George R. Fisher, III, M.D.

Obituary

George R. Fisher, III, M.D.

Age: 97 of Philadelphia, formerly of Haddonfield Dr George Fisher III

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.

In Summary

In Brief Summary. Suggestions for American healthcare reform are made, embracing the full potential of unencumbered Health Savings Accounts, and changing the physical center of healthcare delivery while turning some of the incentives of reimbursement in a better direction. Unfortunately, most of the intent of the suggested changes to the system cannot be appreciated without understanding the history and economics of health insurance, and the complexities of the modern health delivery system. An attempt to capsulize these matters is mixed among the proposed solutions to them in outline. They come from a physician with decades of practice behind him, fifteen of them before Medicare was created. No claim is made of lack of bias. The more important suggestions are:

A. INSURANCE REVISION

..1. Health Savings Accounts, linked to debit cards, reinsurance, investment vehicles, and marketing.

..2. Elimination of Co-pay, but increase of deductibles.

..3. Equalized tax-exemptions (for health) for all citizens, regardless of employer.

..4. Reduction of employer domination of employee health insurance choices.

..5. Increased deductibles for elective admissions to the hospital (or decreased deductibles for emergencies).

B. REIMBURSEMENT REVISION

..6. Revised ambitions for computerized medical records.

..7. Substitution of market-based prices for hospital cost-accounting in DRG calculations and patient bills.

C. ACCOUNTING REVISIONS AND APPEALS

..8. Establish a nation-wide appeals mechanism for both beneficiaries and providers.

..9. Independent negotiation and payment for aggregated hospital indirect costs.

..10. Inter-institutional comparisons of charge-to-cost ratios, indirect costs shifts, and indirect costs.

(D. LONG-TERM: INDIVIDUALLY OWNED AND SELECTED WHOLE-LIFE FUNDING)

..(11.) Payment of Last year-of-life costs from an escrow to Medicare, beginning last-year-of life pre-funding.

..(12.) Gradual substitution of whole-life health insurance for term-life health insurance, beginning with first year-of-life post-funding.

..(13.) Encourage migration of office medicine toward the campus of retirement communities. As a beginning, charge some agency with discovering obstacles to moving (independently competing) physician offices to the campuses of Retirement Communities.

ACA Synopsis, July 4, 2014

The Affordable Care Act, commonly called Obamacare, contains two clashing provisions. Although the public may believe the Act provides for Universal Mandatory Health Insurance for all Americans, it actually only sets standards for minimum coverage. Because of later Supreme Court decision, the applicable section was renamed Section 5000A of. In the same section, it delays applying these standards to employees of big business and exempts about thirty million others entirely. (Section c). In an independent section of the same law, Section 1251 clearly states that people satisfied with existing coverage may keep it. Even after millions of Americans nevertheless received cancellation notices, President Obama repeated on television that no satisfied person would be required to drop existing coverage. Even disregarding mere verbal assurances, the two written sections did follow the rules for enactment and were signed by the President. just how are they simultaneously possible, to say nothing of workable?

A quick answer would be that the first sentence of the first Article of the Constitution vests sole power to create legislation in a Legislative Branch composed of a Senate and House of Representatives; thereby requiring the agreement of both, for a law to be a product of the entire Legislative Branch. It did not take long before a Conference Committee system was established, where the two Legislative Houses could negotiate any differences. When one party has voting control of both Houses, however, it is occasionally able to create identical language, eliminating the need for reconciliation. According to a book by an intimate, the Clinton administration planned to take this process a little further in their own Health Plan of 1992, including undesired provisions when that was useful to obtain a wavering vote, or otherwise to obscure the true direction of the legislation for extra time. Having complete control of the process, the party in power would later be able to delete undesirable provisions. The true nature of the legislation might thus only emerge at the last possible moment when timing could be manipulated to make it difficult to object. It is not possible to know whether this strategy has been used in other legislation, but circumstances strongly suggest it was partially implemented in both Clintoncare and Obamacare, and by many of the same people.

In any event, Clintoncare was withdrawn by its sponsors, before a floor vote, and for undisclosed reasons. Obamacare was enacted by the Senate, but the death of Senator Kennedy and his replacement by a Republican Scott Brown made it impossible to survive a filibuster on its return for final Senate adoption. To avoid this outcome, the Senate bill was forced through the House of Representative's word for word, and the Senate bill then became the final law, even though it was known to include booby traps. Largely as a result of public outrage, a strong Republican majority was returned to office, and the possibility of the further amendment was ended. So that's why we are essentially where we are.

What happens next is much more uncertain, because more actors have an opportunity to initiate events. Setting aside international adventures and financial crises, Congress could lose control of events by failing to negotiate a solution. After that, it is probably up to the electorate of seven states with tight Senate races, if not the United States Supreme Court, which has its own private agenda. All of these potentials put pressure on Congress and the President to negotiate a compromise. I suggest a simple first step would be to see if the entire section 1251 could become an amendment by addition to section 5000A, That would have the effect of adding a fourth class of exemption (people who don't want to change) to Illegal immigrants, incarcerated persons, and those with religious objections. Alternatively, they could be added to employees of big business as "temporarily" delayed. A case could be made to the Democrats that a smaller initial transition group could be more readily implemented. And a case to the Republicans would essentially be that "nothing is so permanent as the temporary". In both cases, the November Senate races would suggest what the public will support.

The public tends to believe the central agitating issue is health care, but more likely the central issue is state versus national regulation of health insurance. Health care was universally regarded as a local or state issue for three hundred years, and the issues were all technical and peaceful until pre-paid insurance began to be the dominant method of paying for it. No one seems to be noticing that ERISA has peacefully solved almost all of the problems of interstate mobility, which is what agitates interstate health insurance. Essentially, my position is that healthcare regulation can safely return to state control, at least during the period when the techniques and insights of ERISA are copied and experimented with, for health insurance. The public actually has very little interest in the interstate regulation of health insurance, so fifty years of agitation have essentially been over nothing.

With regard to health insurance, I believe we are working with the wrong design. Young working people accumulate savings, and old retired people spend it. Lengthened longevity has created the potential for enormous savings from compound investment income generated by working people, but such savings have been frittered away by using a "pay as you go" payment system. If we created portable systems for saving and investing income during the working years (the Health Savings Account), we could almost dispense with health insurance of the present model until people reach fifty or sixty years of age. Lifetime health insurance would be one approach, but all that is really necessary is lifetime savings accounts. Dispensing money from a fund could be quite adequately managed with a debit card, leaving only the problem of disciplining the fees of investment managers. But the details of such saving, investing and disbursing are of only secondary interest to the public, probably best left to the industry itself, because the industry will be very interested, indeed. As for reducing the cost of health care, we have stumbled along, letting the scientists eliminate disease costs by eliminating disease itself. They still have worms in Africa, and Asia could use some sanitation, But we have reached the point where our fastest-growing age group is over 100, and out biggest unsolved health problem is not dying too soon; it is living beyond our savings.

What I Have Learned (1)

This book has been an education for its author. Ordinarily, an author starts with a general principle and offers a specific example of how it works. But I repeatedly found this field changed so quickly, changes in the numbers made the example seem awkward, if not invalid. Or one component changed, and balancing numbers were unobtainable. But I believe the underlying principles remain valid. It's better to earn interest on idle money than not to earn it, for example. But when the circumstances shift, the amount of interest to be earned -- and consequently the proportion of healthcare costs it will cover -- also shifts, allowing opponents to bring the underlying principle into doubt. When this process repeatedly leads to rewriting a whole book before it can be published, it essentially stifles debate. So I finally decided it was better to open the debate than worry about ridicule from hired political consultants over "framing the question" , or protecting my offended feelings. At my age, what would I care about that, for heaven's sake?

So let's follow the trail of the book, and put together what I think I have learned, in the order in which it appears.

Pay for important things, first. Health insurance began a century ago, with good motives, but the wrong approach. It's upside down, in the sense it started with the problems of poor people and extended the approach to non-poor ones. Consequently, it offered "first dollar coverage" but threatened savings running out for truly expensive items, life-threatening ones. The most suitable way to get around this seems to be to have a high-deductible policy, which lets the patient decide what is truly most important. But two things then come in conflict: the higher the deductible, the lower the premium. That's good, but what's bad is the higher the deductible, the fewer people can afford its out-of-pocket component. So the Health Savings Account addressed this dilemma by linking high-deductible ("catastrophic") insurance to a tax-deductible savings account. In effect, the poor person could build up the deductible on-time payments. It isn't perfect, but it was enough better so 15 million people adopted it, and their premiums became 30% lower. And so, more people could afford it.

Earn interest on savings. Then the patients taught me a lesson. In spite of abnormally low interest rates, people seemed to perceive that major illnesses come late in life, and longevity had lengthened considerably this century. And they liked the ability to judge their own health, letting the healthy ones pick stock investments if they chose to because low-interest rates shift many investors from bonds to stocks, which then rise. Sickly people could choose bonds or tax-exempt savings accounts. Quite unique to American retirement funds, this one gives a second tax deduction when you spend it (if you spend it on health).

If there is money left over, you get to keep it. Conventional health insurance spends any left-over money to reduce premiums, they claim. This one gives any money you save back to you, as an incentive to be frugal. I suspect some people thought a bird in the hand was worth two in the bush, which means they didn't exactly trust insurance companies to lower premiums fully, but might raise the salaries of insurance employees with some of the savings.

In time it develops a different significance: if you are lucky and healthy, you spend the left-overs at age 66, for retirement income. The news about the approaching insolvency of Social Security encourages that choice. At least, it begins to look as though Social Security benefits might not be raised, so you may need the money more at a later time; compound interest makes Health Savings Accounts worth more, later. Frugality early, leads to more income later.

If anybody gets a tax deduction, everybody wants the same. For eighty years, employees of corporations got health insurance with a tax exemption, but half of the population didn't. That amounts yearly to a couple of thousand dollars for a family, twice that much for the corporation itself (at its higher tax rates), and the possibility that even more of it escapes to foreign tax havens. By simply allowing the Health Savings Account to buy the catastrophic insurance which is required, this egregious inequity would disappear. If that gets blocked in Congress, then simply reduce the corporate tax rate, which corporations don't pay anyway because of the tax deductions. You might appear to be rewarding corporations, but you really are only shifting their deduction.

Save your deductions for later. It was a surprise to find 40% of subscribers to Health Savings Accounts paid for small health expenses out of pocket rather than take the tax deduction. It suddenly made sense that if the account would grow, and in any event, you would get it back at age 66. You should pay out of pocket when it is small, saving the deduction until later when it has grown.

Split the payment system. Cash for outpatients, insurance for helpless inpatients. When you take away someone's clothes, and he is too sick in the hospital to argue, competitive prices are meaningless to him. Prices should be set by outpatients, who are free to trade elsewhere. A surprising number of inpatient services are identical to outpatient services, which should set the price for both. Some are unique, so a relative-value scale should be constructed to include them in the relationship.

Both the DRG system and co-payments are abominations. Payment by diagnosis is akin to service benefits, wrapped in a rationing system. Pay a fair fee for a necessary service, don't pay for unnecessary ones. As for copayment, it simplifies collective bargaining, but creates two insurances for one service, and has been repeatedly shown to have no deterrence value.

Reverse the Maricopa Decision, preferably with legislation. Mrs. Clinton's plan of ten years ago was for a system of Health Maintenance Organizations (HMO). She can thank her lucky stars it didn't pass because the public rejected them. HMOs were in fact invented by groups of doctors and worked quite well. The essence of why they didn't work lies in the Maricopa decision that doctors were forbidden to run them. The Maricopa decision (4/3 on the Supreme Court) was based on a motion for summary judgment and never had a trial of the facts. Let's see if Congress can improve on that.

Substitute Catastrophic health insurance for any and all versions of limited benefits, including the Affordable Care Act. Catastrophic insurance is now privately run, and it is difficult to obtain data on costs and expenses. No doubt the plans vary considerably. But the system of indemnity insurance is superior to that of service benefits, and high deductible is superior to mandatory benefits. Catastrophic plans seem vulnerable to kickbacks, and should be examined to minimize that; perhaps I am wrong. Nevertheless, catastrophic was seemingly the cheapest of what's available and is certainly more flexible. If we must have mandatory health insurance -- and I'm not saying we must -- mandatory Catastrophic coverage sounds better than any alternative. But if we go that way, we need better studies of it.>/p>

Preliminary Totals

Actuaries have one way of totaling up the average lifetime cost of healthcare, which comes to $350,000 per person, in the year 2000 dollars. Their method of the cost estimate is to ask insurance companies to tell them how much they spend at each yearly age. That potentially has three flaws, although perhaps some of the flaws cancel each other out.

The first comes from getting reports from insurance companies, which might well minimize the cost of insurance itself, sometimes estimated as high as 17%, sometimes as low as 2%, for Medicare. The Medicare figure is surely on the low side, with much of its cost attributed to other sources than CCS -- the cost of Treasury and Congressional involvement, for example, or military administration. But as a preliminary guess, let's say 2-17% is a possible statement about this source, or $7000-$59,500 per person, per lifetime.

The second is medical research, which is $33 billion a year, or $1000 per person-year, $84,000 per lifetime, or 4% extra, for the National Institutes of Health, alone. University and pharmaceutical expenditures overlap somewhat, but surely double the research cost to 8%. Research cost is part of the overall equation, as the companies loudly complain. Training professionals is similarly mixed-source, but certainly another 2%.

And finally, depending on how you figure it, there is an uncompensated subsidy of one subgroup by another. The cost of Obamacare is difficult to measure, but surely seems a major cost to the people who pay extra to support it. For the present, we treat the Affordable Care Act as tentatively revenue neutral, which is to say: adding nothing to the non-escrow portion of the Health Savings Account of the age group 26-65, and/or costing no more than inflation adds at 3%. Inflation lends a working supposition to the idea that total lifetime healthcare cost is somewhere around $500,000 in 2017 dollars, plus 2-17% for health insurance, 2% for training, and an unknown amount for ACA. Call it $600,000 a year, with research entirely funded by independent sources. Total revenue expended for health might easily reach a million dollars per lifetime per person by the end of the decade, by this method of calculating.

Bottom Line. Calculating the expenses-consumed we reach about the same conclusion, but both approaches are confounded by cost-shifting. Let's skip ahead to approximate where the new proposal places us. From childbirth to age 25 we estimate $18,000 cost, having shifted $10,000 of obstetrics from the mother to the child, and donating the remaining $10,000 from the grandparent. From age 26 to 65, starting at an HSA balance of zero, we break even by assuming a shifting balance between current expenses and subsidy from other generations; that is, the escrow account keeps growing while non-escrow also grows but falls behind by age 65. We thus project a net voluntary transfer (of $65,000 for a Medicare buy-out) leaving $ 135,000 for retirement. They would surrender $10-18,000 of childhood expenses when the same $10-18,000 is transferred from the working generation and then later re-transferred from retiree surpluses to one grandchild's HSA.
Up the time of death (average age 84) scarcely any new money has been added to the medical system, except for money previously uncomplainingly paid during working years from working-age people toward Medicare, plus Medicare premiums paid by seniors. These funds, which currently produce unmanageable deficits, would now be paid into the Health Savings Accounts for age 26-84 deficits from awkward timing. For the most part, the surplus should replace hardship, for deficits anticipated for age 66-84 in the form of $65,000 for a Medicare buyout at 66 and a $10-18,000 Childhood buy-in at age 84. Surplus or deficit may arise between the HSA and Medicare at age 65, or again between the HSA and Children's funds at 84. If any deficits appear during this interval, they could be paid by extending Trust Funds to age 104 regardless of whether the depositor is still alive, and only then must the remainder being written off as national debt. At that duration, compound interest grows quite surprisingly. During the early transition, these deficits might appear large, but many of them could later be written off easily against looming reductions in Medicare costs caused by a century of research discoveries, or stock market returns multiplied by compound interest.

This is America, built on several centuries of optimism, or risk-taking. No one needs to warn us of the possibility of miscalculation. We have sometimes, indeed, experienced miscalculation and over-optimism. But if all goes well, we could end a century of risk with bills paid, longevity further lengthened, and money in the bank from betting on the American economy. If things go badly in the stock market and laboratory, or if they go bad in wars and epidemics, our reserves will suffer and planning will work out wrong. Obviously, in a gloomy future, plans must be curtailed. We count on the stock markets to be our banker, but if they appear to be based on a miscalculation, we may once again blame it on the bankers. But let us hope we have the sense to modify our plans, particularly by adding the First and Last Years of Life reinsurance system and dipping into our reserves sooner than expected. That's for volatility. For real miscalculation, major modifications of the delivery system may be needed, but it's difficult to imagine wanting anything more than longevity.

Last Year of Life Insurance

Last year of life insurance is life insurance, retrospectively paid after the death of the subscribers to his health insurance company. Although theoretically reimbursement could be made for actual individual expenditures, it is a more powerful idea to reimburse in the amount of the calculated average last-year costs of the community. It could loosely be said this approach constitutes 100% reinsurance of a selected peril, in order to suggest possible variations, such as 105% reinsurance (to transfer administration costs), 80% reinsurance (to encourage case management ), etc.

The last-year-of-life concept should be regarded as a tool for coping with certain problems inherent in the system of basing health insurance on employer groups. Employer-related health insurance is tax-favored, reduces marketing costs, and almost eliminates risk to the insurers; it is far easier to modify such a system than to reform it. However:

Non-random perils like AIDS may cause insurers to withdraw from ensuring particular companies or even whole industries.

Employees who retire early for reasons of health may find themselves unable to obtain health insurance after the COBRA protection period.

There is presently no method available for young people to guarantee their insurability before they enter permanent employment, or for employees of any age to guarantee their insurability in the event of company insolvency.

The risk of losing insurability is present in every change of employment; job immobility is created when fear of health insurance problems is on the employee's mind. Early retirement may be rejected for fear of exposure to loss of health coverage between the time of retirement and the onset of Medicare coverage.

Serious dilemmas for corporate funding of post-retirement health benefits have been created by a fear that voluntary pre-funding such obligations may create cash targets for corporate raiders. An employee has no legal rights to the prefunded reserve even though he may have legal claims for the eventual benefit obligations

Consequently, the most conservative present estimate of unfunded post-retirement health insurance obligation is $100 billion, and it may be four times that.

Since last-year-of-life insurance is life insurance, it might be provided as either term insurance or cash-value insurance. Although cash-value insurance has obvious advantages for the problems listed above, it would not enjoy the same tax-sheltering which term insurance would have, and consequently would require legislative relief to be fully effective. However, term insurance might well offer some relief for the AIDS problem.

Insurers are leaving the Washington DC area because of prohibitions against screening for AIDS, and Massachusetts also has a law against testing. The obvious first resort of an insurer is to withdraw from covering companies involved in the arts, design, theater, etc, and this tendency is paralleled by rapidly increasing detox and rehab costs for cocaine abuse, which have led to harsh exclusions for psychiatric care. The point is that employer-based insurance seldom includes a premium provision for risk, and if a particular peril cannot be excluded then a general class of service or a particular sort of employer is excluded as a proxy for it.

In this particular instance, it is proposed that insurers explore the willingness of their group markets to shift coverage of last-year costs from company-specific to community-rated premiums while continuing to be experience-rated for all other perils. If the various trade-offs were favorable, then insurers might be willing to discontinue offering last-year coverage except through the community-rated life insurance route. At present, the experience is probably insufficient to judge whether a market-driven voluntary approach would be effective. In the event, most companies proved willing to adopt the approach but insurers feared non-compliant competitors who saw an opportunity to steal business, then the public-interest need for legislation to protect the health insurance industry from disruption by the AIDS problem would have to be debated. For those who dislike compulsory solutions, it is exasperating to discover that the insurance industry generally prefers to be compelled by law since to move ahead in a cooperative manner is to invite anti-trust action.

The preceding, or "term-insurance" approach has the advantage of gathering useful information about the last-year concept without requiring extra tax sheltering or even the formality of separate policies or insurance subsidiaries. It could be retrospectively tested on paper without much cost or any risk, and it might be held ready as a potentially useful tool for the eventuality of the AIDS epidemic provoking serious disruption of health insurance. However, much more important benefits might grow out of the cash-value life insurance or refunded, approach to last-year-of-life coss. Since last-year expenses come at the end of a 70+ year life expectancy, the opportunity for compound interest to work is at a maximum.

Under this approach, the initiative would lie with life insurers, who would be induced to include a standard beneficiary clause in their policies. That clause would assign the community-average last-year health cost reimbursement to any health insurance company which had assumed those costs and had previously provided the beneficiary with appropriate consideration for making the assignments. (At the moment, the various secondary adjustments between employer, employee, health insurer, and tax collector can be left to the marketplace to work out. If no one makes an adequate offer, the beneficiary simply has some life insurance).

The cost of such insurance might turn out to be fairly modest. Although average last year-of-life health costs might be guessed to approach $20,000 per death, the comparatively low death rate before the age of 65 means that an average life insurance policy of less than $5000 (with proceeds exhausted at 65) could conservatively be guessed to cover that need. After age 65, every person can reasonably expect Medicare to have a last-year obligation. Using a 65 investment assumption, the present value of such policy would be $250 at birth; a 3% assumption would only be $500 and would allow general inflation the economy to be ignored. (The $5000 figure would seem to allow generous room for potential innate health-care cost inflation, inasmuch as last-year coverage does not require any provision for recovery from one formerly-fatal condition only to die later of a second fatal condition, which is the main cause of "innate" health cost inflation.) Presumably, the best protection against future health cost escalation is to purchase more insurance than is thought to be needed, expecting any surplus to flow into the estate. Even taking a conservative view of the health-cost escalation problem, its possible to imagine premium costs of $100 per year during thirty years of working life.

Although the marketplace could be expected to determine how much reduction in health insurance premium would be accorded for the lifting of last-year risks, the main value of this coverage would appear in the case of someone who was uninsurable (? ie unemployable?) without it, or who would have been afraid to switch jobs without it. When individuals sustain periods of loss of income, the possession of this insurance might be regarded as a form of catastrophic health coverage, which for the temporarily unemployed might be an absolute minimum coverage. The reasoning is that this type of coverage can be switched on or off; a treaty of assignment need only be signed if the individual finds it advantageous to use it, and is later revocable at will. The policy, in short, is his not his employer's but can be made to coordinate with employer benefits.

Medicaid programs are rather dubious candidates for this approach but even they might be induced to be more generous with last-year coverage (probably under either a term-insurance or waiver-of-premium approach) than they have typically been with full health insurance, the becaused potential for abuse is eliminated.

Finally, the relationship with Medicare needs to be explored with HCFA. After all, Medicare is the main health insurers of fetal illness costs. Far from ever escaping these costs, Medicare has a major concern that it may also have to assume long-term custodial and nursing home costs. Far from ever escaping these costs, Medicare has a major concern that it may also have to assume long-term custodial and nursing home costs. In this matter, Nature provides a certain trade-off. Dying young and outliving your income are both tragedies, but few people have both of them. There is a need to consider ways of transferring costs between the two largely-exclusive problems. The aggregate community cost of fatal illness after age 65 is much heavier than it is up to age 65; possibly $20,000 average coverage would be necessary. Since compound interest would have longer to operate, however, the premiums or present-value costs would not necessarily be proportionately larger. A premium of $40 (1988 dollars) could be imagined; there is no reason why premiums could not be inflation-adjusted on a yearly basis as an alternative to making overly conservative interest-rate assumptions.

The proposal is to explore with HCFA he attractiveness to them of providing some degree of long-term care coverage in return for surrender to them at age 65 of paid-up life insurance adequate to cover fatal-illness costs.

QUESTION: If the health insurer agrees to lower his premium, and subsequently pays the last year costs for the subscriber, how can he be assured the life insurance will eventually reimburse him?

Since health insurance is mostly in employer groups, covering only expenses n the current year, the health insurer can limit his concern to the current year. The health insurance annually needs a slip of paper guaranteeing payment by a life insurer, in the event of client death. Three main methods are available, each with implications about who owns and controls the process:

One method is to follow the reinsurance model strictly; the employer pays the health insurer, who then pays a life insurer for "reinsurance". In this case, the health insurer controls the process, which is almost invisible to the employer an employee.

Where the employer already has a group life insurance benefit, he might well wish to send the check directly to the life company for a somewhat larger benefit(simultaneously reducing the payments to health insurer). While this approach gives control to the employer, it also gives him the headache of negotiating the premium adjustments.

Both of two foregoing approaches would be administratively very convenient, but neither one provides the employee with portability between employers, bridging of episodic gaps in employment, etc. For the employee to take advantage of portability, carriers other than the company carrier must be utilized. The employer's health carrier would then need yearly slips of paper from a number of life carriers, most easily obtainable as part of the yearly premium billing process for the life insurance. Such a paper would amount to a rebate coupon, issued by the life insurers, honored by the health insurer.

It is essential to keep paperwork simple for an estimated premium of about $100 a year for a term an $400 a year for cash-value life insurance (of course, only$100 of either would be transferred to the health insurer). Consequently, insurance management would want to look into bulk communication: "Dear Health Insurer, Our records show the following clients have exclusively assigned the average last-year health benefit to your company for deaths which might occur during the period between A and B. Yours Truly, Life Insuror"

Because of the problem of differing premium dates, the insurance industry might further wish to agree on a calendar or other standardized year definition for this type of coverage. The administrative issue can be stated in the plainest possible term: the extra administrative cost of this approach is the price of portability.

QUESTION: No underlying health insurance.

Although an individual with cash-value life coverage could borrow against it to pay health costs, terminal or otherwise, the issue has been raised as to how someone would employ the life insurance mechanism if he did not have any underlying health insurance, but did have term life insurance. Alternatives would be:

He could purchase health insurance with a front-end deductible equal to the face value of the life insurance. MONY sells a $25,000 deductible policy for about $200 a year family premium, with a $1,000 top limit. Such a combination would protect for more than just terminal illness, but it would not protect against more than one heavy cost. For what would presumably be a very low extra premium, he would need another reinsurance policy to cover multiple illnesses. Such reinsurance might have two parts: one part to cover the remote possibility of exceeding the deductible more than once, and another part to cover the deductible on what proved to have been a non-fatal illness. This degree of coverage goes considerably beyond the last illness concept and would naturally cost more.

The main problem with this life-insurance-to-pay-off-the-high-deductible approach is that it presumes the beneficiary would pay his bills in cash and contains no way to spread the risk. Therefore, everyone ends up either overinsured or underinsured. A smaller issue is that he would pay full charges without a way to negotiate volume discounts at hospitals. Taken together, this approach would be unnecessarily expensive.

An approach more narrowly related to the cost of terminal illness would be for the life insurer to pay last-year costs, large and small, but only reduce the net death benefit to the estate by the average community terminal illness cost rather than the actual case-by-case expense. Once the average rate had been established, it would become possible to tailor the insurance coverage, leaving a suitable margin for year-to-year inflation and other contingencies.

The degree to which carriers could pool claims data in arriving at the average cost is an anti-trust question; the definition of a covered expense is purely a question of practicality within claims administration. However, differences of opinion about the feasibility of different coverages might make data sharing less practical.

QUESTION: What if there are multiple carriers involved?

On examination, this question relates mainly to carelessness, misunderstanding or incompetence on the part of the subscriber. Even if the individual has multiple life insurance carriers, he would be foolish to execute a last-year beneficiary clause with more than one of them. Consequently, no such clause should be permitted unless it defines the primary carrier for last-year purposes as that carrier with the earliest date of execution of such a clause which is still valid at the time of death.

With regard to multiple health carriers, the life carrier would generally take the position that he is only going to pay so much, and the health carriers can work it out among themselves. The reasonable division of the award would be in proportion to the degree the health insurers had paid out the actual health costs. No doubt there would be instances of multiple health insurance coverages of someone who dropped dead with no medical costs at all. If the reimbursement were on the basis of average community costs, lawyers for the health companies would no doubt exercise their imaginations in court, but the life insurer would be serene, and the situation would soon clarify itself with case law.

It is somewhat more difficult to contend with the possibility that the life insurance clause would authorize payment of actual individual costs, only to discover that the beneficiary had over insured himself with multiple health carriers, without coordination of benefits clauses. The life carrier would thus be in a poor position to know just what the actual payments by the two contending health insurers had been, and how much overlap or legitimacy there was to them. It follows that the subscriber who requests that individual actual reimbursements rather than average community ones be made, must also be required to specify whether he wants all carriers reimbursed, or only the primary, or only the largest, payor. With the life carrier thus immunized, it becomes the responsibility of health carriers not to reduce their premiums or make other concessions to the subscriber in return for a last-year treaty unless the subscriber can satisfy them that their agreement meshes with the life clauses, or that the subscriber agrees to the coordination of benefits.

Philadelphia Reflections

The musings of a physician who served the community for over six decades

Obituary

George R. Fisher, III, M.D.

In Summary

ACA Synopsis, July 4, 2014

What I Have Learned (1)

Preliminary Totals

Last Year of Life Insurance