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.
Over the next several weeks, members of Congress will be confronted with one scary story after another about what will happen if they try to cut health care costs.
Tax the costliest health insurance plans? Workers will be denied medical care. Reduce the growth of spending on home health care agencies? Elderly patients living alone will be left to fend for themselves. Set up a commission to reduce Medicare waste? Again, the elderly will suffer. Impose a tax on plastic surgery? That’s unfair to unemployed women looking to enhance their appearance. (Seriously, the plastic surgeons are making that case.)
But here’s the thing: It is abundantly clear that our medical system wastes enormous amounts of money on health care that doesn’t make people healthier. Hospitals that practice more intensive medicine, to take one example, getno better results than more conservative hospitals, research shows. And while the insured receive better care and are healthier than the uninsured, the lavishly insured — those households with so-called Cadillac plans — are not better off than households with merely good insurance.
Yet every time Congress comes up with an idea for cutting spending, the cry goes out: Patients will suffer! You’re cutting bone, not fat!
How can this be? How can there be billions of dollars of general waste and no specific waste? There can’t, of course.
The only way to cut health care costs is to cut health care costs and, in the process, invite politically potent scare stories.
I’m as skeptical as anyone of the ability of the United States Congress to formulate good policy, but the last few days have offered a reason to hope that its members may be summoning the political courage to endure the scare stories.
That would be a big deal. Health costs, through Medicare, are the main source of the huge long-term budget deficit. In recent years, they have also caused insurance premiums to rise so quickly that employers haven’t had the money to give workers a decent raise. David Cutler, a Harvard health economist, estimates that the measures already in the health bills will increase the typical family’s income $2,500 a year by the end of the decade.
Real health reform also has the potential to save lives. Because we now pay doctors to provide more care rather than better care, we have not given them an incentive to reduce hospital-acquired infections and other avoidable errors. A new amendment from three senators — Susan Collins, a Maine Republican; Joe Lieberman, the Connecticut independent; and Arlen Specter, the Pennsylvania Republican turned Democrat — would increase the financial penalty for giving patients such infections.
Even this idea, however, has its own scare story. The Washington Post reported on Sunday that hospital groups were & quietly steaming; over it and suggested their support for health reform could be in danger.
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One piece of encouraging news came on Saturday, when the Senate finally began listening to its own health care advisers.
To help it oversee Medicare, Congress set up an outside board of doctors, economists and other experts in 1997, called the Medicare Payment Advisory Commission. Medpac, as it’s known, tries to figure out which services Medicare may be paying too little for, thus creating shortages, and which ones it may be overpaying for.
Perhaps the single clearest example of an overpayment is home health care. Home health agencies, which care for Medicare patients with specific health needs (as opposed to those receiving general long-term care), have been proliferating in recent years. Yet, according to the most recent data, they still had fat profit margins on Medicare, 16.6 percent. One reason, the Government Accountability Office found, was that fraud was rife.
So MedPAC has recommended cutting home health payments, and the Senate bill would do so, by 13 percent over 10 years. On Saturday, the Senate rejected a Republican amendment, supported by a few Democrats, too, that would have blocked that cut.
The home health provision is actually typical of the cost-cutting measures that have made it into the Senate bill: it’s pretty good. It won’t be perfect, obviously. Some people somewhere may indeed have to stop working with a home health agency they like and find a new one. But that’s not a reason to waste billions of dollars a year subsidizing an industry’s profits.
The real problem with the Senate bill is that it doesn’t go far enough to cut costs and improve care. Here too, however, there are positive signs. For months, centrist Democrats have been saying that cost containment was one of their biggest priorities, but they had not done much to help the cause. That has now started to change.
“ Senators are now really focused on cost containment,” says Mr. Cutler, who has been advising some of them.
The day before the Senate defeated the home health care amendment, Senators Collins, Lieberman and Specter introduced an amendment with some measures to push medicine away from the insidious fee-for-service payment system. The cost-cutting momentum continued on Tuesday when 11 of the 13 freshman Democratic senators announced their own package of measures. Neither proposal is earth-shattering, but both would make a difference.
Among other things, the freshmen’s proposal would do more than the current Senate bill to push insurers to use a standardized payment process. Right now, doctors and hospitals often have to fill out different forms for different insurers. “There’s a lot of money there,” Len Nichols, head of health policy at the New America Foundation, says.
Intriguingly, officials from a rainbow of special interest groups showed up at the freshman senators’ news conference to praise the proposal. To me, their presence highlighted both the biggest strength and the biggest weakness of the proposal. On the one hand, it has a real chance to make it into the final bill. On the other hand, it, like the Collins-Lieberman-Specter amendment, also fails to fix the single biggest flaw in the Senate bill.
Last month, Senator Harry Reid, the Democratic leader, gutted an independent commission — a more powerful version of MedPAC, meant to shield Medicare payment decisions from political interference — that many economists consider necessary. Mr. Reid’s bill would allow the commission to take action only if Medicare spending was rising even faster than total health spending. If total spending rose 8 percent one year and Medicare spending rose 7.9 percent — a miserable situation — the commission would have to sit on its hands. AARP, unfortunately, has emerged as an opponent of a strong commission.
But without one, health reform will be hobbled. And the Senate may be the only hope for changing it.
The House has shown little interest in cost control. President Obama and his administration have pushed aggressively for it, but they have limited leverage. Mr. Obama can’t credibly threaten to veto any of the health reform bills that now seem likely to emerge from Congress.
So after the 11 freshmen announced their plan on Tuesday, I caught up with Mark Warner, the Virginia Democrat who is the group’s leader, underneath the Capitol building and asked him how he and his colleagues would deal with the inevitable scare stories still to come: How do you respond to a lobbyist who effectively accuses you of killing patients?
“I don’t know any other way than you take incremental steps,” Mr. Warner said, “and you hope you get to the tipping point where fear and misinformation don’t have an effect, because people see these things don’t do what they are accused of doing.”
That, obviously, is the long-term strategy. In coming weeks, we’ ll see how well Mr. Warner and his colleagues deal with the immediate pressure. The Grim Reaper is a tough opponent.
George Washington soon learned he couldn't defend the country without taxes, so in time the Constitutional Convention lodged firm control over taxes in Congress. If we must have taxes, the people must control them. Except for defense, Congress has ever since been cautious about imposing taxes. Reducing taxes is quite in accord with this attitude, except net reduction of taxes, after raising them first, maybe a little tricky.
Net reduction of taxes is an important argument in favor of tax subsidies for Health Savings Accounts, using them as incentives to healthy people to "tax" themselves while they remain young and healthy. Investing the money internally, the subscribers can meanwhile protect it for their own use when they inevitably grow old and sickly. If interest greater than the rate of inflation is paid, the money returned should exceed the money invested. Investing the money tax-free further helps the process. If people get back more than they contributed, they recognize it as frugal, saving for a rainy day, and so on. Lifetime Health Savings Accounts were designed as a way to enhance this thinking, and are described in Chapter Two. Over thirty years have elapsed since John McClaughry and I met in Ronald Reagan's Executive Office Building in Washington, but there has been a continuing search for ways to strengthen personal savings for health while avoiding temptations to tax our grandchildren, or to make money out of harmless neighbors. Many of the financial novelties naturally derive from models in the financial and insurance industries. This book in largely a result of such thinking.o
But the biggest advance of all has nevertheless come from medical scientists, who reduced the cost of diseases by eliminating one darned disease after another, and meanwhile increased the earning power of compound interest -- by lengthening the life span. We thus luckily encountered a "sweet spot", where conventional interest rates of 6% or better take a sharp turn upward, while 3% of inflation still remains fairly constant. My friends warn me it must yet be shown we have lengthened life enough, or reduced the disease burden, enough to carry all of the medical care. That may well be true, but we seem close enough to justify giving it a trial as a partial solution. Before the debt gets any bigger, that is, and class antagonisms get any worse.
While Health Savings Accounts continue to seem superior to the Affordable Care proposals, you can seldom be quite sure about details until both have been given a fair trial. The word "mandatory" is, therefore, better avoided at the beginning, and awarded only after it has been earned. As a different sort of example, the ERISA (Employee Retirement Income Security Act of 1974) had been years in the making but eventually came out pretty well. In spite of initial misgivings, ERISA got along with the Constitution and its Tenth Amendment, and the McCarran Ferguson Act which depends on them. We had the Supreme Court's assurance the Constitution is not a suicide pact. So with this general line of thinking, and still grumbling about the way the Affordable Care Act was enacted, I had decided to hold off and watch. The 1974 strategy devised in ERISA, by the way, turned out to be fundamentally sound. The law was hundreds of pages long, but its premise was simple. It was to establish pensions and healthcare plans as freestanding companies, substantially independent of the employer who started and paid for them. Having got the central idea right, other issues eventually fell into place. Perhaps something like that could emerge from Obamacare.
Nevertheless, growing costs are ominous for a law proclaiming it intends to make healthcare Affordable. After several years of tinkering, this program stops looking like mere mission-creep and starts to look like faulty reasoning, maybe even the wrong diagnosis. While waiting for the Obama Administration to demonstrate how the Act's present deficiencies could justify rising medical prices and greatly increased regulation, I brushed up seven or eight possible improvements to Health Savings Accounts, just in case. They had been germinating during the decades after Bill Archer, of the House Ways and Means Committee, got Health Savings Accounts enacted. However, my proposed new amendments wouldn't change the issues enough to cause me to write a hostile book. More recently, some newer variations grabbed me: Health Savings Accounts might become lifetime insurance, and thereby save considerably more money, without the fuss Obamacare was causing. Furthermore, in 2007 the nation immediately stumbled into an unrelated financial tangle, almost as bad as the Great Depression of the 1930s. A depression might lower prices, but if it provoked accelerating deflation, we could be cooked. And thirdly, the mistake of the Diagnosis Related Groups was such a simple one, failure to understand it might not be a complete description. Seen in their best light, unrecognized mistakes were about to disrupt a functioning system, while simple solutions were sometimes ignored. Maybe the problem was trying to spend our way out of extravagance, made worse by massive transfers from the private sector to the public one -- actually, just the opposite of what Keynes proposed. And finally, individually owned and thus portable policies, always held the potential for a small compound investment income. But the recent thirty-year extension of average life expectancy is what really changed the rules. The potential for much greater revenue from compound interest made an appearance, simply waiting for the recession to clear, and to be given a chance to prove itself with normal interest rates.
Cost is the main problem. The Affordable Care Act might be making the wrong diagnosis, even though it used the right name. Employer-based insurance did create pre-existing conditions, and job-lock; losing your job did mean losing your health insurance, and often it was a hard choice. If employer-basing caused the problem, why didn't the business community fix it? Is the only possible solution to pass laws against pre-existing conditions and job lock? Maybe, even probably, a better approach was to break, soften, or change the link between health insurance and the employer. Sever that linkage, and the other problems just go away; perhaps less drastic modification could even achieve the same result. ERISA had discovered such a new concept, forty years earlier. Employers might well bristle at the obvious ingratitude, but real causes were creeping up on them unawares. Generations of patronizing legislators had found it easier to raise taxes on the big, bad corporations, than on poor little you and me. Employers had always received a tax deduction for giving away health insurance to employees, but now, aggregate corporate double taxation made it approach fifty percent of corporate revenue. Nobody gives away fifty percent of his income graciously; for its part, the Government thought it couldn't afford to lose such a large source of tax revenue. Big business prefers to avoid the subject, while big government tends to mislabel things. It's mainly a difference in style.
Another issue: the approaching retirement of baby-boomers slowly revealed that Medicare, wonderful old Medicare with nothing whatever wrong with it, had been heavily subsidized by the U.S. Treasury, which was now paying its 50 percent subsidy out of borrowing from foreign countries, notably Communist China. Medicare's companion, Medicaid, subsidized by an elaborate scheme of hospital cost-shifting, transferred most of its losses back to Medicare. And, guess what, the Affordable Care Act transferred 15 million uninsured people into Medicaid. By this time, Medicaid had become hopelessly underfunded and poorly managed, and 15 million angry people were about to find out what they had been dumped into. Other maneuvers affecting the employees of big business are delayed a year or two, so we may not discover what they amount to, until after the next election, four or even five years after enactment. Meanwhile, the Federal Reserve "solved" the problem of mortgage-backed securities by buying three trillion dollars worth of them. That may not seem to have anything to do with Obamacare, except it pretty well crowds out any hope of buying our way lose of this new trouble. And it sure underlined our central problem. There was nothing all that bad about the quality of a fee-for-service healthcare system which gave everybody thirty extra years of life in one century. Two extra years of life expectancy even emerged in the past four calendar years, in fact. Our problem is lack of money. Lack of money, big-time, and Obamacare was going to cost even more. Health Savings Accounts, new style, emerged from all this confusion as a possible rescue for the cost problem. All this, helped me decide to write this book.
There are some who persuasively argue our even bigger problem is Constitutional. Perhaps because I'm a doctor rather than a lawyer, I don't consider the Constitution to be our problem, I consider it to be Mr. Obama's problem. Because the 1787 Constitutional Convention was convened to unite thirteen sovereign colonies into a single nation -- and splitting it into more pieces wasn't on anybody's mind at all -- they reached a compromise, brokered by two Pennsylvanians, John Dickinson, and Benjamin Franklin. The small states wanted unity for defense, but they also wanted to retain control of their local commerce. They knew very well big states would control commerce in a unified national government unless something fundamental was done to prevent it. Speaking in modern terms, a uniform new health insurance system risks being designed to please big cities who mostly want to hold prices down and wakes up. Sparsely settled regions want -- or need -- to be able to raise prices, here and there, when shortages appear, of neurosurgeons or something like that. The full algorithm is: price controls always cause shortages, so shortages are only cured by paying a higher price. Eventually the Constitution was engineered to give power over all commerce to the several states; otherwise, the small states declared there would be no unified nation.
That's how we got a Federal government with only a few limited powers, reserving anything else to the states. Absolutely everything else was to be a power of the states, except to the degree the Civil War caused us to reconsider some details (which Franklin Roosevelt's Supreme Court-packing enlarged). So, that's why the 1787 Constitution effectively lodged health insurance regulation (among many other things) in the fifty states. Furthermore, The Constitution in the later form of the 1945 McCarran Ferguson Act thereby definitively insulates health insurance from federal regulation, reinforcing the point in a very explicit Tenth Amendment. This may regrettably create difficulties for interstate businesses, and for people who get new jobs in new states. Many states have too small a population to support the actuarial needs of more than one health insurance company, thus creating monopolies in many states and consequent resentment of monopoly behavior. So, work it out. But don't give us a uniform national health system.
There, in a nutshell, you have a brief restatement of the Constitution's commerce issue in the language of the Original Intent point of view. The Constitution as a living document is all very well, but there must be some limits to stretching its plain language; otherwise, it becomes hard to understand what in the world people are talking about.
City dwellers have trouble imagining anyone in favor of either higher prices or lower wages, let alone negotiable prices as the central bulwark of a different way of life. The Civil War toned it down a little, but if it is nothing else, our system is tough-minded and realistic, doesn't surrender easily. The U.S. Supreme Court may soon make the Constitution and its central compromises into the central issue of the day, or they may wiggle and squirm out of it. But as long as they keep squirming, cost containment will remain the central commotion of the Affordable Care controversy. In certain parts of the country, price controls are seen as just one step before shortages appear. That's not entirely unsophisticated. As we will see when we come to it, lifetime Health Savings Accounts could materially reduce the sting of the cost issue, and thus made the final decision for me to write this book. The Constitutional issue, possibly, lurks for another day.
The case in point. On the particular Constitutional point, I would comment whole-life insurance companies in the past seem mainly to have addressed the Federal-State issue by obtaining multiple licenses to sell their products, state by state. Which might bring the Constitutional issue right back, because most insurance companies in practice attempt to be compatible with the largest states, just as John Dickinson predicted they would. In effect, the smaller states are forced to accept whatever regulations the big states have chosen first, or else they might have to do without some new product. Whole-life insurance seems rather less subject to the problem of conflicting regulations because that industry inadvertently acquired another trump card. Life insurance mostly uses bonds in its portfolio, matching fixed income with fixed liability. That's a noble thought, but the additional practicality has surely occurred to insurers that state governments issue a lot of bonds, and insurance companies are major customers for bonds.
Lifetime HSAs could solve the problem of differing state regulations by allowing the individual subscriber to select a managing organization domiciled in "foreign" states, and thus indirectly if the individual chooses, select a different home state for its regulatory climate. After all, the nation has changed in two centuries from a culture of farming in the same local region most of your life, to one where it seems normal to change home states almost yearly. Businesses tied to local laws like insurance, do not move easily. The consequence for lifetime Health Savings Accounts might be a niche market for health insurance in small or sparsely settled states, or others which reject specific California or New York State regulations. Paradoxically, California presently has over a million HSA subscribers, so we must not underestimate the ingenuity of necessary workarounds. Eventually, local pressure mounts to change local regulation, doubtless balanced by the attractiveness of acquiring disaffected customers from out-of-state. All of this could be accelerated by internet direct billing. Consequently, to avert this, we propose:
Proposal 6: Companies which manage health insurance products, particularly Health Savings Accounts, should be permitted to select the state in which they are domiciled, but must, therefore, accept the domicile-state's regulation of corporations. Such licensed corporations may sell direct billing products into any other state; but products sold in another state must mainly conform to the regulations of the state in which the particular insurance operates, even to the point of disregarding any conflicting regulations by the state of corporate domicile.
Comment: Fifty years ago, the main function of any State Insurance Commissioner was to assure the continued solvency of insurance companies, so insurance would be available when the customers needed it. In the past few decades, however, many insurance commissioners with populist leanings have viewed themselves as protectors of the public against price gouging. That is, they adopt the big-city, big-state, point of view. One Insurance Commissioner attitude might thus insist on high premiums, Commissioners with another attitude might reward low premiums. Insurance companies should, therefore, welcome laws which make it easier to switch the state of domicile, since the attitudes of insurance commissioners can change very quickly.
Comment: Lifetime insurance was pressed forward by discovering the investment world's computer-driven innovations might make lifetime coverage far easier, less chance, and considerably more financially attractive, than coverage in self-contained annual slices. It is common knowledge in insurance circles that most term life insurance would be unprofitable, except so many people drop their policies. Therefore the attitudes of different states are not completely predictable. Some states are more aggressive than others in adopting new technology, for example.
Changes in Future Cost Volatility. At an advanced age, illnesses are more severe and more sudden. Right now, increasing longevity also mostly affects elderly people who live longer toward the end of life, by widening the interval between the last two major illnesses. You can never be entirely sure that will continue to be the case because medical care and its science constantly evolve. Furthermore, the cost of care often has more to do with the patent status of a drug or device, than with its manufacturing cost, sometimes turning a cheap illness into an expensive one.
One thing you can be sure of, restructuring health insurance in the way to be suggested in Chapter Two, would result in a general reduction of health insurance markup, by exposing local insurance to the more nationwide competition. Health costs themselves might skyrocket, or they might largely disappear, but in any event, will probably end up cheaper than by using other payment methods. No doubt critics will find large numbers of nits to pick since states retain the right to design idiosyncratic regulations, but new regulations would remain semi-optional for residents to the extent some neighboring state disagreed with them. No matter what else turns up, it will be pretty hard to match the cost variation from national marketing, demonstrated by ten minutes of internet cruising. In fact, the great obstacles to an effective system in the past, like "job lock" and "pre-existing conditions", present no obstacle at all to lifetime HSA within an HSA regulatory framework. Many problems would stand exposed as artificial creations of linking health insurance to employers, at least as long as health insurance remains modeled on term life insurance. Just change to a more natural system tested for a century as whole-life insurance, and such technical problems might simply vanish. Even slow adoption, based on public wariness about a new idea, has its advantages.
Although prediction of future sea change is uncertain, a brief review suggests future healthcare financing could very well become highly volatile, in both frequency and costliness. Therefore, spreading the risk with insurance gets more attractive to age groups unable to recover from major financial setbacks. Planners would do well to consider such things as last-year-of life insurance, or some other layer of special reinsurance. Immediately, such ideas raise the question of multiple coverages, with multiple tax exemptions providing room for gaming the system. No doubt, this was the thinking behind imposing regulations prohibiting multiple coverages with HSA, and probably eventually ACA as well. There must be a better way to handle this dilemma than forbidding multiple coverages. Multiple coverages are very apt to be exactly what we will need to encourage. Since living too long and dying too soon are mutually exclusive, consideration should be given to placing tax-deductibility at the time of service, and permitting deductions for the one that actually happens to you. It is thus possible to envision having four or five different coverages, but only one tax deduction. Since the purpose is to spread the risk, we might even go to the extreme of limiting the number of policies that charge premiums, into the one that actually happens to you, but paid out of a common pool. Planners with a more conventional background might well snort at such ideas. Until, of course, they themselves need a life-saving drug costing ten thousand dollars an injection for an extremely rare condition, under a patent which will expire in a year.
So, Let's Get Started with Pilot Experiments in the Willing States. The original idea of modestly improving the original Health Savings Accounts, continues to stand on its own two feet. It's what I would point to right away if you feel unsuited to the Affordable Care Act, or even to ERISA plans. Right now, anybody under 65 (who does not have, or whose spouse does not have) other government health insurance, including Veteran's benefits can enroll in an HSA, and any insurance company can offer a product containing minor variations of the idea, within the limits of the law. A number of Internet sites list sponsors for HSAs. For ease of understanding, we present this idea as if we had two proposals, term and whole life.
Actually, the term-insurance version is the only one which is currently legal, whereas the whole-life variety remains only a proposal. It seems necessary to regard the whole HSA topic as one proposal for immediate use, and a second proposal as a goal for future migration. In fact, almost 12 million people already are subscribers to the term variety, having deposited a total of nearly 23 billion dollars in them. The internet contains brief summaries of their policy variations. At this early stage of development, it is only possible to conjecture that small and sparsely populated states will probably develop more liberal regulations, while bigger and more densely populated states will probably develop bigger and more sophisticated sponsoring organizations. Anyone of the fifty states, however, might someday change its regulations to make itself attractive as a "home state", and at present, it is possible to transfer allegiance.
Unfortunately, current regulations exclude members or dependents of government health insurance programs including veterans' benefits, from depositing new funds in HSAs. It's easy to see why loopholes might allow an individual to get multiple tax exemptions in an unintended way. But loopholes are a two-way street. The early subscribers tend to be younger, averaging about 40 years of age, and probably of better than average health because it would probably require a horizon of two or three years to build up the size of an account to the point where an individual feels adequately protected. That's a result of a $3300 annual contribution limit, and a scarcity of variants of affordable high-deductible catastrophic coverage. This is one instance where "the lower the deductible, the higher the premium" puts the subscriber at risk for the first few years. And that, rather than loophole-seeking, is the reason early adopters are younger, healthier and wealthier; the regulations give them an incentive to be. Let's stop saying, "My way or the highway." If there is a reasonable fear of double tax exemption, the regulation ought to state its real purpose. Otherwise, "Let a hundred flowers bloom", regardless of oriental origins, is a better flag to fly. If a national goal is to get more people to have health insurance, we should be hesitant to impose impediments on it.
Meanwhile, I decided two things: to go ahead with the book with its final goal largely sacrificed to immediate needs. And, to prepare an interim, or new, Health Savings Account proposal. The new proposal would go ahead with a few advances toward Lifetime Health Savings Accounts which might be acceptable enough to political combatants to pass Congress, but which could advance the concepts of Lifetime HSA through some experimental stages. Even that proved too ambitious because It would require decades to prove the concepts that way. So it was stripped down some more, creating the last chapter of this book. Instead of taking a few ideas and struggling with them for a lifetime, I finally came to the view that a lifetime was a series of events, some of which worked out, and some didn't. Like a string of beads, I finally strung them together, recognizing that some would have to be replaced. s essentially a pilot study of proofs-of-concept, preparing the way for more grandiose plans after most demonstrated flaws had been cleaned up. I called it New Health Savings Accounts (N-HSA), and thought it would work to include all of healthcare except for age 21-66. Although that would cover 58% of health costs, it would not conflict with the Affordable Care Act, and might eventually seek greater compatibility as the ACA evolved. If the ACA got thrown out, it would be a concept prepared to take its place, without tumbling us into healthcare chaos. But until some upcoming elections clarified where the public stood, the two ideas could essentially stay out of each other's way.
A description of N-HSA follows in this section. Because the calculations of the Lifetime goal-model showed L-HSA could generate considerably more money than required, I was misled into thinking abbreviated N-HSA would generate ample funds. That turns out to be only narrowly true, and it has such a thin margin of safety that a major war or a major recession would probably sink it before it had enough public support as a pilot study. That didn't stop Lyndon Johnson from going ahead with a program which was only 50% funded, together with a Social Security program which has a similarly bleak balance sheet, and a Medicaid program which is a notorious failure to do a good job or to come close to paying for itself. But those were different times. In 1965 the international balance of payments of the United States had been positive for 17 years in 1965 but has been steadily negative for fifty years subsequent to that time. It shows no sign of improving. The Vietnam semi-revolution destroyed Lyndon Johnson's political career in the Sixties. His entitlement programs lingered on as unsupportable public generosities for fifty more years, but they simply must change if we are to survive as a nation.
The Health Savings Account is based on a different set of fundamentals. We have saved enormous sums by stamping out thirty diseases but at a different sort of cost which has increased as we extend our generosity to essentially everybody, even non-citizens. We have created a tidal wave of rising expectations which even the most optimistic surely cannot imagine can continue indefinitely, and a rising rebellion of envious foreigners with nuclear capability, and an unstable monetary system without any definable standard; which puts us at the mercy of ambitious foreign rulers. And yet, we continue to throw huge amounts of money at research, in a typically American mixture of hope and calculation. We have narrowed most medical costs to about five chronic diseases, cancer, Alzheimer's, diabetes, Parkinsonism and self-inflicted conditions, and we aren't going to stop until those five conditions are cured. Nobody told us to do such a thing, but everybody secretly hopes it will work. If we eliminate diseases, well, everybody can then afford not to pay for them. Unfortunately, it created a bigger, unanticipated, problem.
We bifurcated medical payments into three compartments: working people age 21-66 who earn almost all the new wealth, but most don't get very expensively sick. Secondly, the elderly from 66-100 who don't earn much money, but increasingly have all the expensive diseases. And third, the children from birth to age 21, who only consume 8% of the health care costs, but who have no opportunity, either to pre-fund their costs or to earn enough to pay for them. This third group, as I found out, unexpectedly upset almost all plans for comprehensive care, cradle to grave. Rich and poor folks, about whom we have heard so much, are distributed within these three groups. What we have mindlessly created is the need for an enormous transfer of wealth from the people who earn it, to the rest of the nation, who have most of the disease and little of the earning power. This wealth transfer is just more than the generosity of the country can comfortably support, and it's been growing steadily from President Teddy Roosevelt to President Barack Obama.
My concept, right from 1980 onward, has been to find a way for individuals to store up their own wealth while they are working, so they can support their own costs when they grow older. Doing it by demographic classes is too much altruism to tolerate -- just listen to what young people are saying about their lucky elders, and to what the baby boomers are saying about the millennials. The nick-names will change, but that's the way all interest groups talk about each other. I had assumed that medical science had already reduced the disease burden to the point where self-funding your own old age -- in advance -- would cover a majority of the population, but I now have to admit we are only part-way. Enough volunteers would probably support N-HSA to make the experiment a success in normal times, but it doesn't have enough cushion to be completely confident it could survive a war or a depression. Every time we make a scientific advance, the day of feasibility gets a little sooner. So, it boils down to whether you are willing to take the risk now, or not. I'd like to see a pilot study of volunteers iron out the kinks, first. But a great many impatient people are boiling to take the risk right now, and if we are lucky on the international and economic level, it might work. Every bull market "climbs a wall of worry." If we approach it more gradually, it is more certain to work. Judge for yourself.
Lifetime Health Savings Accounts generate surprising amounts of money, and therefore solve lots of problems. However, they leave three problems unsolved, all of them having to do with the administrative agent. The first is trusting some stranger to hold most of your assets for a century, acting supposedly on your behalf in the meantime. The second is to obtain a fair return on your investment, which is to say, you must not overpay for honest service. The remaining problem is a transition from an old system to a better one, for hundreds of millions of different ages, different-wealth, different health. It seems to me Senator Cruz' proposal might ease all three issues, although it lacks details.
The Federal government could seem like an ideal immortal to handle long-term deposits until you look at its record. Watering the currency, shaving the edges of gold coins, and spending money earmarked for one thing, but spent on another, are things which pepper a history more attuned to getting votes than providing service. The motor vehicle office is a symbol of it. In a century, the Federal Reserve has turned a dollar into a penny of value and bought a lot of battleships with money held in trust for pensions. Politicians constantly accuse banks of stealing, but their own record is no better. Private institutions are expected to hold money for a century, but the person in front of you will probably retire, quit or retire in twenty years, to be replaced by a succession of strangers. Mergers, corporate raiders, and outright bandits teach the only generality you can trust is diversification, not consolidation. Insurance is a mixed blessing. In six corporate embezzlements I have been forced to watch, all six were overlooked by management who were easily satisfied with the insurance benefits. What that means is the insurance premiums are too high, mostly designed to save the directors from embarrassment.
In this way, most sane people eventually come to the conclusion the only person you can trust is yourself, and protections will probably only make you careless. Somewhere, this cost is built into the system, and it is hard to say how much it costs. The ancient Quaker doctrine is only a variant of it, "The way to make sure you have enough, is to have too much." Working backward from present longevity, the average person needs to save for retirement, tax-free, about 3% of average income, for about fifty years. And he needs to compound those savings at an average of 6-7% per year, so the first fifteen years are the crucial ones. That goal should accumulate enough to pay for a lifetime of healthcare, plus thirty years of retirement, plus a Quaker cushion of too much. But it needs to reckon with a general obligation of 10% unemployable, plus a one-time transition cost which might be as much a 50% of one lifetime's accumulation. There are other variables, like Korean bombs and Wall Street crashes, minus cures for cancer and automation, but we simply cannot predict all that. It's bad enough without such variables, implying the American public gets serious sooner than its history suggests. Let's project a doubling of savings, or 6% for fifty years, average savings including hardship cases. Actuaries can arrive at more precise calculations, but this is close enough to know it will be a struggle but achievable.
The struggle part is to navigate the jiggles of a continuation of the 12% average annual rise of the stock market over the past century smoothed out for annual volatility, and to assume we can wrench 6% from the finance industry out of limiting inflation to 3% inflation and their own retention factor to 1% . The first step in that process is to transfer the 3% inflation risk to where it belongs, with the customer, not his agent, by isolating and constraining storage costs. Another step is to see what we can wrench from the undeveloped 80% of the world becoming developed, minus the part they can wrench from us. That is profit growth averaging 3% per year for a century. There will be bumps on this road, you can be sure.
The other industry with which the customer must contend is the insurance industry. Their profit is also the customer's loss. It may turn out that the services of the insurance industry are quite fair, and any lessening of producer profit will eventually lead to shortages of their consumer product. But the European taunts at our costs, plus staggering glimpses of insurance reserves, suggest transaction costs plus insurance costs are appreciably overpriced and have been so for decades. Perhaps they are over-regulated, perhaps overpaid, but it seems likely a percent or two can be squeezed away. It is a certainty they over-insure the risks. We should be earning interest on what we now pay interest for, only ensuring what we cannot afford to spend. That may well imply we should spend less on some things, and our problem is to identify which ones they are. To some extent, this is a universal struggle. But most of its excess would surface after a two-year study by impartial experts.
The alternative to this steady grind is to create a market-place and then let the competitors wring the wet washcloth of costs on their own terms. What does the customer care about the technical details, he knows what he wants and for a while will be satisfied with it. The profit margin of a healthcare supermarket defines the cost of doing things that way, providing the signals for change of emphasis when the environment inevitably changes. The chances are good this approach will prove cheaper than continuing down the present path, hoping for a miracle without knowing where it might come from: funds administrators, investment administrators, insurance administrators, hospital administrators, or government administrators. Essentially, we have specialized ourselves into this mess, and the agents have themselves prospered excessively from the design. Whether they were always good at math or not, individuals have been given thirty years of new longevity to cope with the mess their institutional specialist agents have created.
When the idea of Last-Year insurance was presented to the AMA in December 1987, someone got to the microphone before I could. The AMA system is to publish meeting agendas in an advanced handbook. The subject had therefore been announced with a few spare sentences leading up to a proposal that the Association should look into the matter.
Whether the proposal was really unclear or whether a comedian just jumped at an opening, the subject was introduced with a mocking story. There was a little town outside Philadelphia, it seems, which used to have an ordinance about its fire hydrants. All hydrants were required to be inspected, one week before each fire. To follow that jibe with a description of insurance technicalities isn't the easiest position to in, but somehow the reference committee subsequently found the generosity to endorse the study.
Last year of life insurance is life insurance, paid after the death of the subscriber. The death benefit is paid to a health insurance company, reimbursement medical expenses incurred during the final year of the subscriber's life. The ultimate effect and the intention is to reduce the premiums of health insurance.
Since there can be no free lunch, it is clear this proposal will not reduce the cost of medicare care. The overall total cost of health insurance, therefore, is not changed by changing the form of premium collection. Indeed another layer of administration is required. What difference can it make whether you pay part of your premium to company A or company B? There are five answers.
Pre-Funding. As emphasized in the first section of this book, there is a great need to change our national system of health insurance from a pay-as-you-go system to a prefunded one. Such a radical shift in philosophy could be quite disruptive, so transitional steps are needed. each age group has a different point of view about pay-as-you-go. Young subscribers since their premiums are higher than their risks. Older subscribers feel thirty years of paying premiums creates a moral obligation for health insurance to carry them through their time of heaviest expenses. Consequently, established dominant health insurers have legitimate anxiety about new companies skimming off their healthy subscribers, leaving them with the sick ones and thus triggering an insupportable upward spiral of premiums and dropouts. The problem is to prevent this disaster for the private sector without precipitating it by changes which frighten away healthy subscribers. The problem is to fix the engine with the motor running.
Therefore, the initial reaction that last year insurance constitutes fragmentation is unfair; the segmentation is intentional, aimed at providing a gradual shift toward pre-funded health insurance in one area where it may be achievable. Ina segmented system, reducing the premium for a reduced unfunded component of health insurance means fewer remains at stake when you try to reduce the unfunded problem still further. Subscribers and insurers have more temptation but less latitude for gaming a system with fatal illness largely removed. When a greater proportion of claims represent randomized unpredictable acute illness or accidental injuries, the troublesome non-random risks are easier to see. The main difficulty is obstetrics, where family planning makes the insurance mechanism highly unstable; further ideas relating to obstetrics need to be developed and would be easier to develop if isolated underwriting of fatal illness proves a success.
Catastrophic Health Coverage. When Secretary of HHS Otis Bowen opened up the subject of catastrophic health insurance, he was probably as jolted as other physicians to watch the way this popular idea was instantly redefined. Once it became clear that catastrophic health coverage was a legislative slam-dunk, attempts were made to include domiciliary care of the aged, chronic illness of all sorts, mental retardation, and many other things which were expensive hence a catastrophe if you had to pay for them. Any hope Medicare could be restructured to pay for expensive illness first, paying for minor illness only if money was left over, went up in the smoke of special interest lobbying and revived hope among liberals of extending Medicare into a national health scheme.
This appalling example of what is out there on the other side of the gates, should at least remind serious students of health financing to use highly technical definitions when they make a proposal. There is, of course, plenty of room to argue that terminal care life insurance should cover expenses two years before death, or conversely that it should only cover two months. You can change the calendar definition of the coverage almost at will, and yet still intelligibly call it last-year insurance. The intent is clearly to cover the characteristically high costs of dying under medical supervision, as contrasted with saving lives with medical miracles, or nursing chronic invalids. if such coverage should pay for sunglasses, facelifts, or porcelain teeth, it would clearly be unintentional. Terminal care of fatal illness.
With the mechanism largely impervious to deliberate redefinition, and largely immune to manipulation for profit, isolation of the ethical issues of terminal care becomes a possibility. The cost of the problem gets held up for regular consideration, as premiums for the coverage get revised. Public attitudes about whether an extreme medical function is desirable would surely be reflected in the choices actually made between different coverage options. At different ages, one might feel a desperation to have every possible chance of survival, yet might later wish to be left to die in peace. Lawyers may argue about the legitimacy of living wills, but few would dispute that someone who spent his last-year insurance on something else, had made an important statement about his wishes. Deathbed discussions are almost invariably couched in slogans. The same relative, on the same day, may say "Let him die in peace," and then "Where there is life, there is hopes." Such expressions are usually made for the effect they have on the listeners and do not greatly illuminate underlying public attitudes about a serious subject. Observation of how much of their money they are collectively willing to spend is often a better guide to what people truly want that is the expression of opinion by their representatives. On one occasion, I happened to watch a large conf=gressional committee listening attentively to testimony on health insurance when unexpectedly the subject of euthanasia was introduced. Within two minutes, a majority of the congressmen had fled the room.
Pre-Existing Conditions. People change jobs with fair frequency, voluntarily and involuntarily. The tendency of young entrants into the job market is to take part-time or small-time employment in order to gain experience, but then if possible to work their way into permanent employment with a major employer. This progression is seen by them as moving into a better job, one "where the benefits are good."
This system has a sort of hidden equity to it since generous pay and generous benefits are definitely linked with the profitability of the firm. Unions have tended to be strong and aggressive in prosperous companies, while conversely companies in the rust belt losing out to foreign imports have found the industrial unions much more tolerant of givebacks. Fortune 500 companies definitely get a better quality of worker, because they pay up. With many exceptions, the tendency is to work for small struggling companies when you are young, and big prosperous ones when you get good at your work. This unofficial system provides health insurance directly to the working population, while the youngsters just entering the job market mostly don't have health problems. If such a young uninsured person does get suddenly sick, the larger companies may still pick up much of the cost involuntarily, courtesy of the cost-shifting mysteries within hospital accounting systems. Much against their will, the large prosperous companies do partially reinsure the system against risks being run within the pool of young people from whom their future employees will be drawn.
Obviously, such a system is unstable. One of its worst features is that those who develop extremely serious illness before they get into the employer health insurance mainstream, are probably permanently excluded from it. There is no way available to them or their parents to guarantee future insurability for health insurance. As long as health insurance remains so firmly linked to employment in a large firm, it is hard to imagine any solution except through modification of the life insurance mechanism. Even so, if large numbers of people are to be encouraged to protect their insurability for health insurance, some way must be found for them to get their investment back, once the huge majority of them eventually do acquire employer-paid health insurance. We will return to this issue in the next chapter.
If the average person lives to be 80, and that's almost true, only forty years of that time are spent in the workforce where employer-based group health insurance is the norm. Since this period of time includes the coverage of dependents children and has potential carry-over to retiree health benefits, it is critical for the individual worker and his family to lock up his health insurance protection. The most frightening aspect of sickness among active workers is the possibility they may not be able to get health insurance when they lose their jobs. To be sick and out of a job is to have a "pre-existing condition." Since the pre-existing condition is the one most likely to cause a problem, it is small consolation to be covered for everything else. To have a wife with leukemia or a child with cerebral palsy is a very strong reason not to switch jobs if there is any question of health insurance coverage. While the person who knows the condition exists may have some bargaining power or individual coverage options before he leaves the job. But to develop a serious health condition during a period of unemployment is a truly ominous situation. Insurance contracts do not include exclusions of coverage of pre-existing conditions as legal boilerplate, they really mean to exclude the risk to themselves. In fairness to them, it must be noted they cannot possibly allow people to get sick and apply for insurance. The situation needs some mechanisms for insuring against loss of health insurability, and last-year-of-life insurance might at least serve to reduce the range of potential uninsurability.
Portability. Our system of linking health insurance to the place of employment has the disastrous obverse that if you lose your job, you lose your health insurance. This particular issue periodically gets more attention when a recession in the economy leads to waves of layoffs. Employers of more than??? are required to maintain health insurance for ??? weeks after a layoff. Employees are entitled to continue their employer's group health plan at their own expense for ??? weeks more. However, such arrangements are complicated and unwelcome; it is not clear they are very popular with families who have suffered the bewilderment of losing their income. Last-year-of-life insurance would be as portable at your own expense, while funded life insurance is both portable and permanent as long as the cash values can carry the premium. Perpetual insurance is still better; the cash values have built to the point where the interest they generate is sufficient to pay the premium further contribution.
True, present income tax laws permit only term life insurance to be considered a business expense for an employer. In 1988 the Congress is undoubtedly in no mood for social legislation which increases the national budget deficit, such as by creating a tax shelter for cash-value life insurance. But laws can be changed when Congress wants to change them, and the experience with the catastrophic health insurance shows the public can sometimes whiplash congressional opinion very rapidly. A severe recession would immediately restore Keynesian ideas about budget deficits to fashion. The best present response to legislative defeatism on this subject is to examine the net effect on the deficit of replacing a portion of health insurance premiums with last-year life insurance premiums, transferring tax-deductibility from one to the other. If the two financial effects wash out, permitting last-year health premiums to be treated as business deductions should worry few practical politicians.
Experience-Rated Unfairness: The AIDS Epidemic.If a company had a policy of paying all medical bills of its employees, the cost to the company would vary with the amount of sickness there happened to be. Since self-insurance of this type represents at least half of all health insurance in America, health insurance companies must offer a comparable cost if they are to have any hope of selling insurance. Rather than establish a single premium rate for the community, the usual practice is to offer "experience rating", sometimes also called "merit rating." In an experience-rated group, the premium is adjusted up or down to reflect the cost of the claims actually submitted. From the point of view of the subscribing employer, the cost is the same as it would be to pay the claims directly, and the administrative profit of the insurance company may well be less than the cost of processing the claims in the employer's personnel department. Adjust this cost somewhat to recognize the interest earned or lost on the premiums and claims, and you pretty much have a formula for the dominant American health insurance system. The cost of fatal illnesses, the last year-of-life costs, are thus buried in a system which emphasizes the yearly costs of employers while making little analysis of the individuals who are included in the coverage.
From time to time, reformers have tried to force health insurance companies to charge a uniform community rate to all subscribers, but are immediately confronted with a rush by low-cost employers to drop out of insurance and adopt a self-insuring approach. As long as health insurance is unfunded and carries no future guarantees, it is not easy to convince lucky people they should pay more than they have to, just to lower the premiums of those who have bad luck. An earlier section of this book dealt with the pernicious effect on intergenerational risk-sharing which is exacted by the tax code in return for treating premium costs as business expenses. Many people see the wisdom of paying a higher premium when they are young and healthy so they will not be stranded when they are middle-aged and sick. A fair number of people are willing to pay more for their health insurance if remain healthy than if they happen to get sick. But almost no one wants to pay more for his health insurance when he is well while relying on the unenforceable voluntary generosity of future generations for support if he gets sick himself. Everyone distrusts the possibility that future generations might go self-insured and leave the present generation hanging out to dry.
Experience-rated health insurance, therefore, is an evil for which there are few obvious remedies. Since employment groups delimit final boundaries, experience-rating is inherent in basing health insurance on the employer. Last-year-of-life insurance contains the potential for the major cost risk of fatal illness to escape voluntarily from that employer-based partition. There is no way to know how much-hidden age, sex, race, or other discrimination there is in job recruitment, and certainly no. way to know how much the potential health costs are weighted in the equation. NOr is there any way to know how much American Business are unsuccessful with foreign competition because of these immeasurable issues is dramatically illustrated by the current epidemic of a contagious venereal virus, HIV...
AIDS is invariably fatal, its complications are expensive to manage, and it is relatively easy to surmise who is likely to catch it. This combination of features creates strong incentives for insurance companies to exclude the condition from coverage, or exclude high-risk groups from the subscriber base. Since the average cost of treating a single case is???, several HMOs have been driven out of business by having a run of cases of AIDS. From an insurance viewpoint, the most treacherous feature of AIDS is that the distribution of cases is not random throughout the population. If even a financially strong insurer is careless or altruistic about accepting high-risk groups, it's premium structure may rapidly become overpriced by comparison with competitors who somehow did not have so many cases. To be perfectly frank, homosexuals are overrepresented in the entertainment, fashion, and advertising industries, as well as the art world in general. It is almost impossible to imagine such industries maintaining an employment-based health insurance system in the future except if they somehow exclude paying for the risk of AIDS. If the epidemic spreads, and particularly if legislatures seek to prevent the exclusion of certain industries, then cities like San Francisco may simply not have any health HMOs or states like New York may not have any health insurance. Whether the exclusion is applied to people with positive blood tests, or to unmarried males, or to the entertainment industry, to cities or to whole states, insurers will find a way to protect their own solvency. If not, the whole country will be without health insurance until a cure is found.
Consider now the advantages of last-year-of-life health insurance for coping with this problem. Since AIDS is invariably fatal, it has the grisly advantage that no one is going to recover from the condition, only to contract a second expensive fatal illness later. Everybody else who doesn't get AIDS is also going to have a last year of life, and for the majority, it will be an expensive year. Medicare finds that ??% of its claims over the last 60 days of someone's life. Because the AIDS victims are young they have fewer years for compound interest to reduce premium costs, but having said that it remains true the population-wide risk of fatality at a young age is very small. Community premiums could double or triple without discouraging potential subscribers who have the cost of terminal cancer in mind. Actuarial costs of last-year insurance for the whole population can be calculated much more accurately than any individual can guess his own risk. Risk-avoidance strategies might somehow evolve, but with so little annual mortality in employer groups, yearly experience-rating could not be their mechanism.
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.