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.

Conowingo

Conowingo Dam

IT was once a major hazard of travel between Philadelphia and Virginia, to cross the Susquehanna River along the way. The river is wide at the top of Chesapeake Bay, and the cliffs are high on both sides. Consequently, the cute little towns of Port Deposit and Havre de Grace grew up as places to stay in inns overnight, perhaps to throw a line into the water and catch your breakfast. Today, these little towns can be seen to have millions of dollars worth of cabin cruisers and sailboats at anchor, at least during certain seasons of the year. In 1928 the Conowingo Dam was built about ten miles north of the mouth of the river in order to harness the water power, and the Philadelphia Electric Company put a power station there as part of the dam, to generate electricity for Philadelphia. It doesn't seem so long ago, but it gave a mighty boost to the electrification of Philadelphia and its industries at the end of its industrial decline from 1900 to 1929. Unfortunately, competitive forms of power generation have now reduced the dam's output of electric power to periodic bursts during the day, and Philadelphia no longer enjoys a reliable cheap water-powered electricity advantage. Coal and nuclear came along, and now shale gas looks like the coming future.

Bald Eagle Fishing

Although water power could be claimed to be not merely cheap but environmentally friendly, the unvarnished fact is fish get caught in the turbines and rather chewed up by being sucked from the tranquil lake on the upside, emerging at the bottom as a diced fresh fish salad. That attracts seagulls and other fish lovers to the base of the dam. Some fish escape the meat grinder and merely are stunned by the experience, floating downstream to be attractive to eagles, turkey vultures, hawks, and owls. The consequence is that many thousands of gulls sit on the downside of the dam, while hundreds of turkey vultures and eagles sit on the higher levels of the power generation apparatus. And hundreds of bird-watching nature lovers stand on the southern shore below the dam, poised with many thousands of dollars worth of camera equipment and binoculars. If you don't have a pair of binoculars, your visit there will certainly be substandard. Lots of fishermen are there, too, but depending on the waves of spawning fish at different seasons of the year; shad is particularly favored. You can now begin to see the prosperity of Port Deposit and Havre de Grace has a wider variety of attractiveness than merely sailboating and crabbing. There is, however, a large and ominous yellow warning sign.

The sign says you are standing on a riverbank where the water can suddenly rise without warning; if the red lights start blinking and the warning siren starts honking, immediately gather up your tripods and head for higher land. It looks pretty peaceful, however, and the people with tripods are mostly chatting happily with their friends. It can be pointed out, however, that about two hundred bald eagles are perched on the superstructures roundabout. Cameras are mostly digital these days, attached to the rear of a telescopic lens three feet long, and when they shoot bursts of exposures they sound like a machine gun. So, the bird photographers follow a swooping eagle eagerly, shooting away and hoping to catch the bird in an attractive pose, throwing away the rest of the pictures. Good shots are called "keepers", which the photographer is happy to show onlookers on the rear view screen of the camera/machine gun. More sedate bird watchers carry binoculars made in Germany or Switzerland, which cost thousands of dollars and produce really spectacular images. It's unclear whether all this expenditure is worth it, but there is little doubt in the bird lovers' minds you are wasting significant parts of the trip without some kind of binocular.

Suddenly, ye gods, the lights start to flash and the siren starts to honk loudly. Not knowing exactly what to expect, first-time visitors head for the hills. The old-timers with a Gatling gun on a tripod are much more casual, picking up their apparatus and scuttling several feet up the river bank. The birds seem to know what the signals mean, scramble into the air, or start to arrive from far perches. The electric company seems to have received a notice that more electric power generation is needed, so the gates at the bottom of the dam are lifted and water gushes forth; the water does indeed rise rather rapidly. The birds divide themselves into two groups: the gulls' circle in a thick spiral at the base of the dam, while the eagles and vultures circle independently in a second spiral, several hundred yards below the dam. One group looks for fish salad, and the other group prefers stunned whole fish. Photographers however much prefer the eagles downstream, circling and then swooping to the water's surface to grab a wiggling fish and running off with it. Some of the bigger bullies prefer to let others do the fishing, simply swooping to steal the fish. Ratta-tap-ratty tap goes the digitals. After twenty minutes it is all over, and the birds seem to realize it before the water stops gushing into geysers. The river recedes, birds go back to their perches, and quiet again rules the land.

On the way home, you notice something you perhaps should have known. Interstate 95 takes people speeding down the turnpike, just out of sight of the dam. You get there quicker, but don't see the sights. Coming back from the bird watching parking area which the electric company provides, you are more or less compelled to recognize that U.S. highway Number One goes right across the top of the dam, up to the hill and over the charming rolling countryside. Back to Philadelphia.

Methods in the Madness

Even today, many people are uncomfortable about psychiatric illness in their family. In the Nineteenth century, this feeling was much more pronounced, so wealthy families sought out luxurious psychiatric hospitals where wealthy patients were kept out of sight. Rich families also sought out psychiatrists of their own class to be in charge; not only keeping matters out of sight, but they were also likely to be discreet in their outside discussions. Sigmund Freud wrote a whole book to the effect that getting richer brings on mental disorders.

Snake Pits. By contrast, saying institutions for indigent psychiatric patients were once substandard, is quite an understatement. Indigent cost to society must have been a considerable burden fifty years ago, with over 500,000 licensed beds nationally in 1955, even though society is a notorious pinch-penny with indigents in any era. When Thorazine made its appearance as the first really effective antipsychotic drug in 1953, it was prematurely followed in 1955 by President Kennedy announcing a plan for cutting the number of inpatient psychiatric beds by half. This goal was quickly and drastically achieved, cutting beds in "psychiatric snake-pits" to 40,000 by the year 2000. To a certain degree, however, we have simply moved mental patients from snake pits into prisons at a higher cost. In all this turmoil, upper-class institutions at first were much less affected.

Rest Cures. During the last half of the Nineteenth century, psychiatry itself had become a distinctly upper-class specialty. To what extent this class isolation was a cause of the profession's later troubles is hard to say, but it probably was a factor. In the early Twentieth century, this social situation was upset by a pell-mell rush of enthusiasm by psychiatrists to follow the teachings of the Austrian doctor, Sigmund Freud, introducing psychoanalytic methods of treatment at a significantly higher cost.

The Analysts. For a while, no academic psychiatrist could expect promotion unless he was an analyst, and this attitude spread out into the practicing profession, too. But its time was brief; psychiatric drugs starting with Thorazine swept the scene. Soon, anybody with a fountain pen and a prescription pad could be a psychiatrist; seven years of specialist training were no longer required. Hope was soon raised that psychosis would next follow the example of tuberculosis, first with effective patient treatment, and evolving later into the closing of highly expensive specialty hospitals.

Fads and Fashions. Many of these changes did result in general savings. In each step in the therapeutic process, the leadership of the specialty was thrown into disarray by radically new treatments requiring many years of re-training to master. Brash young physicians displaced the experienced older ones; the older ones never quite got it, and the younger ones never quite got over it. The ultimate outcome of this uproar was what you can now see in the center of many cities: "homeless" people living in rags on steam grates, because there are few psychiatric hospitals for chronic indigents, anymore. And basically, no good ways to define and reimburse psychiatrists.

Trust Fund Babies. The effect on upper-class "trust fund baby" patients are harder to notice, but inevitably young people of any class will outlive their parents, and often outlive the trust fund as well. What did further disrupt the vulnerable changing treatment scene, was the introduction of large numbers of addicts to recreational drugs, which tended to affect those who could afford the cost, sooner than those who could not. The system was disrupted from the top down at first, and then it became a regular feature of the youth scene for young people of any social class. The closing of upper-class inpatient facilities is particularly disruptive when the signs of addiction first make their appearance, encountering a distraught family having no familiarity with what to expect, or whatever treatment facilities are available, however abundant or scarce, good or bad.

Non-Relatedness of Psychiatric Severity to Hospitalization. There is an old saying in psychiatric circles: "People aren't hospitalized because they have psychiatric conditions. They are hospitalized because they are bothering somebody." Because psychiatry at the time was regarded as a state responsibility rather than a federal one, there were enormous disparities in treatment adequacy. It should be recognized that interstate disparities are part of the force behind the move to federalize. It's actually one of the pressures by interest groups to upgrade spending in poor states, which in time will correct the imbalances between states which James Madison envisioned as a driving force for change. Because California was particularly generous, it was punished by attracting large numbers of psychiatric patients. The response of neighboring states was quite the opposite; they closed what few state facilities survived, and the patients drifted to California. In both cases, local politicians found something to boast about, and their opponents found something to complain about.

The Rather Drastic Philadelphia Method. One place they couldn't quite boast of, was the relative absence of drug addiction in Philadelphia, for quite a long time. The local Mafia chieftain declared anyone selling drugs in his territory wouldn't even live to regret it. His methods were easy to notice, and for a number of years, Philadelphia was "clean". The proof that this was the cause was easily demonstrated by an upsurge in drug addicts soon after a neighboring Mafia tribe "bumped him off".

Cycles. One psychiatric social worker looked on the scene with disgust and offered this explanation. "These psychiatric fads come and go, and they always will. We see patients on steam grates and we say they must be hospitalized to get better treatment. After a while, we call those hospitals 'snake pits' and then say the patients should be integrated back into society." That was her view of it, and everybody else except me may be right. But I feel blame for the present mess is partly shared among many forces: To over-enthusiasm for a new treatment, partly stimulated by a desire to save a lot of public money which encourages a suspension of disbelief, and adverse decisions made by public officials, with other priorities being pressed upon them. Increasing longevity caused adverse de-selection to emerge from state governments funding nursing homes for the indigent elderly, for example. We, unfortunately, do need some bad examples to trigger improvement, but too many of them will overwhelm a government into seeing no way out except hunkering down.

John Kennedy closed the Snake Pits. Who will close the steam grates? {bottom quote}

The End of the Dream Economy The shift in American international trade payments from positive to negative, which took place around 1966 reminded us we weren't as rich as we thought we were, while the recreational drug scene shifted attention to different clients for psychiatric care. The two movements have a certain amount in common. In other words, the nation shifted charitable priorities away from chronic psychosis. It was a result of a whole host of pressures independent of the inclinations of the psychiatric patients and psychiatric doctors. Psychiatry is an extreme case because the patients always surrender a certain amount of autonomy. But it is a warning to everyone that it is dangerous to surrender the remaining control of your fate to people who have limited incentive to look out for your interests. I have been convinced by the arguments that the closing of high-class, high-cost psychiatric hospitals for the rich, did not start this trend. But when wealthy powerful people cannot find an institution they are perfectly willing to pay for, (as is now true in the case of chronic adult psychosis), it is a remarkable development. And it raises a question how much further this trend might go.

That Dratted DRG, Again. Hospital payment by diagnosis makes a reasonable assumption that hospitalization costs are somehow related to the diagnosis, but while that's often true it is seldom precise. The less the precision of the diagnosis, the less precision it will have in determining the cost. When it reaches the extreme of two million diagnosis categories lumped into two hundred diagnosis-related groups, it is inevitable that some diagnoses are unrelated to the mean, in the services they require. Furthermore, some patients with identical diagnoses have complications involving fresh departures in treatment. Or they will be affected by unusual manifestations of illness requiring them to run up special costs. Variations are sometimes enough to bankrupt a family, sometimes they are so extreme they bankrupt a hospital. Bigger hospitals find the law of large numbers often takes care of the problem, but combined with local environmental or politician problems, sometimes even a very big hospital can be shaken by an epidemic.

Outliers. That is, "outliers" will be found, where the DRG payment is not even remotely appropriate. But the main reason DRG is adequate for most hospitals is the payer wills it to be so, and the hospital then devises some workaround which the payer chooses not to notice. In the case of psychiatry, whole disciplines of illness are occasionally found to have little association between diagnosis and cost of treatment. No matter what his diagnosis may be, a person who thinks he is Napoleon can stay in a hospital for one day, or his whole life, depending on circumstances. So the DRG law at first provided outliers should be paid the old way, by itemized services, for psychiatry and other outliers. That was once the way we paid for all hospitalizations, so why wouldn't it continue to suffice for outliers to be treated as exceptions? The flaw in this reasoning, of course, was prices of individual services were discretionary, and pretty much limited to exceptional cases, plus psychiatry. That led to two clusters of prices in the chargemaster lists, one for outliers in conventional general hospitals, and a second one for psychiatric hospitals. Either way, it seemed a good precaution to set the prices high.

Strained State Budgets. In government circles, there is a standard sort of behavior, usually tolerated as a normal part of the negotiations. To get a bill passed in Congress without delay, technical adjustments can come later. In retrospect, it is unclear whether readjustments were bungled or whether the problem was unsolvable; the payers' fuse did seem to have been rather short. In any event, when the number of psychiatric beds fell toward 40,000 from an earlier 500,000, many gave up and went out of business.

Windfall, Then Disaster. And so it came about in those days that general hospitals were chafed by low prices set for DRG, while psychiatric hospitals were effectively given blank checks, and prospered notoriously. A movement was even under discussion, to move non-psychiatric patients into psychiatric hospitals, but events headed this off. It took some time for all of this to work through the system, but eventually, three situations survived. Prices were drastically reduced for psychiatric DRGs, to the point where hospitals of this type were driven out of business. Secondly, the DRG system proved to be a highly efficient rationing system, eventually moving toward a pattern of 2% profit margins within a 2% national inflation rate. And thirdly, the Chargemaster rates remained high, discouraging hospitalization and encouraging outpatients. One by one, famous established psychiatric facilities closed their doors, to the point where indigent patients are found on steam grates, and some affluent ones, too.

The Veterans Administration. As a matter of fact, there is one place left to treat inpatient psychiatric patients -- the Veteran's Administration hospital system, if you can find an empty bed. The bed capacity is small, but at least they do not segregate by the ability to pay. Social workers desperately looking for somewhere to place psychiatric patients, quickly learned to ask the most important question first: "Have you ever been a veteran?" If so, regardless of income, but somewhat dependent on locality, it is one lucky patient. All of the inadequacies of the VA informal rationing system soon come to light, however; the long waiting lists, the remoteness of the location, the recreational drug epidemic, the demoralized staff. With thousands of patients on their outpatient waiting lists, it was just not possible to cover all this up, to say nothing of fixing it before newspaper reporters arrive. Newsmedia has generally been ardent supporters of Obamacare and government-run medical care, but even they have been chastened by the example of it encountered in the Veteran's Administration. Let me help them with their outrage. The Armed Forces themselves will have nothing to do with VA, running an independent system of military hospitals for active-duty military, and politicians they wish to court. When President Eisenhower had a heart attack, he went to Walter Reed Hospital, Franklin Roosevelt and a host of other presidents went to the Naval Hospital in Bethesda. Even Senator Joe McCarthy died in the Naval Hospital, where the first thing a VIP says is, "No one must know I am here." That's the motto of military hospitals. But if any important government official is ever cared for in a Veteran's Hospital, by contrast, it will be very big news, indeed.

Supreme Court Rescues Obamacare, June 26, 2015

Obamcare

The case of King v. Burwell was argued before the United States Supreme Court March 4, 2015, and the decision was reported June 26, 2015. In a clear victory for President Obama, the Court held that it was not the intent of Congress that a phrase in the statute, even though repeated six times, should be the final meaning of the law. Someday a participant in the writing of the law will come forward and tell the story of how the words got into the statute in the first place, but at the moment all we know is the words are there, and the law is unworkable if they remain. Just about everyone would agree these two statements are true. Furthermore, it is clear only Congress could change them, and Congress has changed parties since they were originally written; so they probably cannot be changed at all before new elections are held, unless the President agrees with Congress to do it. There is a third possibility: Congress and the President could make private agreements about what they would compromise on and present a friendly adjustment. Whether that was tried and failed, or whether it was not tried at all, is unclear. So, the Supreme Court did what it never wants to do, it changed the law.

Since millions of citizens had watched (on C-Span) the legislation, dropped on the desks of astounded Congressmen, with no opportunity permitted to debate or amend it. Indeed, even to read most of it before it was voted on, the public is inclined to take the Court's word for it, that...

"The Affordable Care Act contains more than a few examples of inartful drafting".

Whether the clause in question was accidental or not, is a matter of opinion. The clause in dispute reads, and is repeated six times, as

Tax credits "shall be allowed" for any "applicable taxpayer", but only if the taxpayer has been enrolled in an insurance plan through"an Exchange established by the State under [42 U/S.C., pp18031]" pp36B(b)-(c)

Some idea of the Court's historic position is given in a few quotes:

"In a democracy, the power to make the law rests with those chosen by the people. Our role is more confined--"to say what the law is."--Marbury v. Madison, 1 Cranch 137, 177 (1803)
"Oftentimes the meaning--or ambiguity--of certain words or phrases may only become evident when placed in context."--Brown and Williamson, 529 U.S. at 132.
"Reliance on context and structure in statutory interpretation is a 'subtle business, calling for great wariness lest what professes to be mere rendering becomes creation and attempted interpretation of legislation becomes legislation itself.'-- Palmer v. Massachusetts U.S. 79,83 (1939)

In the end, three conservative Justices, Scalia, Thomas, and Alito found there was no reason to change the language of the statute as ambiguous, and four liberal Justices, Ginsburg, Breyer, Sotomayer, and Kagan found there was. The two swing Justices, Kennedy and Roberts, joined the liberals in finding the statute ambiguous, for a final vote of 6-3.

Judging from the global circumstances, it is probably fair to conclude that ambiguity was probably not the only issue involved, and it was probably inartful for the Court to establish a precedent that such a restructured role for the Court was either necessary or desirable. The history of Canada's use of this device to coerce provinces into joining the national health system was well known in Canada at the time. And the McCarran Ferguson Act has restricted insurance administration to a State level for seventy years. Both of these examples would seem to have provided a sounder basis for the Court to interfere in what really seems like pretty clear language in the law.

The Plight of the Latecomer to HSA

Medicare had been in existence for fifteen years when Health Savings Accounts were designed. Medicare was popular and apparently permanent. Accordingly, the HSA proposal was intended to phase out when the individual became a Medicare recipient. Since there might be an unspent surplus at that time, it was provided that the surplus be turned into an IRA, partly as a gesture of deference to Senator William Roth of Delaware, who was the originator of the tax-exempt fund idea.The consequence is that the HSA now bridges the transition, between health care and prolonged longevity. That's a feature now seen to be an enhancement.

However, experience with the program shows we overlooked something. The plans are attracting a following between the ages of 35 and 50, which is to say they turn unattractive to people 50 to 66, who ought to be in their highest years of earning. On interviewing them, the difficulty seems to be that diseases start increasing at about that age, and a depletion of the account gives it scant opportunity to recover before the program terminates. Compound interest is fine, but if you have used it up for disease A, it cannot compound enough to support disease B. By contrast, a subscriber at age 35 might well be in a position to pay for one bout of illness, followed by compound interest build-up. So the plan covered two or three more severe illnesses before age 66 is attained. The contribution limit of $3300 annually is just not enough to provide a comfortable margin. Furthermore, the purpose of the limit is not clear. If a subscriber contributes more, it would be his own money, not the governments. True, it would be tax exempt, but a very large proportion of the population are tax-exempt through their employer, anyway. People whose income is concentrated may be especially affected, such as those who sell a farm or business, or athletes. Finally, everything said about unexpected illness would be true of unexpected stock market fluctuations.

Proposal 3: The annual limit of deposits to HSA should be increased by a COLA based on medical costs, rather than the cost of living. Furthermore, the limit should be a lifetime limit rather than an annual one. At present, this would substitute a lifetime limit of $132,000 for an annual limit of $3300.

This proposal, while welcome, may still not be enough. The employee with recent experience with healthcare costs, has by the age of 50 come to realize that the personal cost of an HSA has three sources: the deposits which we have mentioned; plus the premium of his required Catastrophic insurance; plus the compound interest rate which his HSA manager is allowing to pass through to him. Additional deposits cost the manager nothing, but the insurance premium and the interest rate are passed through to him from vendors, and their cost is largely obscure to the customer. "Kickbacks" are particularly obscure.

First, the interest rate. The stock market has gone up 12% a year for a century. With transaction costs of perhaps 0.5%, the customer should also subtract 3% for inflation. That creates the remote possibility of paying 8.5% to the customer, and we have in this book generally assumed a net return of 6.5%, with a profit to the middle-men of 2.0%, assuming the middle-man accepts the risk of "black swan" volatility. This is generally about 50% every 28 years. However, the broker probably does not look at it that way. He notices the stock market has gone down in the past few months, may go down more in the next year, and might then take ten or fifteen years to recover to a profitable level. Furthermore, new HSA subscribers may well be young and improvident, have few assets to supply a cushion, and background of judging a consultant's value by the labor he applies, rather than the risks he takes. The customer wants 6.5%, the broker offers 1%. Each sincerely believes the other is cheating him.

Disintermediation, def. Eliminate the middle-man. {bottom quote}

The Nut of It.

So, there are other places to look for the difference. The employer can afford to give up the difference, providing he gets a 40% tax deduction directly, borrows the money at 6%, and is making profits this year. The HSA manager can afford to make up the difference, providing he treats the HSA deposit as a pass-through rather than a paid service and makes it up by adding a surcharge to the insurance premium. The insurance company can make up the difference by lowering its prices and profits. It would take subpoena power and open books to know what was a fair proportion for each to contribute. However, the customer must receive a higher income rate, or the complicated interactions will not work. That's where we start. The HSA becomes feasible because transaction costs have been lowered by computers and near-zero interest rates. The customers cannot enter into the bargain if the finance industry refuses to share the windfalls along with the risks. The customer is going to get 6% or forget the whole thing.

Perhaps a simpler way to summarize the unfortunate confrontation is to recognize it is going to be difficult to support 6.5% retail interest rates in an environment of 1% bank rates, and historically low-interest rates, generally. That is particularly true in an environment of falling stock market prices. Unless it can be convincingly shown that someone in this circle is making outrageous profits, or unless someone is willing to put up the capital to buy this business at a discount, the following dangers must be faced and surmounted:

1. The medical customer will eventually resort to what he did in the 1930s. He will neglect his teeth, his gallstones, his varicose veins and hemorrhoids, his eyeglass refractions, and other optional, delayable, services. Consequently, the accident rooms of hospitals will be full of treatable but neglected cases.
2. The stockbrokers will recognize that the era of $250 commissions is over, and the retail customer is going to buy index funds over the Internet from wholesalers, and conduct his medical business dealings out of a bank safe deposit box. The history of discounts in closed-end investment funds is part of this conversation.
3. The insurance companies will surrender their surveillance role, and strip down to a re-insurance role. Something like the PSRO (Professional Standards Review Organization, see Senator Wallace Bennett of Utah) will take their place.
4. The hospitals can survive a long time on their present surplus assets, particularly buildings. In time, much of their role will be taken over by retirement villages. Doctors and pharmaceutical companies will be squeezed in ways unique to maintaining their function, more or less.

Which will we choose, if we are headed toward a 1930s depression? All of them. But assuming for the moment that things aren't so bad, let's start with #2. The stockbrokers are doomed, anyway. Almost all banks have some empty floor space, where a fee-only wealth advisor can function with his computer terminal. Alternatively, CPAs can absorb a new business model, in addition to filling out tax forms. One thing is not going to remain the same: the finance industry has a whole lot of disintermediation to do.

Dubious Wisdom: Adding Incentives to Health Savings Accounts on Behalf of Other Linked Accounts

Government programs tend to have a "one size fits all" quality, growing in part from the Constitutional requirement for equal justice under the law. Most of them make no mention of what to do with left-over funds, usually implying they return excesses to the pool for recycling. Supposedly that reduces the cost for everyone else. Sometimes, of course, it raises employee salaries, buys battleships, or is otherwise spent for things we didn't specify. A much better default rule would be to return unspecified excesses to the original contributor, as an incentive to keep his spending lean and mean. But that's someone else's Crusade; we just urge it to be examined each time the matter arises.

The cookie-cutter similarity is exaggerated by the way legislation is created. Each Congressman represents nearly a million constituents, far too many to be running for re-election every two years with scant time left to legislate. The laws are consequently too general, are revisited too infrequently, and leave too much to the Judicial branch and the administrative agencies to settle. Congress increasingly resembles a Board of Directors, rather than the source of legislation, ultimately lacking the power to control the President by picking him. For this reason, we hear the British parliamentary system praised since the Prime Minister is chosen by the ruling party. My own feeling is Congressmen are not able to devote enough time to the job of legislating mainly because they spend so much time in the telephone call center, soliciting election funds within the hearing of their leadership. The deluge of business is ultimately the balance point of leverage in the system. Let's examine some issues which are not urgent, but eventually must be settled by these harried law-makers.

We have stumbled onto the clear linkage between paying for healthcare, and subsequently being forced to pay for the resulting extended retirement, which is an unexpected but inevitable consequence of improving health care. Although the cost of healthcare has been a national concern, extended longevity proves to be potentially even more expensive, expressed as a lump sum at age 65. That's because a completed retirement fund becomes a constantly shrinking asset once you retire, whereas Medicare is only spent when you get sick. Furthermore, retirement will soon last a third of a lifetime (or more), so it is awkward to suggest a defined price for it. Everyone, even someone who is quite rich, is afraid to spend retirement funds for fear of running out of money during a particularly expensive terminal episode, like some of the cancer treatments now making an appearance. Homogeneous nations like the Scandinavians seem willing to carry equal retirement to a national level, for approximately the same reason socialism is more popular there. A homogeneous people are more willing to trust each other to "re-insure" the whole population in unpredictable circumstances. But our society seems headed in the opposite direction of diversity. These are not parallel goals.

Socialism is mainly unpopular in America if carried beyond issues of mere subsistence, because of its tendency to reduce work incentives. So it's a circular argument usually growing out of famines and genocides. For example, raising the retirement age might ease financial strains, but instead many people just want to quit work at age fifty, while others see no reason to retire at all. Unfortunately, workaholics resent the suggestion their extra income should support others who prefer to quit work. The difficulty is magnified by first supporting thirty million people who are plainly unable to work, plus at least an equal number who hate the kind of work they do. The outcome is a diverse nation seemingly resistant to government protections which guarantee more than bare survival, in constant contention with a subpopulation which yearns for education during the first third of their lives, and another subpopulation which yearns for expensive leisure during the last third of their lives.

If that's a fair analysis, there will always be a divergence in luxury for retirements, and therefore a constant propaganda war between fairness to the poor and fairness to their more visibly successful competitors. The term "Social Darwinism" captures that flavor. At least for a long time to come, the amount available for individual pensions at retirement age will be a scorecard for a successful life. Both public boasting and envious criticism should, therefore, be discouraged, but the lifelong incentive to be frugal cannot be ignored. If we can manage this paradox, the incentive can be used as a silent reminder that what you frittered away as a youth, might have been used to improve your retirement. At the very least, the public might be reminded government debt lowers long-term interest rates, intentionally lowered in order to stimulate short-term growth of the economy. But to paraphrase John Keynes, "In the long run, we are all retired." Eventually, we must all live on what we saved, and debts we agreed to must be repaid. What we now seem to have, are incentives to retire early, and incentives for the government to inflate away the cost by suppressing interest rates.

One logical place to begin is to pay a bounty into an HRSA for subnormal spending during the previous year {bottom quote}

Therefore, if unifying the finances of medical care and retirement at any age, is an incentive to be medically frugal, why not unify the incentives for all things medical? Otherwise, the landmark moment becomes the termination of your present means of support, the termination of your present mortgage, or graduation from your present school. There is general agreement, medical costs have risen so fast because there is nothing else to spend earmarked medical money on, except frivolous medical care. As we said earlier in the book, there is the reason to suppose the success of Health Savings Accounts lies in the powerful incentive provided by retirement needs, offered as use for left-overs from healthcare. The roll-over of an HSA into an IRA provides an alternative, and the tax deduction for the health of an HSA provides a preferred, but not mandatory, outlet.

If, one by one, other funding sources for healthcare flow into an HSA, healthcare at all ages are provided with a unified incentive to be frugal. Health insurance of one form or another may resist the HSA alternative, but if we are correct, the market will force it. Because medical care seems destined to concentrate among elderly people, it seems urgent to provide this incentive to Medicare first. Of all places, Medicare is the least desirable place to be employing deficit financing, pay-as-you-go financing, or other mechanisms to make it appear to be less expensive than it is. Medicare is where serious expensive disease concentrates, and that trend continues. Because of stretched finances, one logical place to begin is to pay a bounty into an HSA for subnormal spending during the previous year. The compound-interest beauty of this approach is the younger you do it, the more it will help; and so that idea might be built into it, too.

Flexibility is also an incentive for almost any program. We have mentioned several ways to enhance Medicare's revenue and there seems no reason to limit the choices. The transition from Medicare as we know it is likely to be a long one and family circumstances may change several times during the phase-in. If the individual could contribute to the contingency fund, or to the Last Year of Life fund, make choices for increased benefits for late retirement --and flexibility for anything else anyone can suggest, the bookkeeping may become more complicated, but the attractiveness of Medicare improves.

Attention might be paid to the individual's ability to apportion the distribution of his nest-egg at the time of retirement, until the time later on when he writes his last will and testament. There will be an irresistible tendency to overestimate personal retirement needs, in order to avoid exhausting them too soon, and that should be relied upon. On the other hand, these requirements are often abruptly changed by illness, or death of a spouse. There might be several contingency funds, with different rules for invading them. These warnings are issued in full realization most people cannot see so far ahead, and most people will be a long way from achieving their own goals.

With such general ruminations in mind, it seems inadvisable to limit choices without good cause or provide for handling exceptional cases with some sort of required approval. Doing otherwise might lead to forcing some people to reject a job opportunity, or else to buy insurance they do not need. Or to encourage inflation to minimize the unfairness to a surviving spouse, to force reduction of his/her lifestyle. For the first few decades at least, constraining the choices at certain critical points should operate on a sort of common-law or Court of Equity process. As the issues gradually surface, they are slowly resolved. The country grows increasingly restless about the intervention of administrative agencies without adequate oversight by the court system, at the same time, it distrusts the courts. The problem is not so much incompetent courts, as the design of a system dumping decisions on them which might better be made by the individuals. Once more, the problem of too little congressional time surfaces. At present, the tendency to flexibility is to reduce it, and most of the public prefers otherwise.
Marriage Laws. Broken marriages, whether broken by death or design, are too common to justify immobilizing their future direction. A lawyer dominated legislature must recognize the danger of too much power in the hands of the trial bar when dealing with life-long savings of either party to a divorce, or both, or prior expenditures of the couple for health purposes. Or unanticipated contingencies which occur after the separation of a couple. It will be a long time before we have settled what is best to do about serial marriages of homosexuals, or marriages of intersex couples, or no marriages at all. The courts dealing with lifetime health and retirement funds should at least have a defined outlet for the special insights their role provides because the country will need to hear those insights.
Special Treatment of the Handicapped. Not only do handicapped people of all varieties have increased healthcare expenses, but they also have special laws dealing with their problems. These may conflict with what is generally best to do about lifetime health and retirement funds. It is unwise to freeze the rules before the exceptions become evident. Retirement is now commonly thirty years long; relationships can change. Freed of obligations to minor children, they may even change more rapidly.
Expatriate Citizens and Conflicts Between States. It is comparatively common for citizens who were foreign-born, to retire to the nation of their birth because it is cheaper to live there. They become subject to devaluations of the foreign currency and pray to agents who purport to help them, just as residents of different state jurisdictions become subject to conflicting mandates. If the host country abuses them, they present a problem for the State Department.
The list of potential conflicts with flexibility is very long, and these are only examples of it. The basic point is that a mechanism should be created to deal with long term exceptions to laws which envisioned a much shorter horizon and many fewer linkages.

Philadelphia Reflections

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

Obituary

George R. Fisher, III, M.D.

Conowingo

Methods in the Madness

Supreme Court Rescues Obamacare, June 26, 2015

The Plight of the Latecomer to HSA

Dubious Wisdom: Adding Incentives to Health Savings Accounts on Behalf of Other Linked Accounts