The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
... William Penn's Quaker Colonies
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
The Affordable Care Act (Obamacare) is implemented by twenty thousand pages of regulations to be issued by the Secretary of Health, Education and Welfare. They must respond to two thousand pages of laws hastily passed by Congress three years ago. While much remains incomplete, a great deal is known about the coming plan. Are substitute components feasible? Are there potential solutions for the long run, "bending the cost curve downward" after the Affordable Care Act has done whatever it does or doesn't do? Five underlying issues come to the forefront, three of them inherited from the past, and two more added by Obamacare. Discussion of these five items constitutes the bulk of these reflections.
THREE INHERITED ISSUES: Within its announced goal of universal coverage at community rates, the Affordable Care Act built on, and continues to favor, a framework of what preceded it: tax-preferenced, employer-based, service benefits, a mysterious phrase which denotes three inter-connected issues. While the President was entitled to set his own priorities, his reaffirmation means he must actively espouse much of what originally generated the need for reform. In political jargon, by incorporating them within the Affordable Care Act, he owns them.
TWO NEW ISSUES ADDED: The most important question at the present moment is whether mandated universal insurance coverage is both feasible and affordable. Based on theory alone, market-set prices must necessarily disappear as a benchmark for reimbursement -- when everything becomes insured. Unless some additional provision is made, any system which replaces the market by becoming universal must somehow face this issue. The easiest way to retain a marketplace is to leave a large population outside the insurance. Since this would be politically awkward, it is more feasible to exclude a representative component of medical care outside the ring of insurance coverage. And here the most obvious opportunity is to set a higher cash deductible while discouraging supplemental insurance from covering it. Since a small front-end deductible is contemplated for Obamacare anyway, just make it a big one. While it would create some political blow-back, the alternative of ignoring this issue creates an unsustainable need for government price-setting to extend throughout 17% of the Gross Domestic Product, permanently. Because of this issue alone, Obamacare would seem to land on the edge of a Health Savings Account, and should seriously consider going that way entirely. Service benefits could be quite satisfactory retained in the payment of inpatient diagnosis-related groups (DRG), provided it is recognized that certain services like inpatient psychiatry have always proved unsuitable for DRG. In order to retain market-set benchmarks as widely as possible, any other inpatient situations where DRGs are partly unsuitable might be included within the deductible as well, perhaps with small accommodations. And SECOND, as a final last-minute compromise, Obamacare consigned residual uninsured populations to the underfunded (and often poorly administered) state Medicaid programs, to the immediate dismay of state Governors and physicians familiar with existing Medicaid. Health Savings Accounts address both the marketplace and cost issues, simply and quickly. But a second urgent challenge is to bring Medicaid up to speed in the next six months, a daunting prospect indeed, and an expensive one. The administration has seemingly allowed itself to get lost in the weeds of insurance exchanges without a clear and simple insurance design to offer through them. Health Savings Accounts (a savings account linked to catastrophic coverage) afford proven benefits for healthy working people. If the basic plan for ensuring everybody is to give poor people the money, giving them the money takes care of poor people in Health Savings Accounts, too.
STRESS TEST. These two problems -- market pricing destruction, and overwhelmed state Medicaid programs -- readily appear to be deal-breakers because they are newly-created. A more subtle issue is not whether the old problems simply will leave us where we started, but whether the act of universal mandate becomes a stress test which brings out problems which were tolerable with more slack in the system. No one can predict the size and timing of such issues, so it is usually wise to proceed in small steps. Most likely, inherited problems from the old system will indeed emerge as greatly magnified by a universal mandate. The "old" system was business centered, tax preferenced, and delivered service rather than indemnity benefits. It twisted itself and the health industry to help these three requirements endure. With a change in central priorities, the health industry may no longer accommodate them.
So after The Affordable Care Act has been accepted, discarded or modified, the old problems will probably resurface. We suggest here some longer-term goals which could be facilitated by advance preparation for them. Although an essentially unchanged system has accumulated a great many small fixes which need repair, the big ones proposed are these: Eliminate the tax inequity for health insurance based on an employee's type of employer. Any time is the right time to do that. Second, make it easier to migrate from Job Lock and the other problems of employer control, by successively eliminating the advantages of employer-basing. Third, remove the barriers hampering a migration of the (medical office) center of medical care away from tertiary institutions, and toward retirement villages (the principal location of disease). Fourth, utilize the recent advances in large-scale computing to establish a system of individually owned insurance, which can simultaneously subsidize the lingering debts of everyone's first year of life, plus the mostly inevitable expense of everybody's last year of life -- while paying for much of it with investment income during the intervening healthy years of employment.
A number of smaller reforms can additionally be identified, useful in themselves, which would facilitate larger, long-run, goals.
For whatever reasons, much of the Affordable Care Act is still shrouded in mystery. After three years, an employer-based system is still predominant, and it remains unclear where a big business wants it to go, or perhaps what makes business reluctant to go ahead. It is even conceivable big business just wants a vacation from healthcare costs, hoping to go back to the old system of supporting the healthcare system by recirculating tax deductions. Once an economic recovery restores profits enough to generate corporate taxes, it will once again be worth saving them by giving away health insurance and taking a tax deduction. Otherwise, it is hard to see what value there is, in a year's respite. Under the circumstances, it begins to seem time to look at some new proposal, neither sponsored by an opposition party nor motivated by antagonism to the Administration initiative. Let's reverse its emphasis, testing how much it is true the financing system now drives the health system, not the other way around.
Both big business and big insurance have been remarkably silent about their goals and wishes for the medical system, while quite obviously agitating for some sort of change by way of government, and quite obviously leaving their own agendas off the visible negotiating table. Let's illuminate the situation, with the medical system speaking out about how employers, insurance, and investment should change while leaving the medical system alone until we better understand the finances which are driving it. The proposed way to go about all this is to harness Health Savings Accounts, with its two different ways of paying for healthcare (cash and insurance), with two-time frames for the public to explore (annual and lifetime), and passive investment of unused premiums versus concealed borrowing. So yes, it's technical, and necessarily it's been simplified. Two important features, multi-year insurance and passive investing, are outlined in this book. But one theme runs throughout: the customers, individually, should have choices. Nothing should be mandatory, everything possible should be left for individual customers to select.
Don't take on too much at once. Health Savings Accounts have grown to over 12 million clients, so it isn't feasible to do more than repair a few loopholes, and let it grow. The next logical step is to get rid of "first-dollar coverage". Not by eliminating insurance, but by making high-deductible the normal standard for health insurance. If we must make something mandatory, it ought to be ensuring big risks before insuring small ones. Catastrophic indemnity insurance is a well-established, known quantity; it's not likely to need pilot studies to avoid crashes. It doesn't need government nurturing; it needs big insurance companies to see the writing on the wall. So let's get along with it, without any mandatory coverage rules. If the old system of employer-based and tax-warped coverage can get its act together, that's fine. Because as I see it, the main danger in Catastrophic coverage is it will penetrate the market too quickly; let people have a level playing field to watch the game unfold. When we have two viable competitive systems, the customers can decide between them, and both will emerge healthier.
An observation seems justified. In a system as large as American healthcare, changes should be piecemeal and flexible; win-win is strongly preferred to zero-sum. Sticking to finance for the moment, we slowly learn to avoid zero-sum approaches, while strongly applauding aggressive competitors. Napoleon conquered Europe, and Genghis Khan conquered Asia by smashing opposition, but it isn't an American taste. Since everyone would prefer saving for when he needs that money for himself, (compared with being taxed to support someone else's healthcare), let's see how far and how fast we can arrange that. The recent extension of life expectancy creates a long period between healthy youth and decrepit old age. About 20% of those born in the lowest quintile of income, will eventually die in the highest quintile. That's a good start, but the process can't go much faster just because someone beats on the table with his shoe.
Nevertheless, a larger proportion of people could save a small amount of money when they are young, and by advantageous investing in a tax-sheltered account, accumulate enough money to support their healthcare costs while old. Some people will never be self-supporting, of course, but the idea is to shrink the size of the dependent population as much as we can. We can at least try it out, on paper so to speak. And if it produces good numbers, perhaps we are ready for pilot projects. That ought to be the next step in our long-term plan to reform the health system without attacking it -- switching from one-year term insurance, to multi-year whole-life insurance. The underlying insurance principle is called "guaranteed re-issue". We aren't ready for that yet, but we are ready to call in the experts in whole-life life insurance and ask for their guidance while setting up information gathering systems to navigate the reefs and shoals. The exercise does seem feasible and is partially explored in the rest of this book. Meanwhile, medical science is steadily reducing the pool of acute illness and lengthening the average longevity. Actuaries are my best friends in the whole world, but I think they are wrong about one prediction. Like retirement planners, both professions assume future taxes and future health costs are going to go up. But I am willing to predict, net of inflation, they will go down as longevity increases. Just wait until you see an enthusiastic medical profession attack the problem of chronic care costs. The nature of retirement living must change. Both things will change because of changes in the nature of investing and finance, the lowering of transaction costs, and the effect it has on the economy. Because: investing is based on perceptions, and a general disappearance of the acute disease will certainly re-direct perceptions of what is important.
Over thirty years have elapsed since John McClaughry and I met in the Executive Office Building in Washington, but a search for ways to strengthen personal savings for health marches on, trying to avoid temptations to shift taxes to our grandchildren, or make money out of innocent neighbors. Most of the financial novelties to achieve better income return originated with financial innovators and the insurance industry. But the central engine of advance has come from medical scientists, who reduced the cost of diseases by eliminating some darned disease or another, greatly increasing the earning power of compound interest -- by lengthening the life span. My friends warn me it must yet be shown we have lengthened life enough or reduced the disease burden, enough. That's surely true, but I feel we are close enough to justify giving it a shot. Before debt gets any bigger, that is, and class antagonisms get any worse.
While Health Savings Accounts continue to seem superior to the Obama proposals, there is room for other ideas. For 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 misgivings, ERISA got along with the Constitution. And we had the Supreme Court's assurance the Constitution is not a suicide pact. So, still grumbling about the way the Affordable Care Act was enacted, I eventually stopped waiting to describe an alternative. The long-ago 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 and strong. It was to establish pensions and healthcare plans as freestanding corporations, more or less independent of the employer who started and paid for them. Having got the central idea right, almost everything else fell into place. Perhaps something like that can emerge from Obamacare, but its clock is running out.
Well, it's all called the Health Savings Account, Classical Version. John McClaughry and I invented it as the Medical Savings Account in 1981, and we both consider it to be on the short list of things we want to be remembered for. The central feature of these accounts is they pay your medical bills with a special debit card, and they get every tax deduction we could find, except one.
Proposal 79: The law says they must be linked to catastrophic health insurance but are forbidden to pay the premium. This omission should be repaired, by changing the law or regulation; with this change, they would become superior to the discriminatory employer-based tax abatement discussed below, because that could extend the income tax relief equally to everyone, regardless of employer.
Since almost everyone would agree, why not adopt it and get on to other business? The essence of the whole remaining debate is how to pay for comparatively low-cost care, especially for people with low incomes, neither impoverished nor affluent. Some people will have to be subsidized, and the rest are mostly able to save enough to pay their medical bills. We can ease things for borderline cases with tax deductions, and the rest is mostly a routine drawing of lines. The concept is discussed in greater detail in later sections of this book. Right now, all it immediately needs is a revision of those two regulations of the Affordable Care Act.
An HSA should be overfunded. Any surplus can be used as a retirement fund.
That's all there ought to be to this fuss, and we already have most of it enacted into law. Whether called the Health Savings Account or the Medical Savings Account, it is a combination of two things: catastrophic health insurance and tax-deductible savings account for smaller health costs, and it could just as easily be regarded as a Savings Account with re-insurance backup, as Catastrophic health insurance with an account for the deductible. In practical use, one part customarily pays for hospital inpatient care, the other largely pays the deductible and miscellaneous outpatient services. When you get right down to it, it seems amazing so many people resisted the idea of full coverage, with imaginary objections. Since this simple issue has a history of being twisted for partisan purposes, it illustrates how unwise it is to call opponents names, when a little persuasion might convert them to becoming friends of the concept. But if you read between the lines of the next section of this book, it should be no problem to surmise who has opposed this perfectly legal alternative.
Instead of confronting, let's out-bid them, with a Lifecycle Health Savings Account (L-HSA). The dreams of the future usually include legalizing a few radical advancements which become normal parts of the landscape in time. By adding passive investing and the power of compound interest, the HSA becomes a Lifecycle (multi-year) Health Savings Account, providing the balance can be legally carried forward for a lifetime or even longer. The out-bidding already takes the form of adding a new revenue source, not by reducing the benefits.
Proposal 80:At this point, it probably would be wise to add some legislation clarifying the ground rules since several professions would have to cooperate in allowing a new line of business for whole-life insurance.
In effect, it could become a do-it-yourself whole-life insurance company, which pays for health insurance instead of funerals. I'd love to see the whole-life insurance companies adopt the idea, which comes close to imitating their business model. There's no reason why stockbrokers and/or investment managers couldn't do much the same thing in competition--it all depends on what the enabling statutes happen to enable. Whole-life insurers could manage the money professionally and would create much-needed competition for old-style health insurance companies, now operating on the "use it or lose it" principle. The large amounts of money the savings account approach would generate, seemingly almost discredit the idea as exaggerated; we'll, therefore, let the reader do some of the math. Perhaps you do need to dangle astonishing incentives to get people away from the something-for-nothing term-insurance approach which is now threatening to shoot itself in the foot. The full transition is a fifty-year project, but long-term progress usually doesn't seem so long looking back on it, and it gives everybody a chance to claim some credit. Remember, it's only long-term lack of progress you really need to fear.
Let's not quibble. It might even be legally or financially possible to adopt one approach, year by year, or the other, spread over a life cycle; and hurry it all up by making it into a mandatory monopoly. But it is inconceivable for half of a whole unwilling country to tolerate a mandatory health system they widely resent. However, it seems possible to implement parts of both approaches voluntarily right now, without major disadvantages except extra cost. You can do that, or you can read the Lifecycle-HSA as just an alternative proposal to consider. The main dream offered here prefers to cut average lifetime health costs in half ($175,000) but might be expanded to full lifetime coverage of $350,000. Or reduced by individual vendors to some more affordable fraction, such as by a reduction of average costs by only a quarter ($85,000) or a tenth ($35,000). To do this requires some legislation, but $35,000 times 300 million population is scarcely trivial. Even Bill Gates isn't worth half of that.
Over-investment in Health Savings Accounts -- The Retirement Alternative. Because it's a new program, with financing uncertainties, we advise everyone with an HSA to consider overfunding it as a precaution. If you could use resulting surpluses for something else, it should reduce the hesitation to overfund. One alternative is to use Medicare exclusively after age 66 and transfer the surplus to your IRA retirement fund. That's legal and essentially cost-free. Consider all the foregoing to be a short introductory look at the theory of Health Savings Accounts; we next display an actual example, using actual numbers which just came across our desk from a large and local insurer. To keep it simple, we assume the client had no serious illnesses at all and paid for minor illnesses out of pocket. That will rarely be the actual case, but its use here is to illustrate the safety of over-investing in the product in order to fund a healthy retirement with the overflow. Although it will provoke extensive discussion later, we assume the deposits into the HSA will earn 6% compound interest.
Example One. Assume an average employee aged 21 receives $750 yearly from the employer and deposits $3300 into the HSA account, adding the personal supplement permitted of $2600 extra, until age 66. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
Example Two. Assume an average employee aged 21 receives $750 yearly from the employer and deposits $3300 into the HSA account, adding the full supplement permitted of $2600 extra, until age 26 when he/she retires to get married. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
Example Three. Assume an average employee aged 61 receives $750 yearly from the employer and deposits $3300 in the HSA account, adding the full supplement permitted of $2600 extra, until age 66. Deposits earn 6% compounded. After age 66, income tax is paid and the remainder rolled over into an IRA. Subsequent to retirement, the minimum retirement is paid annually, while the balance continues to earn 6% after tax.
You pay income taxes when you make the transfer to the IRA and on IRA withdrawals. Most of the investment return is tax-sheltered, however. Assuming 6% tax-free earnings and a 15% blended income tax rate, your investment of $132,000 would be worth $698,000 pre-tax, and $482,000 after income tax, at age 66. At that point, suppose you pay your HSA tax and re-invest the proceeds in an IRA. Assuming a life expectancy of 88 years at that point, you would leave $1,638,000 when you die, or $1,493,300 after income tax. That's assuming you actually spend nothing out of the account, but since it's a surplus, it also represents how much you could have spent without affecting the retirement. Be careful of this point, however, because the age at which you spend it will markedly affect the outcome. That's unlikely to be sure, but if you consume it all you have paid for all your lifetime healthcare, as best we can estimate it. The point of this calculation is not to make everyone rich, but to demonstrate the financial power of the approach. With a little management, it easily covers the actuarily projected lifetime cost of health care of $350,000 per person and leaves enough slack to be comfortable about it. In case anyone questions the ability of a poor person to save $3300 per year, lifetime savings would amount to $440, per dollar invested at the beginning. That's too attractive to brush aside on the grounds you might never be able to do it, even for brief periods. It's quite honest and legal, starting today, but an additional reason to show it here is to demonstrate how little anyone has to lose by investigating it today. In fact, over 12 million people have already started such arrangements. If the rudiments of the plan are that attractive, just imagine what a few legal clarifications could accomplish.
What's the secret? Instead of paying 10-15% to service your bills, you earn 5-6% interest by pre-paying them. The swing between those two is the difference between comfort and worry. There are other swings, but that's the main one.
Read on, to see how the passage of a few relatively harmless laws, might offer poor people a way to get a rich man's health care. Getting rich in this sense amounts to funding your medical bills in a radically new way, but it does not imply any change in the kind of care you receive. Otherwise, it certainly will cost somebody $350,000 per average lifetime, as calculated by Michigan Blue Cross, verified by Medicare.
But it doesn't imply that no one will be worse off. There are 1,500,000 employees of health insurance companies, but there are only 800,000 licensed physicians. Doesn't it seem excessive that for every doctor you see, there are two insurance employees handling the bills? It's probably conservative to guess that every doctor hires another insurance employee, and every pharmacy hires several. Every hospital probably hires a hundred, and every laboratory or x-ray laboratory hires more; it just seems to go on, and on. Five or six clerical insurance employees per doctor don't seem like a wild guess since a lot of doctors aren't actually practicing. Those who want to continue with this sort of thing can pay for it. Surely, the rest of us deserve some other choice.
Because this book is written during a confusing period where both Health Savings Accounts and Obamacare have been enacted, but the position of the Supreme Court has not been clarified, nor the regulations coordinated, -- what an individual should do is highly specialized to his age and situation. We cannot predict what upsets the November 2016 elections will bring, or what the result of their reconciliation will be.
Essentially, this particular health plan offers its groups the choice between an Obamacare with, and Obamacare without, a Health Savings Account. Into the HSA version, the employer effectively contributes $750 but gets a lower premium from raising the deductible. Never mind the economic argument that the cost ultimately comes from the paycheck; most people will say it feels like a gift. The compound interest in the future dictates that every young person should enroll in an HSA at the earliest possible moment, and supplement the employer contribution to the limit of his ability. A young lady, for example, should go to work immediately after graduation from school, even though she plans to drop out of employment when she gets married. An older employee, on the other hand, is far less expensive to the employer than he appears to be if the retirement benefits are considered. If a person reaches age 61 without provision for retirement, there is little to be done about it.
Commentary. The high deductible portion of Obamacare serves as the catastrophic link required by the HSA enabling act. The employee is annually allowed to contribute up to $2600 to the savings account additionally. (There's a family plan, with different contribution rates.) There's no way to know how long an employee will remain with the same employer, or whether a new employer would continue the same coverage; but at least an individual's HSA has been established, provided you go ahead and do it. If an employee starts this plan at age 21 and continues it to age 66, the outside potential is to transfer $159,550 to a regular IRA at age 66, assuming 6% interest, but no personal supplement, and only out-of-pocket health withdrawals. Never mind theoretical economists; it's a very good deal, and it almost feels free.
But don't get carried away; you can't spend the money twice. The example shows the financial benefit of being lucky with your health; it could also be said to reflect the cost of being unlucky or careless if your health is bad. Its success depends on young healthy people saving their money and generating extra income before they become older people getting sick and having to spend their savings. Meanwhile, scientific progress will exaggerate both the savings and the attained age before the spending begins. In the past century, that added thirty years of longevity, and hence thirty years of compound interest. If some scientific miracle should add more cost than longevity, a mid-course correction might have to be applied. Some future generation might have to answer the question, "Didn't you want to live an extra ten or twenty years?" I would have to say the medical profession has been pretty good with this juggling act in the past when we were in control of it; one of the ponderable dangers of upsetting the system is the danger of upsetting this balance in the future if control of the payment system falls into other hands.
The foregoing should suffice as a summary of this book's proposal. The next section describes some of the other serious problems with healthcare and how they got that way in the past century. Sometimes more funding will help these problems, sometimes it won't. The section following that will describe some of the nuts and bolts of Health Savings Accounts, and sketch in some more elaborate variations which might be possible. By far the most important new concept to be thoroughly absorbed is the approaching wrestling match between the health industry and its finance partner. Recall that we have estimated the Health Savings Accounts would earn 6% compound interest income during the long lifecycle between healthy youth and sickly elderly. Actually, that is likely to be an under-estimate.
Stock Market Issues.For the past century, the foremost student of the matter, Roger Ibottson, has shown the equity stock market has averaged about an 11-12.7% total return. Investors in index funds of the same stock have received about 5%. Three percent of this attrition is ascribed to inflation, leaving another three percent unaccounted for. Money managers use the residual 3% for expenses and to buy bonds as a safety measure. While the law of large numbers will ordinarily account for the ordinary jiggles of the stock market, there is some other cycle at work causing a severe crash every 25-30 years. It is thought wise to set aside 25-40% of the portfolio in bonds to ride out such "black swan" storms. This, in essence, is the central issue of the third section. The final section describes other variations of the Health Savings Account concept, particularly as it involves transitions from other funding mechanisms.
The insurance plan for childhood isn't complex or tricky; it just has a lot of parts pinned together. Although it is most readily understood by looking at a graph of it, the following is a list of its main ingredients:
1. The child gets his Health Retirement and Savings Account at birth, presumably with some sort of custodial provision for the person now responsible for his health costs. It's legally his only HRSA from birth to death. The reason for this is to start the compound interest running at birth, adding at least two doublings to the end of it.
2. By the appropriate legal methods, half of his mother's (or collectively his family's) responsibility for his obstetrical and neonatal costs become the child's cost, and half of her other costs for obstetrics/gynecology are assigned to her spouse. The reason for this is to equalize (somewhat) the male/female difference in health premiums, and to shift half of the purely delivery and neonatal costs to her offspring. Employers would be permitted to pay for these costs to her HRSA, just as if they pertained purely to the mother.
3. On the assumption that the above maneuvers roughly equalize cost apportionments, the rest of this discussion is in absolute terms.
4. The pooled transfer fund transfers $18,000 to the baby's personal account, discharging the grandparent from further responsibility after his HSRA makes one such transfer. The reason for this maneuver lies in the maternal birth rate of 2.1, making each grandparent or designee responsible for only one grandchild per lifetime.
5. The grandparent has previously executed permission for $18,000 to be transferred to the fund, in consideration of earlier concessions, and it remains in the pool after his death until it has been used a single time, regardless of other children in the family. If the discharge has previously occurred, transfers are made from funds contributed by childless members.
6. After the funds have been transferred to the newborn's HRSA, they pay for the newborn and neonatal costs, and the balance remains in the baby's HSRA until the 26th birthday, responsible for the child's health costs up to that age. Calculations have previously been made, to aim the child's HSRA to arrive at a zero balance at that age. But the right is reserved to increase or decrease the grandparent/grandchild transfer amount, in order to satisfy program requirements, particularly to maintain the solvency of the system, and to prevent the creation of a perpetuity extending further than an additional 21 years. That is, the transfers can be increased for everyone in the event of cost overrun, and decreased individually, in case of overfunding which threatens the probability of a perpetuity.
7. At age 26 the child assumes personal responsibility for his healthcare during the years of his employability age 26-65 unless other arrangements are made with the Affordable Care Act.
8. At the 26th birthday, it is intended that discretionary funds would be zero, and that long-term escrows have been created, in the range of $200 at birth for a long term contingency fund, $100 at birth for Medicare, and $100 at birth for retirement. The last three funds are an obligation of the parent generation, except in the case of poverty or disability, out of consideration for the transfers in item 2.
9. At any time up to age 45, the individual has the right to sign an agreement with Medicare. It should in effect provide that his Medicare withholding tax should be paid into his HRSA instead of to Medicare. His Medicare cost for the last four years of his life should be paid to Medicare as re-insurance benefits. And his Medicare premiums adjusted up or down to keep the system in balance. At age 65 he agrees to have any projected surpluses in this system paid to him as supplemental retirement benefits or turned into an IRA, except at his death he agrees to allow the grandfather assessment to be drawn once out of his HRSA.
10. All ages and dollar amounts are hypothetical, intended only to suggest an order of magnitude.
11. The lifetime cost of this unified "First and Last Years of Life Reinsurance" is suggested to be $400-$500 per person per lifetime, assuming a 6.5% investment income compounded quarterly throughout. Any additional costs or revenue from the Affordable Care Act are not considered, and passage of appropriate enabling acts is assumed. It seems fair to begin consideration with an additional $1000 of out of pocket costs for misjudgments and transition costs, and it seems fair to warn that many observers consider even 5% net return to be optimistic for a 90-year projection. Most investments are the other way: returns are higher for longer commitments. However, few loans are longer than 30 years, and experience is limited.
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.
