith and credit of the taxing power of the U.S. Government; but we hope to avoid using it except in dire emergencies like a national nuclear attack or something else of this order of severity, eventually establishing a reputation of a self-funding program. Within that program, the real fallback is to the 26-65 generation who are earning a living. They are expected to care for their children, and aging parents, but by individual agreement. Since the plan is to stop collecting 6.5% payroll deductions from this age group, and anticipated deficits are of the nature of 0.5% of income, assessments should be comfortably met, although it is too much to expect them to be cheerfully met. A whole chapter is later devoted to this sensitive topic.
2.5 Transfers are necessary, however. Because of the security risk, it is probably wise to introduce the extra step of transfer into and out of an insurance or insurance-like pool, so that transfers between Health Savings Accounts can be performed by a tightly controlled security organization which maintains permanent transaction records as its main or only function. Pooling would actually ease the accounting burden of linking every account in surplus with every account which runs a temporary deficit when actually it is only necessary to account for the balances between individual accounts and the pool. If newborns have individual accounts, they will have to be linked to their parents or guardians, and perhaps transferred from their parents' accounts at age 26. Although making health insurance a personal rather than a community activity is a step forward, there will be much occasion for reducing individual volatility while the accounts are still too small to provide their own liquidity reserves. This is also the place to put subsidies for the poor, and payroll tax assessments on the 26-65 age group, replacing the 6.5% payroll tax for Medicare pre-payment, which has been eliminated out of consideration for dropping later Medicare coverage. After the transition phase is complete, the pool will be less necessary, but it may take decades before money spent on obstetrics comfortably matches up with money pre-funded for cancers and strokes.
3. Medical costs essentially do not matter for lifetime plan design, since this is "found money". Rising costs are of course the main concern, and of course, we should pay all of them, but not necessarily by investment income, entirely. We strive to generate as much new revenue as possible and are confident it will raise appreciably more than the present system. If more is needed, additional sources must be sought. It might, if all went as planned, generate half of the cost of healthcare in the far future. But it will never seem like that much, because we are already outspending our revenue, and borrowing the shortfall. Only after our books balance on a current basis, will the public notice any difference. Congress will notice it sooner and be tempted to spend it. If it generates more than we need for healthcare, then if we are wise we really should spend the surplus on retirement costs for an aging population.
However, the outlines of what is possible can be made out. Likely, future medical costs for younger individuals under the age of 65 should remain constant, or even decline in the future. However, medical costs of the elderly are assumed to rise in the future, as people live longer and get more expensive chronic diseases. CMS says 5% of the elderly generate 50% of costs for their age group. Conditions related to obesity are a new source of such costs, while Managed Care has had no effect. Exceptions will appear but predicted cost curves seem likely to assume the shape of a dumbbell, bulging at the ends, but shrinking in the middle. Since working cash for inter-person transfers and unexpected illness are laid on the working age group, it is a lucky happenstance that future predictions almost always show a dumbbell or wasp-waist shape to the cost curve, making it possible to design budget shortfall levies to concentrate on this level. The biggest threat to future healthcare financing may well lie in the likelihood that people who now die at the age of 60 will live to be 85, and be afflicted with the same high expenses as we now see in people aged 85. If present trends continue, the rising costs after age 85 contain a mixture of falling sickness costs, hidden within rising domiciliary costs, or nursing home costs, which possibly belong in a different budget. This outcome seems more likely that the present rate of longevity extension, which is more likely to level off. However, the original point is the strongest on: it is a mistake to pretend to predict a future which cannot be predicted.
4. We assume average health costs for a lifetime to be $300,000, based on a Blue Cross of Michigan study, confirmed by AHRQ and CMS to be of that general magnitude. It is a critical number since it is the burden workers age 26-65 must carry for the whole medical system at every age--averaging $7800 per year apiece for the working person. It is important to know how it is calculated, to understand what it means -- and what it doesn't.
Calculated as described, the $7800 pays for one working person, plus averaged contributions for dependents and charity obligations. Because of cost-shifting, the proportion of redistribution is unclear. But, remember, these are lifetime costs, using current prices. If costs remain otherwise identical, a 3% inflation rate means the answer, calculated the same way next year, will be $309,000. This point is made to convince the reader, that even if we do not know the precise costs, we can be fairly sure that costs will soon outrun our ability to cope with them.
In order to include present costs and present practices, a hypothetical person is constructed from current costs at each level, reassembled in order to reflect current costs for current treatments, as if they all occurred in the year of death. It, therefore, includes 3% inflation over the time span from birth to each particular age. The modest costs of childhood are thus inflated the most, while the expensive last year of life is not inflated at all. Since it will be adjusted in the next paragraph, it is probably not a serious error.
Predicted Future Healthcare Costs. If the $300,000 we spent on each person's health in the last 90 years should merely increase at 3% inflation, lifetime costs will become $4.5 million, 91 years from now. That's sobering enough. But if medical costs increase as much as they actually did in the past century, lifetime costs will come to an unthinkable $1.5 billion dollars a person. Therefore, we accept the present hypothetical lifetime cost, including inflation, to have been $300,000, and assuming no change other than 3% inflation, will be $4.5 million, 91 years from now.
Nevertheless, we know in retrospect that a solitary deposit of $55 in 1926 at the 10% rates which actually prevailed last century, would have kept even with it without later additions. Today, to keep up with the costs of a newborn great-grandchild could apparently be accomplished with a deposit of $796, over twelve times as much. It's still an achievable goal, but it's drawing away from us. Remember, $800 will only pay for present prices, plus 3% inflation. Unlike the last century, the next century cannot add thirty years to life expectancy, or eliminate thirty diseases. In fact, only five remaining diseases account for half the cost, and life expectancy has no room left to increase by another thirty-year extension. The medical profession has the scientific tools to make it work, provided the financial and political professions create the right environment. The present prospects are for science to deflate disease costs in every age group except the oldest, but to quantify is impossible. Since 1913 when the Federal Reserve was founded, a dollar then is worth a penny, now. The medical profession can't help with inflation. Perhaps no one can, but at least a monitor exists to make mid-course corrections of the currency.
More than that, notice the difference between $300,000 and $796. The difference, although roughly estimated, suggests the savings possible by switching to lifetime costs, and investing the difference between "whole life" and "pay as you go" annual payments. It is unnecessary to come even close to actual costs to see the savings from financing the medical system longitudinally, outstripping anything imaginable in extra administrative costs, or price escalation from moral hazard. Cut it in half, or take only a tenth, the savings are so appreciable you begin to wonder if they might upset the stock market. There are even safeguards from miscalculation, remaining inherent in other approaches to cutting the cost of medical care.
For example, we fervently hope, but make no assumption in the example, for an extension of working life, both down and up, to 24-75. That is, we favor a reduction of the two great vacation periods in American life, by a parallel extension of the lifetime of significant work. We recognize most Americans do not agree, and in a democracy that's how decisions are made. But this safety valve remains available to those with bad luck or bad timing; it's how you recover your finances if they have slipped along the way.
Let's cut wasteful practices, particularly the habit our government has of making hospitals into welfare programs, or our insurance administrators have for making them into banana republics, and the habit the public has of wanting everything for free. Let's structure costs in such a way that if an individual doesn't overspend for healthcare, the money saved gets applied to better retirement. It gives the individual some skin in the game, which is the essence of bringing costs down by competition.
Right now, however, it is necessary to examine how we might extract the savings from Health Savings Accounts, gradually transitioning from one-year term to whole life with investment, without upsetting the system. And examining what useful things might be done with a cash windfall before too many extra noses push into the trough. After all, you cannot spend the money after you are dead.
Let's start backward from an assumed guess of $300,000 average lifetime expense, from the viewpoint of someone aged 90, which is also only guessed-at future longevity, to the day of death. To have $300,000 at age 90, you must have $30-40,000 set aside at age 65 in index funds. Remember, in the elderly, we are talking about the period of greatest health costs by present projections, in an age group where few people are working and thus must entirely depend on investments and pensions. It can be done but it's a stretch. In many ways, the greatest obstacle would be the mindset of elderly people themselves. We are talking about buying common stock for elderly people, who must overcome the main reason they buy high and sell low. Left to themselves, they will lean toward the safety of low-yielding bonds.
We have repeatedly alluded to The Monitoring System, which will take time and experience to design. Whether the monitor resides within the Treasury, the Department of Health or some independent agency is a political question that others probably feel they have a better right to decide. Such an agency might have many functions, but since it must have the power to make myriads of mid-course adjustments, it probably requires a self-balancing oversight board like that designed for the Federal Reserve, and we favor that approach. At least once a year, that monitoring body will have to recalculate the estimates of the emerging trend of the balances between costs and revenues, and the distribution of the balances among each yearly cohort from birth to age 91.
Those yearly recalculations would set the price of entry into the system for latecomers, calculating what it would cost to make up for failing to pay for it all at birth. And if the system makes a revision for new information about trends in motion, everybody will in a sense be a newcomer, subject to a late deposit levy. And since the working adults 26-65 will be picking up the extra costs for birth to 26, plus charity cases at all ages, there will have to be secondary and tertiary adjustments in the levy. Furthermore, there may be a recalculation of the cost of a particular age cohort for current medical expenses, and that will have to be set as an additional deposit required for that age cohort. Meanwhile, the investment managers will report on how close they came to their target, and further adjustments made. The Federal Reserve will make a report on current inflation rates, leading to more adjustments. The ultimate goal is to set a price for late entry at each year, so that continuing future income distributions will be equal, for current entrants, as for those who made a lump-sum investment at birth. This monitoring system will also be responsible for smoothing out short-term volatility, as in an influenza epidemic, and possibly long-term readjustments of internal lending and borrowing which were not anticipated at the outset of the program.
The Elderly Investor. Although the Libertarian view is that people ought to be able to do what they please with their own money, this is one case where it probably would be advisable to mandate the pooling of investments, in spite of the obvious introduction of political risk. The argument runs: it might be possible for most people to save $30-40,000 by any number of ways before the age of 65. But after 65 it becomes a little unwise for a growth fund to place trust in the investment judgment of a class of people who rightly prize security overgrowth. They will predictably have a very hard time shaking the perceptions of their age group. On the other hand, if there is ever a chance people will accumulate $45,000 in savings, it would be at the time they stop working. Let's hurry on; our present purpose is to illustrate the principle we are driving at.
Working people 26-65. Between the time they get their first job and the time they retire, working people have children, send them to college, buy a house, and try to come up in life a little. They get dozens of claims for their support, so in our example, to have perhaps $35,000 to surrender at age 65, using our system they might alternatively have to have $500 available at age 27, from Santa Claus. And then let it grow, untouched, to the next goal of $35,000 when they reach 65. That sounds easy, but it often has its problems. If somebody, say their parents, gives them the $500 as a present, it's all pretty easy. But if they have to work for it, then somebody has to give them $35 at birth, because the daisy chain is connected from start to finish. That's right, $35 turns all the way into $300,000 at age 90 if each step is coordinated. It pays for an entire lifetime of health costs. But it doesn't need to. If just about everything goes wrong, a quarter of that would still amount to a big chunk of money. Are you going to tell me no one could afford to give $7 to a newborn? There's no rule against making a partial contribution to your own care. There are practical problems to be addressed, but the power of compound interest isn't one of them. In fact, you might easily find that no investment house would accept a $7 deposit for a 90-year forward account.
Children. After the elderly, the second subsidized group is composed of children, including obstetrics and pregnancy. There is overlap here between child and two parents, and for conceptual purposes, there is nothing to do but be arbitrary. The addition of 26 years of compounding is too tempting to quibble about ambiguities, which might be solved by giving it to any of them, or to all three. That heightens the unfairness to those who do not have children, but it also creates an incentive for the mother to have her first child younger. Medically, that would be a desirable thing. Our society, perhaps even our biology, has created a tradition that the parents subsidize the health costs of children. The Health Savings Account system formalizes that tradition or at least does not conflict with it. For the surprisingly small amount of one single payment of $150 at birth, the child would have $40,000 at age 65, assuming a 10% investment return. Investment advisors might rebel at their costs for accepting amounts that small, but a single-payment zero-coupon bond or credit might be created. That would ease the mechanics, as well as reduce the outcry against federal subsidy to people who might be indigent when the child is born, but are far from it later in life. The disadvantage is a bond makes no provision for the health care of children even though it pays for it, so some patchwork is still needed. A birth deposit of $150 would be worth about $2000 at age 26, and average childhood medical costs might be somewhat greater, so a transfer of ownership could imply a net liability.
The Poor. The third and last category of subsidized people consists of those who are both poor and sick at the same time. Unfortunately, we have tried and rejected two methods of dealing with their problem. The first was defined by the original Good Samaritan: "Take care of him, and I will repay thee." And the second method was almshouses, now a relic of the past. The disadvantages of both approaches are now obvious. The third method was to eliminate poverty, which has worked pretty well. Fifty years ago, sixty percent of the hospital beds in Philadelphia were "ward" beds. Nowadays, there are few enough of them to scatter among paying patients. But the disadvantage soon appeared that the public became determined to prevent the inevitable rationing from spilling over to more fortunate components of society, in an era when hospitals are fearful of discrimination. Mindful of the long history of charity for the sick poor, and the spotty history of using government to cover the costs, we propose that governmental charity be paid out of the pool for inter-account transfers. That preserves an independent audit of just how much is paid by whom, and it is linked to an assessment process on people who must pay the bill. That will not prevent government from discounting its contribution, as it does not prevent Medicaid from discounting hospital bills. But it widens the audience who are instantly aware of it, all of whom will be heard from in the November elections. Individuals are compassionate, governments only pretend to be. You would almost have to say it is the one remaining good feature of having a King -- to symbolize the nation's simultaneous aspirations, of opulence and compassion.
Since America has rejected the obvious approaches to caring for the sick poor (almshouses and blank checks), our institutions are in some disarray. We even seem to be rejecting a mixture of the two, which was the hospital reaction to the 1965 entitlements. Until we identify and concentrate the sick poor in some way, we cannot even measure the size of the problem. But at least concentrating the rest of the population's sickness on paper allows us to measure their cost and (by subtraction) estimate a health budget for the sick poor. It will inevitably cost more than average, and result in worse outcomes. But only after we measure it, can we even decide how much we can afford.
What you have, including the three demographic subsidies, is what it seems to cost working people in today's environment to care for themselves and their obligations. It's distributed over forty years of working, but not everybody works that whole period of time. If you wish, you can contribute $100 a year from age 25-65, a surprisingly small amount which after compounding at 10% should pay the lifetime costs of one person (yourself). Calling it $150 to be safe, it is no more than a tenth of what most people suppose they pay for annual health insurance. Therefore, it is safe to suppose a family of four could afford to pay for ten poor people (in addition to themselves) at the cost they are already spending. Remember please, our goal is not to pay for all health care to the last penny. Our goal is to devise ways to pay for as big a chunk of it as we can.
And by the way, devising some method to get the latent money out of these accounts for medical care, since $300,000 does no good in a frozen account of somebody aged ninety. Please read on.
In an earlier section, we discussed how to predict the leads and lags of revenue and expenses in future healthcare. Some approaches were suggested, but they were for a strictly defined, short-term program. We now must turn to future adventures in new directions, where it quickly emerges it is impossible to predict ahead several decades precisely if even the setting of goals must await Congressional decision. For example, we have it from statisticians that the average lifetime cost of healthcare is approximately $300,000 per person, somewhat more for females than males. That figure, however, is based on the assumption that present trend lines will continue when we can be pretty certain some expensive diseases will be cured, and some cures may even be more expensive than the disease. Diabetes has so far proved to be one such disease. Instead of dying in a few months, diabetics now give themselves injections and pumps for fifty years. It is now the turn of diabetes to be regarded as an expensive disease, a cure for which might possibly save money. And it all came about, because of research.
So for the purpose of planning far ahead for the entire nation, we hastily assert that numerical answers are not the way to go. What's needed throughout the discussion is to keep revenue and expenses relatively in balance. That means designing a workable monitoring system for the project, so we can notice when the two lines are diverging. At that point, either we cut our suit to fit our cloth, or else we economize on some non-medical expenses, in order to pay for our new-fangled health care. Over long periods with different diseases, up to research bat at unexpected times, it seems fairly certain we would have to adjust, first to the left, then to the right, then to the left once again. The analogy would be pointing a sailing ship toward a goal, shifting sails as the wind changes. If this is the way we must navigate, we stay on a course only if we abandon the goal of stating the time of arrival, because we can't predict the weather. But as long as we must wait for politics to tell us what the next step is, we can't even define the system of measurements. That's awkward, but it's essential. For a planner, it is asking for a license to speak as we please, leaving only irreversible decisions to Congress. I suggest we establish a monitoring system right away and create it with a lot of independence. The real goal is not so much to assist the system but to learn how to monitor it. Everyone is entitled to an opinion, but no one was entitled to his own facts.
Essentially in what follows, we exemplify four ways to generate more revenue for healthcare, and (unfortunately) two other ways to generate losses of revenue. Since that's relatively simple, the proposal is to learn more in the four positive directions if we need money or consider two ways to learn if revenue comes in too fast, unbalancing something. Please notice there is no provision for new transfers from the private sector.
Revenue Accounts.
Individual Escrow Accounts. There are three: all beginning at the onset of working life and depositing until age 65. (We do hope Congress will liberalize those limits.)
First escrow, proposed for retirement funding, starts to distribute funds at age 65, continuing to earn investment income after 65, assumed to be completely depleted at age 90.
The second and third escrows have yet to be described but are intended to pay for the final year of life, eventually including another one for the first year of a designated grandchild's life. Its deposits consist of transfers of Medicare payroll deductions, from age 20 to 65. Deposits stop at 65, but the balance continues to compound until the subscriber's death. Transfers to Medicare and the grandchild occur at that point, disbursing remaining balances in ways to be determined.
Mid-course Readjustments.Net Gains or Losses From Research, Investments or Special Circumstances. Assuming the National Institutes of Health continue to fund research at $33 billion per year, we can reasonably expect some reduction of treatment costs, net of the cost of the treatments. At the end of one year of their expected patent life, anticipated gains or losses should be transferred to either escrow account, preferably partially to both. This is an adjustment factor which may be some time in developing, and not immediately useful. Nevertheless, if we suddenly find a cure for cancer, for example, there must be an adjustment pocket, just in case the HSA as constructed does not provide for it.
Investment Income and Compound Interest. It must be obvious that investment gains will fluctuate, and there must be some short-term cash to manage long-term investments. We try to make realistic assumptions, so it is possible these revenues are maximums. This is a worst-case provision, in case developments are unexpected, and the accounts are somehow too rigid.
Disbursements.
Net Costs of New Treatments. It is common for new drugs and treatments to cost more than old ones, usually to pay off R&D costs in exchange for visibly improved treatment. After a few years, the sunk costs are paid off, and the net cost of treatment is reduced. However, in addition to this R&D write-off, some diseases are so rapidly fatal that the cost of keeping the patient alive must be called a net cost of the new treatment.
Net Reduction of Health Costs. In this example, it is assumed there will be scant financial gains to the public until the transition costs are mostly on a downward path. That's a political decision which may come out differently. However, it greatly simplifies the description to make the assumption that all temporary gains should remain unassigned until they seem permanent.
The Full Program in Operation. The overall assumption is that health costs will eventually mostly morph into retirement costs, except for the essential health costs at the beginning and end of life. Within that assumption is another, that health costs will continue to be low for young people, high for older ones, with decades of compound interest between the two. We also assume basic stability in the monetary system, with a positive interest curve, and equities outperforming debt instruments over the long haul. Although we are uncertified in these matters, we will make one monetary suggestion, in case of monetary turmoil. Finally, we have no idea how long it will take research to dig us out of our present difficulties, but congratulate the American public for taking the far-sighted gamble that funding research efforts can eventually rationalize the health system.
Transition Problems. By far the most difficult problem to solve is transitional and largely man-made. That is, by any set of reasonable assumptions, the interest income which could be generated by investing the cost at the beginning of life, could cut the costs in half at the end of life. Almost all of the problems in the way of doing that are created by adjusting to programs previously established by Congressional vote. That is, the solution is evident in the situation, except for the fact that no layman can wave aside existing laws. Consequently, the transitional costs must be paid by following existing law when a layman makes them, but if Congress made them Congress could wave away the barriers Congress had previously created. The consequence is that a layman must make convoluted, often self-defeating, transition proposals, whereas if Congress itself had made them, such objections might be swept aside.
Transition Gap. Since we propose to pay for the new system with income gathered on payroll deductions, there is an initial transition gap between the beginning and end of Medicare, for the early years of the new system. The duration of funding gap would be about twenty years, the length of time between the termination of payroll deductions (age 65) and the average age at death (presently 84). But the gap would actually diminish gradually over five years and eventually be extinguished by the arrival of available sources of funds for this transfer, since the last year is only a quarter of the Medicare budget.
What are the available sources of funding for this gap? Equity, defined as the judgment of Congress, should determine the apportionment between them. They are:
1. The generations, like my mother, who died at the age of 103, receiving benefits but never contributing to Medicare, because President Johnson was in a hurry to get started in 1965. Her whole generation is now dead, but her beneficiaries either inherited her generation's money or benefited from it. This portion in fairness is owed by my generation in the form of inheritance taxes.
2. The present recipients of Medicare, who imagine they will have paid for health costs of their last year of life in a prescribed way, through a combination of payroll withholding and premiums, but in fact would be receiving double benefits.
3. The currently working generation, whose payroll taxes for Medicare would be reduced by eliminating a quarter of their present assignment.
4. Children from birth to the time of beginning work, who will gradually be building up an escrow fund to pay for their terminal care. This last is probably just a bookkeeping rearrangement.
5. The Treasury, in the sense, or to the degree, that eliminating the deficit and its borrowing costs is part of the outcome.
In other words, everybody, in varying degrees, should contribute because everyone would benefit. The benefits flow in at different times and rates. Whether to chop them up into pieces or to smudge them into the existing tax system is a matter Congress will decide, no matter what we suggest. Nevertheless, we start the discussion with a suggested plan, recognizing many plans might be feasible.
In the problem at hand, about a quarter of Medicare costs appear in the last year of life. If a mechanism could be constructed to deposit such a sum at interest the day the person is born, a normal interest rate would have paid this off by the time a person was about twenty-five or thirty years old. That is, there is plenty of money in the system to do it, except children seldom have much money. This paradox will be addressed in discussing transition problems. However, to confront newborns with a collective fee of fifty billion dollars is nonsense, particularly when the beneficiaries of this gift would already be dead, and would have contributed nothing to its cost. Yet this is not too different from what Lyndon Johnson did with the transition costs of starting Medicare in 1965. Using this example, we are about to propose a method of accomplishing this transfer within existing law, which Congress could easily improve on if it chose.
That would be to consolidate the first and last years of life into a single person and suggest a pump-priming federal gift of $450 to pay for both. At 6.5% tax-free compounded quarterly, this should create an escrow fund containing $101,000 upon death at an average age of 84. Since there would be no birth costs for existing Medicare recipients, the subsidy would be reduced to $300 for them (generating a minimum of $67,500), but paid back out of surplus as surplus begins to be generated, and disappearing when it is repaid. If necessary, their Medicare premiums could be reduced in the meantime. The great bulk of escrow contributions would be provided by transferring payroll deductions to the HRSA. It is not contemplated that payroll contributions would be reduced until foreign borrowing stopped. By this approach, almost all participants would benefit. Congress might improve on this system if it chose. The goal is to start with first and last years, gradually extending both until contributions become unnecessary. That might easily take fifty years to complete, and would imply net cost reductions by research in the meantime.
Let's restate the essential dilemma: the average taxpayer meets a banker's definition of a good client. He has excellent future earning prospects, but he doesn't have the ready cash to take advantage of it. To put it another way, the average HSA depositor will have gobs of money when he dies, but right now he's short of cash. Somehow, we must find ways to fund the first few years, when people are steadily dying, but the new depositors haven't generated enough investment income in their accounts, to pay for it. They face the problem of paying payroll withholding taxes throughout their working years, and Medicare premiums for twenty more years on Medicare, before they eventually benefit from last-year of life reinsurance. We propose to offer these young people a trade: pay us your own last-year costs in return for skipping a portion of Medicare payroll deductions and/or Medicare premiums. A straight trade would amount to paying about $10,000 right now, in return for not paying up to about $40,000, later. That's a guess, of course, and the number of takers would vary each year, so it implies an annual auction to set the price. As the years' progress, the amount the government would need will slowly diminish to zero, net of inflation, and the auction is over. Perhaps it would be easier to wholesale the total to a broker and leave the auction to him. The details of this sliding scale could become quite complicated, and all the government wants is a loan. Over time, the price of this auction might evolve into a useful number in the estimation of net medical inflation, for other purposes.
Proposed Transition Scheme.After the defined-term HRSA has a few minor adjustments, and after a couple of years of study and discussion, another proposed first step would be to start up the escrow funds which would fund a Terminal Care proposal, called Last year of Life Insurance. The actuarial process is essentially the same as life insurance, and the life insurance industry probably has useful experience to draw on. Medicare can readily supply the data on actual cost experience, and current payments would be very close to next year's cost. Over time, costs might migrate, so the continued existence of Medicare is essential to this program, which should be reassuring to conservative subscribers, who fear we will propose closing Medicare. No, we propose phasing it into additional Social Security funding, at the speed which research makes possible. It is intended that Medicare payroll deductions will fund the transfer of average national last-year costs to Medicare, allowing them to reduce Medicare premiums for current subscribers. In fact, if the payment system got tangled, payroll withholding might have to be temporarily increased, to pay for costs created before the research findings.
However, there is on average a twenty-year gap between the termination of payroll deductions (the onset of Medicare) and the age at death of subscribers, so this transitional cost must somehow be re-arranged. However, the overall revenue to fund the last year would come from payroll deductions, which is desirable for the entire program from start to finish, if it can be managed. The alternative plan is to transfer the entire proceeds of the payroll tax to the individual's escrow account as it is collected, eventually supplying considerably more revenue than is needed, because of the generation of compound interest. It might be necessary to delay the onset of death payments a year or two, but eventually the gap will be filled, then it might be exceeded, but eventually, the program will be able to address the second-to-last year, or even more. Funding the transition is the central issue in the discussion, and the public has a right to decide how they would like to fund it.
Additionally alternative for transitional costs, the program could draw on the first year-of-life program for its surplus funding, because everybody now alive has somehow already funded the cost of having been born. Furthermore, including newborns would add 20+ years to the interest compounding for combined newborn-and-elderly pay-back. The problem is only one of math, there should be plenty of money in the proposal once it gets started.
Elimination of Existing Programs. The grand scheme is to use the compound income to eliminate the tax cost supporting existing government programs, substituting an accordion-like elimination process which begins at birth, ends at death, and is supplemented only in the middle. Gradually, it is envisioned that working people could stop directly subsidizing other age groups' health costs before and after their working years. As investment funds come in, and medical expenses decline, some of their retirement costs could be covered, as well. Since age-transferred costs would be supported by non-escrowed investment accounts. It may take a long time to get to that goal, but national morale should be improved by understanding there is a goal, and a workable plan to get there. By "workable" is meant you may pay your own costs at a different age, not subsidize some strangers who happen to be of different age. And definitely not to borrow any deficits from foreigners.
Let's summarize: The last year of life re-insurance proposal will aim us in a better direction, getting more parallel to where medical care is taking us, and eventually save a great deal of money. It's a most significant problem is funding the transition to it, and we suggest several methods of accomplishing it.
Those who feel affection for government guarantees should be heartened to learn this plan provides for the probability we may not actually reach that goal in their lifetimes. Thirty million Americans were excluded from the Affordable Care Act, which sincerely hoped to cover everyone. However, the realities of seven million prison inmates, eight million mentally handicapped, and twelve million undocumented aliens proved to be too much for that goal. The ACA should have served to convince almost everyone that a very sizeable population subgroup has such specialized needs that specifically targeted programs might well be a better approach for them. And so, it is only realistic for this proposal to allow for the possibility that Medicare, the CHIP program, and Medicaid may never be completely closed, even though they were never completely suitable for more typical Americans.
The reader may have noticed we have omitted one significant group, those from birth to age 25. It has special problems, addressed in the next section.
Barron's recently invited 1000-word summaries of radical change proposals. tg.donlan@barrons.com
Health insurance financing is a gigantic wealth transfer system. Politically, it is described as a transfer from rich to poor. But it really is a transfer from one age bracket (working people) to two non-working ones, children and retirees. Add thirty years of longevity by curing the diseases of one age group faster than another, and the balance between age and wealth distributions gets bent out of shape. Socially, it's dangerous. It gets even worse to base one-year casualty insurance on employment, tempting employers to dump a system which ends when employment does patch together by tax incentives. Average employment duration is around three years, so almost every condition soon becomes a pre-existing one, whenever employees lose their insurance. Insurance companies see what's coming, and cannot be blamed for getting out before it collapses.
More revenue would help, but existing sources are almost exhausted at 18% of GDP, while a rapid change in health delivery would flirt with disaster. But one thing remains: using the idle money in pay/as/you/go to fund a transition matching a change in spending incentives, or even scientific research eventually eliminating the disease. It would work with income returns of between 3-7%. Compound interest on money already collected would pay the deficit. Extension of the age limits on Health Savings Accounts would stop the borrowing, and trust funds would extend the compounding for 21 years past the average age of death upward, to the point it would far exceed the need for retirement funding through taxation or borrowing. Transfer of $4000 of each grandparent's HSA surplus (at death plus 21) to the HSA of one grandchild would add another 21 years to compounding downward, leaving several millions of dollars per person for retirement, curing a number of social turmoils in the process. That probably wouldn't happen completely, but a Medicare surplus rather than a deficit would allow any transition to be much speedier. The present 2.9% employment tax presently collected from working people would equal or exceed what is needed if compounded. Since the new fiscal limits would be enforced by the laws of mathematics, there would be far less temptation to spend it on battleships. Further extensions of longevity would increase revenue faster than inflation could undermine it. Essentially, it would be asked to match 104 years of compounding--with what took 42 years to accumulate. There's plenty of slack if you try those simple numbers on a free compound interest calculator, found on everybody's Internet. A second chance to do what we should have done in the first place.
True, the necessary change in incentives would come from unifying three systems into one lifetime one, incentivized by noticing the remarkable savings already created by millions of Mid-Western subscribers to HSA. A few sentences of amendments to existing law should be all that Congress needs to struggle with since these are existing programs. Whereas the R's need to see a single-payer system has become a single-saver system, the D's can save face by asserting they are the same thing.
George Ross Fisher MD
3 Haddon Avenue South
Haddonfield, NJ, 08033
Cell 215-280-6625
office 856-427-6135
Email: grfisheriii@gmail.com
Create a file within each other for notes about the subject. There is a strong possibility these notes will get mixed up, and if they are filed with the same name, they will overwrite the other file. So, we name each Jot. but we also number the (Jot 1, Jot 2, Jot 77, etc). Then, they are filed in among the text files of the chapter. That is, /quartet/fourrx/hira/spiral/jot6 would be an example of the notes entered for the future inclusion in the Spiral chapter.
The Nature of this sort of thing is that you put things in a general category, and then split them up when you really get to work on the subject. Thus, ideas about the AMA will get put in quartet/revisit/jot for the time being, but as we get closer to it, the contents of the general jot will get lifted out and put in more specific categories, like /quartet/revisit/election /jot and eventually even these will get further split out into chapter, /quartet/revisited/electrons/DOWDA/jot. Because of this shifting around, it becomes important to number the jots.
Since that is the general plan, I have been looking around among various methods of lifting text from one file and placing it in another. One way is to "get" a file into which you are going to transfer information, go to the end of it, "get" the second file from which the information is taken; so both files are in the memory at the same time. Then, the information to be moved is surrounded by block markets, the cursor moved to the place where it is to go, and the ctrl+M command given. Then, the name of the file is changed to the recipient file name (at the top of the screen), and everything deleted from the end of it. Then file it. This will work, but it is cumbersome, and there is a significant danger of erasing a file you want to keep by getting mixed up on what you are doing. There is also the danger that there won't be enough room in memory for both files at once.
Therefore, I have a program called Magic Mirror which does this sort of thing, and there are other programs like Hook-it, which might be satisfactory. We will have to fool around with this until we get a system which we like. On further reflection, it might not be a bad system just to put the jots at the end of the text chapters, since that is where they will get integrated. When we print out the chapters, the jots will follow, and we either use the jots, move them to a different chapter, or erase them.
Meanwhile, here is a Jot for /quartet/fourrx/hira/cheaper/(remember, the MS/Dos computers use a backslash, but I am writing this on a Radio Shack which does not have such a key.
In contrast with an American national saving rate of 4.5%, the Canadians currently save at a 9% rate. Perhaps Canadians save more of their income because they are less adventuresome than we are, or innately more conservative (? they have had socialist governments this century, remember), or because it is colder up there. But their own explanation is that they have a system of tax-exempted savings much like our Individual Retirement Accounts, permitting an annual contribution of $10,000 in contract with the maximum of $2000 our Congress permitted for a short while. The Japanese, for all the talk about work ethic, enjoy comparable tax incentives for the national savings process.
It would be of interest to know what proportion of Canadians utilize this opportunity (the American experience was that only 14% opened IRA accounts), that the great majority of these funds are invested in government securities. /quartet/fourrx/hira/jot:
There must be an important message in the federal incentives we have constructed to make employer-based health insurance the dominant, even sole, form of health financing. A self-employed person can receive a tax deduction (ie treat as a business expense) the premium for his employees, but not the health insurance premium for his own insurance. In order to achieve this fringe benefit, he has to go to the expense of incorporating his business and becoming a salaried employee. At a time when the federal deficit was increased by $50 billion annually through the tax sheltering of employee health insurance benefits, and congressmen knew it would be political suicide to tamper with the process, the 1987 tax law increased from 5 to 7.5% the proportion of income which must be spent on healthcare before further expense become eligible for income tax deduction. Since group Blue Cross subscribers received a 35-50% discount on hospital prices, and Blue Shield group subscribers received a 30% reduction in participating physicians fees, the combination of discount and tax-sheltering easily make health care for employees less than half as expensive as it is for the self-employed or unemployed. That is the public is positively driven to adopt this form or insurance, even if it requires changing the form of incorporation of the business, changing jobs, taking part-time salaried work, or engaging in some sort of prevarication. In an era of interest-group politics, where almost everything which Congress does is at the behest of some pressure group, what group is motivated to defend this logically indefensible system?
Most analyses of issues like this begin with the motto, "Cui bono?" who seems to be profiting from it? The owners, managers, and employees of incorporated business all clearly profit from the tax dodge, and will retaliate against any elected official who tampers with their favored status. Congress, in its desperation to balance the budget, has no hesitation in raising taxes on healthcare. Everyone over age 65 has been made indifferent to the problem by Medicare; liberals lose interest because the poor have Medicaid. Reelection politics come first, the budget comes second, health care comes last. That's the system we have to work with, and politicians in their locker rooms will freely admit it's a bad scene. BUt proposals for reform must yield to the political reality, and find innovative ways to get the system back to rationality, but only within the boundaries of what is politically feasible. It's quite a challenge.
/quartet/4rx/hira:
How much would it reduce the % GNP devoted to healthcare, if healthcare were prefunded? (the expenses would be the same, but the income would be partially investment income)
/quartet/who-needs:
#HOSPITALSINUSA
1800 2 (PA and NY)
1875:145
1988: 7000
/quartet/revisit:
Blue SHield mostly doesn't pay for cognitive services: therefore, a realignment of procedural services reimbursement is just a reduction of payout.
/quartet/revisit:
1987 Blue Shield (PA) payout:
60% surgeons
9% inpatient internists
25% diagnostic services
6.3% laboratory
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.
