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.

Stepping out of the Obamacare Frame

The most painful criticism of Obamacare, is it wastes so much opportunity to make important reforms -- and still doesn't make them. Gail Wilensky, who spent two years running Medicare and Medicaid, spending decades struggling with a reform of the healthcare system, recently deplored the program's inconsequential goals, if coverage extension is all there is to it. More likely there was to be more, but events overtook the project. Seemingly, the President underestimated the difficulties and overestimated his advisors. Under the circumstances, the natural thing would be, back off in the face of many other demands on his attention, hoping there would be time left in his presidency to recover. The longer he delays, the less chance this strategy will have.

Most of the things which are seriously wrong had been wrong for decades. Using insurance for small healthcare claims is too expensive, merely making administrative costs compulsory and universal for no purpose other than tax avoidance. The only insurance against large and infrequent medical expenses has some modest place we might retain and repair while betting on science to reduce sickness costs. Rather than play historian trying to explain the whole situation, let me devote this chapter to a handful of illustrative changes which might make a big difference, even if only a few prove spectacularly successful. That is, we should taste them to see if they work, not bully ahead and swallow a whole banquet. Listen to the famous warnings of Galen and Hippocrates: primum non-nocere . At least, don't make matters worse.

1. TAX EQUITY. I wish I could name a solitary blunder we could fix or a solitary villain we could hang, to watch everything get better. Our general problem has many contributing problems at its source, At the top of the list, It's a toss-up between a handful of insurance practices begun seventy years ago, and the World War II expedient which we will call the Henry Kaiser tax exemption. I'm sorry, but "job lock" is advantageous to employers, who should not be expected to give it up without a reason. Small businesses are small, but in the aggregate are still important competitors. The fairness argument is meaningless in a competitive environment; large employers must be given something in return for a concession. It is only necessary to review the many regulations which favor small businesses over large ones, to see that large employers feel abused that government's thumb is on the scale. The way to eliminate job lock is to be found in bargains struck in this other environment, where there are more opportunities to balance unfairness arguments. The difference in costs is 15-30%, and it's big enough to warp the system toward certain types of insurance. It's certainly big enough to induce almost anyone to take it when offered. In summary, the designers of the Affordable Care Act seem to have underestimated the value of the Henry Kaiser Law to large employers, and therefore have not made a high enough offer to induce large employers to give it up. Since that would create a tax cost for the government, the rate should be reduced by about a quarter and extended to everyone.

If Congress simply must micro-manage -- {bottom quote}

A few tips

The importance of preserving the tax inequity in the eyes of big business has been under-estimated. However, the importance of eliminating it has also been underestimated by reformers. All tax exemptions stimulate overuse because they amount to a discount. Federal tax exemptions now mainly extend to two consumer purchases: health insurance and home mortgages-- and both of them are destabilized by it. We currently have a national crisis in both at the same time. The tax-subsidized home-mortgage housing bubble preceded the financial panic, and tax-subsidized health care has led health costs into a second unsupportable bubble. Considered on the level of economics, giving a tax advantage to one group but not to its competitors requires a truly substantial justification because it can distort whole industries. The point here is that you can't eliminate it until you give it to everyone, because only then will the lobbyists go away.

Giving a tax subsidy to employees but not to self-employed or unemployed persons created the uniquely American system of employer-based health insurance, and now largely perpetuates the rather odd fringe-benefit system. Many employers wish they could find a way out of it. Emphasizing the important but temporary origins of this tax quirk in the California war industries merely dramatizes its lack of justification for seventy years afterward. Since the tax preference has been sustained almost exclusively by lobbying, it even calls into question the sustainability of our form of government. It should not be necessary to describe collateral damage like job lock and internal hospital cost shifting. The issue of equal justice alone should be enough to justify the abolition of this unfairness. To go still further down this path, mandating individual coverage to large populations while also excluding some of them from tax exemption because of the nature of their current employers, is to invite a Supreme Court case. And since mandatory coverage has been passed, the sooner a case is granted certiorari , the better.

2. REVISIT THE INSURANCE INNOVATIONS OF THE 1930-40s:

INDIVIDUAL OWNERSHIP OF HEALTH INSURANCE POLICIES is really another way of saying eliminate employer ownership because somebody must be the owner. Aside from the person covered or the person paying the bill, there are no other obvious choices. The only conceivable alternative is government ownership. Because the present participants fear that particular outcome more than almost anything else, a major source of resistance to change is the lack of clarity about what would replace employer ownership. And the longer the Obama administration fails to adopt reassuring measures, the more they are suspected of having that motive. Determined opposition originates in the current owners of "self-insured" groups, the employers, or the unions who have acquired this function from employers. Since most such arrangements are de facto "administrative services only", insurer protests of higher administrative costs for individual ownership are often just relics of ancient combat between Blue Cross and commercial insurers.
Regardless of the internal structuring of incentives, healthcare reform cannot be permanently settled without individual ownership. It must be understood, however, that eliminating the tax preference could be resisted at first by patients who acquire it, because of fear the tax would in some way be shifted to them, too, rather than eliminated. That need not be true if consideration is given to the relative size of the losers and gainers. Since the membership of group policies greatly outnumber individual policyholders, the revenue cost of tax equity -- after redistribution -- would be considerably smaller than 50/50, and likely be in the range of 75/25.
PRE-EMPT STATE LAWS WHICH INHIBIT CATASTROPHIC COVERAGE. State mandated benefits now impact high-deductible insurance in many states, and are the main reason Health Savings Accounts have been slow to spread. The provisions of ERISA shield employer-based health insurance from the unfortunate health coverage mandates in question. ERISA could not have been successful without this pre-emption, so unions and management unite in absolute concern to isolate ERISA from congressional meddling, although for different reasons.

REVISIT McCarran FERGUSON ACT. This act effectively makes the "business" of insurance the only major industry restricted to the state rather than federal control. It should be amended to permit the sale and portability of health insurance policies across state borders, thus greatly increasing competition and reducing prices. Once more, present law discriminates in favor of the employees of interstate corporations, who are also exempted by ERISA.
RESTORE ORIGINAL FORM OF PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS (PSRO). These physician organizations effectively regulated many issues which are now the subject of a complaint. They were lobbied into ineffectiveness in 1980, and together with "Maricopa", essentially turned medical oversight over to insurance companies who thus receive no physician advice except their own employees.

The Supreme Court Needs Help, Too

LEGISLATE OVER-RIDE OF 1982 MARICOPA CASE. This unfortunate U.S.Supreme Court 4-3 decision was never tried and upholds only a motion of summary judgment about a per se violation. It prohibits physician groups from agreeing on lower prices and has been taken to mean physicians are excluded from exercising control of HMOs and Managed Care. It also perpetuates the notion of individual competitors in a profession which is rapidly acquiring larger groupings as units of competition. By some quirk, the full tape recording of the 1982 U.S. Supreme Court arguments can be heard on the Internet. It is above this author's pay grade to know whether it would be better to ask the Supreme Court to review its earlier decision, or to make legislative changes in the antitrust law which would somehow result in a better outcome.
WIDESPREAD INTERFERENCE WITH MARKET PRICING. Of equal or greater importance, is the package of expedients introduced by the Blue Plans in the 1920s and refined up through 1950. They include first-dollar coverage (the Henry Kaiser tax subsidy may share equal blame), service benefits, internal hospital cost shifting, hidden discounts to favored insurance companies, and the "pay-as-you-go" system. A more recent addition has been the DRG system of inpatient reimbursement, a brilliant idea poorly implemented, leading to total confusion in hospital inpatient and outpatient pricing. All of these subjects have been discussed at length in this book, and will not be repeated here.

3. ADDRESS QUIRKS AND ABUSES WHICH DISTORT PUBLIC MANAGEMENT OF HEALTHCARE:

SUBJECT MEDICARE TO MORE UNDERSTANDABLE AND CONVENTIONAL ACCOUNTING. The present special accounting of transfers by an agency of government, escapes being treated as debt would be treated in the private sector, and actually treats interdepartmental debts as assets. Medicare is now the largest debtor in the world, rapidly becoming more indebted, and hardly anyone realizes it is 50% subsidized. The implicit need to extend this subsidy to the rest of health insurance makes "Single payer" wholly impractical, however attractive it is to get a dollar for fifty cents. The public is largely unaware that Medicare is 50% supported by tax infusions from the general fund, not to mention the tax deduction employers take on the payroll deductions supporting Medicare. The change sounds like an inconsequential technical one, but merging the debts of Medicare and Medicaid would be considerably eased by this improved transparency, as just one example of where the special accounting leads us. Uncoupling the debts of Social Security from those of the 1965 amendments would be another example, but in the reverse direction because of the accounting razzle-dazzle. Until the CMS reports make this subsidy more apparent, the public is not participating in the debate.

No surgeon can pay malpractice premiums out of Medicaid reimbursement.
Now hear this.

TORT REFORM. Malpractice costs mainly affect surgeons and obstetricians, who sometimes pay annual malpractice premiums of $200,000. Not only does this provoke defensive medical behavior, but it also provokes local physician shortages which in turn lead to hospital cost-shifting and other responses. The only tort reform which has proven value is to place a limit on awards for "pain and suffering", the traditional catch-all cost expander. Resistance to a cap on pain and suffering might be softened somewhat by allowing the greater of $250,000 or 10% of the total award. It is entirely unreasonable for pain and suffering to be worth about seven times the medical or "economic" damages, as is currently standard in the malpractice insurance industry. There may be other approaches to curing the malpractice problem, but many have been tried, and the medical profession believes this is the only one with proven success. It is very clear that the public does not understand how small a proportion of a typical malpractice award relates to the injury, and how much it relates to appeals to jury sympathy.

Treat liabilities like debts. And transfers from the general fund as liabilities. {bottom quote}

Accounting, for Congressmen

PARITY BETWEEN INPATIENT AND OUTPATIENT CHARGES. As a general principle, when a service, device or drug is used in both the inpatient area and the outpatient one has its price exposed to regular market forces in the outpatient arena, the same price should be applied to it in the inpatient arena, plus a (separately negotiated) inpatient overhead adjuster reimbursement which generally applies to inpatients, and a second adjuster for the emergency room. There will be some services which are totally unique to inpatients or emergency room, which will have to be treated as outliers. In this way, a mutually reinforcing restraint is placed on such dual-use items -- with the market holding down outpatient costs, and the DRG ultimately holding down inpatient/emergency costs including outliers. As a general rule, the overhead cost-multiple established for dual-use should apply to the single-use items of either in-patient or out-patient. The key to all of these balancing limits is to permit open competition between hospital emergency services and private competitors, and an absolute prohibition of linkages between providers and emergency vehicle operators. After a brief trial, all such price constraints should be exposed to re-negotiation with an eye toward establishing transparent regional norms. MANDATE DISPLAY OF DIRECT COST MULTIPLES NEXT TO PRICES (FEDERAL PROGRAMS ONLY) (whenever prices are displayed, as in bills, price lists, etc.) FOR ITEMS COVERED BY HEALTH INSURANCE. Some high mark-ups are justified, but the public has a right to criticize them. This would not prohibit, but would considerably hamper, cost-shifting. It should be presented to provider groups as forestalling the prohibition of cost-shifting because of abuse. For this and other reasons, it would enhance provider competition.
REIMBURSE HOSPITALS ONLY ON RECEIPT OF ASSURED POST-DISCHARGE HANDOVER OF MEDICAL RESPONSIBILITY (FEDERAL PROGRAMS ONLY). Unfortunately, hospitals do need increased incentive to improve communication after discharge, which now increasingly occurs on a Saturday. Payment by diagnosis, otherwise a good idea, results in sequestration of medical charts in the accounting department.
Similarly, REIMBURSE HOSPITALS FOR LAB WORK ON THE LAST DAY OF HOSPITALIZATION ONLY AFTER DEMONSTRATION OF REPORTING. Such lab work, frequently obtained within hours of discharge, is sometimes overlooked and may even be unobtainable for the previously mentioned reasons, which in this case also apply to the hospital's own physicians.
ENCOURAGE THE ESTABLISHMENT OF REGIONAL BACKUPS FOR AMBULANCES DRAWN OUT OF AREA. At present, ambulances are limited to going to the nearest hospital, rather than to the hospital of patient preference. The main justification for such behavior is the possibility that a second call might come while the ambulance was in a distant area. Fire departments have long solved this problem by shifting reserve vehicles into an overstrained area, to cover that area while the home vehicle is temporarily unavailable. In some areas, a reserve vehicle backup might require additional ambulances, but mostly it requires a mobile phone network. In areas of extreme distances between ambulances, the main need would be to relax regulations which exclude volunteer vehicles from serving that function. In densely settled urban areas, we now have the preposterous situation of mothers in active labor being stranded at the wrong hospital, only a few blocks away from their obstetrician. When such situations are repeatedly encountered, the current IRS exemption from financial reporting should be rescinded from the ambulance sponsor.

Reflections on Age Groups

Only the age group 20-65 contributes much revenue to health care, but health costs affect every age group. In fact, children and retirees probably run up more health costs than the group paying the bills. Obstetrics and terminal care are among the most expensive services which the medical industry provides, and absolutely everybody is born and will die. Therefore in modern society, one of the most essential services a nation provides is for some mechanism to transfer the medical costs of people who can't work, to other age groups who can. There's nothing hidden or underhanded about it, that's just the way things have to be. The fact that working-age people themselves have fewer illness costs than their dependents is an awkwardness of our present state of scientific advancement, but nevertheless, it makes working folks restless; it tends to destabilize the societal compact, and therefore it is a thing to obscure if we cannot remedy.

But since we cannot make it go away, the problem-solving approach is to make the transfers as painless as possible. It soon splits into two issues: how could we equitably transfer the costs of being born, forward into debt for later repayment? And, secondly, how could we transfer the cost of dying, backward into a debt openly anticipated by every working person? Insurance has already made a start on paying for coming death, so the hard part is to convince the eight-pound squalling infant that he must expect to pay for a birth he never asked for, plus nurturing that may appear to have been deficient? Multitudes of distraught parents of teenagers have decided these obstacles are too daunting and throw up their hands. The fact remains, however, that if we could find a way to do it, the reward would be 26 extra years of compound interest. In our way of calculating at 10%, that would be more than three doublings or eight dollars in return for one. Let's just day-dream a minute. If you have a child a dollar at birth, it would be worth $4000 at age 90. But if you gave him a dollar at age 26, it would only grow to $512 by the time he is 90. The difference is roughly $3500, per person, per dollar.

That amounts to $18 trillion extra dollars if you gave just one dollar to each one of the 4.5 million newborns in America, but at birth rather than compared with age 26, and held it at 10% interest to age 90. Don't bother to quibble about inflation or recessions, or wars, or cures for cancer. The staggering magnitude of the numbers should be enough to convince almost anyone, that it would make a big difference if we could find a way to include an extra 26 years to the remaining life expectancy of the child compared with attributing those 26 years to a child's parents. How in the world could we do it?

Instead of arguing about how much less than $18 trillion it would actually prove to be, because of all sorts of objections, let's agree that doing it would still amount to a ton of money. Let's assume that loans between parents and children are interest-free and that subsidies to poor people of much greater than a dollar are seriously contemplated by every single proposal for health care reform ever devised, and let actuaries and accountants devise proposals for the best way to do it. It requires us to consider lifetime health costs instead of just next year's costs, and it requires both a trustworthy institution to suggest mid-course corrections and a monitoring system which can keep a wet finger to the wind. And it requires an extensive and extended education program for the public, in order to make it inconceivable (as presently it is not inconceivable) that such enormous sums would attract dishonest custodians.

There's a second problem at the other end of life. For better or worse, we have an existing Medicare program which is working reasonably well. Changing it in any way encounters immediate resistance, and indeed changing anything else in the government arouses the suspicion that Medicare will be cut, pay for it.

The most generally accepted way of reducing Medicare costs is to increase the retirement age at least to age 70, and perhaps 75. For one thing, we must not allow a thirty-year vacation at the end of life to become a national entitlement, if only because eventually the rest of the world will figure out how to compete with such an unsustainable model

And finally, we must recognize that a growing proportion of the health costs of the nation are self-inflicted things like alcoholism and drug addiction, to say nothing of obesity and unwise nutrition

(expand the last three paragraphs)

.

Data Sources for Health Care

OTHER REVENUE PROVIDERS WITH POTENTIALLY USEFUL MEDICAL DATA, MOSTLY UNUSED

Although some research discoveries are stumbled on by accident, most of the important ones derive from asking the right questions. If you don't ask the right question, you can wander around in a laboratory white coat for a lifetime without discovering much that is worth knowing. We already have huge stores of data, much of it in electronic form, about the health system. It mostly comes from people paying bills:

Health Insurance

Health Savings Accounts

Payroll deductions for Medicare

Medicare premiums

Military Medical Systems

Veterans Administration

Government subsidies to Hospitals

Medicaid (50-70% Federal)

Social Security

Life Insurance

Premium Investment Income

Cash payments (weak source)

Unclassified Remainder

To summarize the data sources already in existence raises questions of privacy and overwhelming government intrusion into the lives of citizens. That might well be a threat in forty or fifty years, but the disaster of the Health Insurance Exchanges trying to use a small particle of this data is reassuring, in a discouraging sort of way. These systems were originally devised to ask questions of no great relevance to national health costs, so they pose no great temptation to a wandering medical snooper. But they almost always have to meet some sort of an annual budget, so the answer to the question we are now asking is mostly available to everybody, on the Internet. It should be comparatively easy to learn, with adequate accuracy, how much is being spent on what kind of person, right now. If the total comes anywhere near 18% of GDP, we have as much detail as we need for this book to defend the conclusions it draws. We can tell the gross amounts, and by dividing by 350 million, get the average per person costs. Apportionment by age is somewhat less precise, but the numbers are so large, age stratification can be fairly accurately estimated. Let's start with a question we think we know the answer to.

Hospital Cost-Shifting by Age Group, Patient Income, and Payer Class

When kids get sick, the parents pay the costs. When the grandparents get sick, Medicare may well pay a large part out of tax withholdings, premiums, and government borrowing, but working children still are the last resort for the grandparent generation, if resources fail. What's the common theme, here?

All medical costs, whatever the age of the patient, ultimately rest on the contributions of some working person, aged 21 to 66. The medical payment system is largely driven toward transferring funds from non-sick people to sickly non-working ones. The non-sick increasingly resent this stubborn fact, but as long as we continue an employer-based system it will only get worse. It is necessarily a dangerous hostility to encourage.

Indeed, our whole society is somewhat based on the interdependent family unit, using the assumption breadwinners pay for themselves and children, and are ultimately responsible for their parents as well. It's somewhat dismaying to reflect, that with a decline in the power of religion, a decline of the importance of the family may threaten the stability of many under-examined issues, just like healthcare financing. If the employer or the government supersede the family, the family is still the fall-back; and anyway, all taxes and profits ultimately derive from working people, just not the family's own, particular, working people.

Whole generations vocalize decreased respect for marriage in various ways, but do not seem to have considered the disruption it would cause, to get taken at their word. Viewed both ways, if we discuss the ability to pay for healthcare, we have to admit there is nobody to stand behind those bills, whatever the age of the patient -- except some breadwinner. Then, when we ask whether the country can support the cost of healthcare, we are actually questioning whether a solitary age generation of workers can really afford to pay the current costs of everyone else. Must demographics somehow be twisted to suffice, or can we tweak the system? Can we all live ninety years, and only work for thirty of them?

The Demographic Distribution of Health Costs. Unfortunately, health costs do not self-distribute to match health revenues without some pushing. Mostly, the process is, revenues are twisted to match costs.

About 3% of health costs concentrate in the first year of life, about 15% of costs are generated in the last year of life. The last year of life itself has shifted, from age 47 in 1900 to 83, today. Given some time, longevity will grow to 93. From these facts alone we see a minimum of 18% of costs being redistributed from workers to non-workers, and inter-generational cost shifts as a whole are probably closer to 68%. That's variable and inaccurate because hospitals know you have to be born and you have to die, so they find ways to pay bills, shifting the cost of what isn't mandatory, onto the bills of those who cannot escape. That, in turn, is shifted a second time, to the people who can better afford to pay them. It seems to the business office like money going in and out of the accounting office door, but in fact, it goes in one door and goes out through quite a different door.

Mostly, revenues are twisted to match costs. {bottom quote}

Hospital Cost Shifting

It just has to be that way; no other way will work. It isn't rocketing science to figure out, it actually doesn't cost thousands of dollars to deliver a baby, or to pronounce an old fellow dead. Just compare the price of a five-star hotel with the price of (one half of) a semiprivate hospital room or the cost of a frozen food dinner with a hospital meal. This isn't cheating; it's just an institution trying to serve the community.

Indirect Overhead. One of the generalizations which is made fairly, however, is a typical hospital ends up with too much indirect overhead. Somebody has to be paid to mow the lawn, but you can't very well bill patients individually for lawn-cutting. Somebody must answer the telephone for the institution. Over the past centuries, a lot of activity was dumped on the hospital, because hospitals are nice, they are handy, and everybody shares a piece. They are a favorite place to hold local elections on the second Tuesday in November, for example, because they generally have some spare space in the lobby, and they belong to everybody in the community. They have cafeterias and gift shops because that is part of their function. As long as they have them, why can't the community use them? They also have parking garages, partly with the same motive banks use, to issue mortgages for buildings which could be sold for some other use in a pinch. And mortgages are cheap, right now. The point is not they are building things they don't really need, the point is an accumulation of such costs provides a handy vehicle for -- large indirect overhead charges on the cost report. Every overhead cost must eventually be added to some bill, and can thus -- why not-- be re-assigned to areas of the hospital which normally house patients of a target group.

There once was a time when indirect costs avoided elderly patients; as soon as Medicare became an entitlement, the incentives shifted. Now, serious expensive diseases are all migrating into the Medicare age group. As they do with computerized cost-shifting of pediatric units, and as they will when Obamacare pays for some indigents. But please don't pass regulations to suppress the salaries of cost accountants, in order to control all this abuse you have suddenly discovered.

When 100% of the costs must be supported by 20% of the patients, no hospital in existence could stay in business for a week, without cost-shifting. No doubt, most hospital administrators would welcome insurance companies doing this cost-shifting on their own books, but they would be foolish to permit it. Sooner or later, some community activist would protest it was dishonest, and the insurance companies would promptly dump it back in the hospitals' laps. In a sense, hospitals are reinsurers of last resort and must remain reluctant to give away the tools of their trade.

Albany Conference 1754

State and Federal Powers: Historical Review

John Dickinson of Delaware

It was expedient to leave certain phrases in the Constitution intentionally vague, but the overall design is clear enough. Just as twenty-eight sovereign European nations now struggle to form a European Union, thirteen formerly sovereign American colonies once struggled to unify for the stronger defense at a reduced cost. Intentionally or not, that created a new and unique culture, reliant on the constant shifting of power among friendly rivals. Everybody was a recent frontiersman, trusting, but suspicious. It still takes newcomers a while to get used to it.

So the primary reason for uniting thirteen colonies was for a stronger defense. As even the three Quaker colonies of New Jersey, Pennsylvania and Delaware could see, if you are strong, others will leave you alone. In time, the unification of many inconsequential behaviors created a common culture of important ones; and in time that common culture strengthened defense. At first, it seemingly made little practical difference locally whether construction standards, legal standards, language and education standards and the like were unified or not. Except, that in the aggregate, it forged a common culture.
The practice of Medicine was certainly one of those occupations where it mattered very little whether we were a unified nation. Unification of medical care offered a few benefits, but mostly it didn't matter much, right up to 1920 or so. Even then I would offer the opinion, that unification of the several states (with consequent Free Trade) only made a big difference to health insurance, and still made little difference to the rest of medical care. In fact, there are still about fifteen states with too little population density to provide comfortable actuarial soundness for health insurance, as can readily be observed in the political behavior of their U.S. Senators. Although the number of low-population states gets smaller as the population grows, there are even so perhaps only ten big states where multiple health insurance companies can effectively compete within a single state border. Quite naturally the big-state insurers expect one day to eat up the small ones. By contrast, the nation as a whole, the gigantic population entity which Obamacare seeks to address, has far too many people spread out over far too large an area, to be confident we could unify them into one single program. Dividing the country into six or seven regions would be a much safer bet. That's the real message of the failure of the Computerized Insurance Exchanges -- far too much volume. And the coming failure of the Computerized Medical Record -- with too much complexity. With unlimited money, it can be done, because diseases are disappearing and computers are improving. But why struggle so hard?
It is at least fifteen years too early, and mostly serves the interest of insurance companies, if they can survive the experience. At the same time, we are at least fifteen years away from growing the smallest states to the point where we could decentralize. It's really a situation very similar to the one John Dickinson identified, James Madison briefly acknowledged, and where Benjamin Franklin improvised a solution. In their case, it was a bicameral legislature. In the case of medical care, it could be an administrative division of revenue from the expenditure. It could be the cure of a half-dozen chronic diseases. It could be six regional Obamacare. But creating one big national insurance company during a severe financial recession is something we will be lucky to survive.

Returning to the Constitutional Convention, an additional feature was added to the tentative 1787 document to respond to protests from small component states. They objected that whatever the big-state motives might be, small states would always be dominated by populous ones with more congressmen if a unicameral Legislature is made up of congressmen elected by the population. Pennsylvania had recently had a bad experience with a unicameral legislature. So a compromise bicameral legislature (with differing electoral composition in the two houses) was added to protect small-state freedoms from big domineering neighbors. Even after the Constitution was agreed to and signed, the states in ratifying it still insisted on a Bill of Rights, especially the Tenth Amendment, elevating certain citizen prerogatives above any form of political infringement, by any kind of a majority. These particular points were "rights"; individuals were even to be insulated from their own local state government. The larger the power of government, the less they trusted it.

John Dickinson of Delaware, the smallest state, soon made the essential point abundantly clear to a startled James Madison, when he pulled him aside in a corridor of Independence Hall, and uttered words to the effect of, "Do you want a Union, or don't you?", speaking on behalf of a coalition of small states. It was probably galling to Dickinson that Madison had never really considered the matter, and went about the Constitutional Convention airing the opinion that, of course, the big states would run things. Dickinson, who had been Governor of two states at once, had observed the effect of this attitude and wasn't going to have more of it.

Delegates

Benjamin Franklin, who for over 40 years had been working on a plan for a union of thirteen colonies (since 1745, long ago producing the first American political cartoon for the Albany Conference), devised the compromise. It was essentially a bicameral legislature -- with undiminished relative power in the Senate for small states. In this backroom negotiation, it was pretty clear Franklin held the support of two powerful but mostly silent big-state delegates, Robert Morris and George Washington. These were the three men of whom it could be said, the Revolution would never have been won without each of them. In 1787 they were still the dominant figures in diplomacy, finance, and the military. All three were deeply committed to a workable Union, each for somewhat different reasons. Now that a workable Union was finally within sight, parochial squabbles about states rights were not going to be allowed to destroy their dream of unity.

And so it comes about, they gave us a Federal government with a few enumerated powers, ruling a collection of state governments with regional power over everything else. And since big-state/small-state squabbles are unending, almost any other solution to some problem repeatedly, seemed preferable to disturbing what holds it all together. On the other hand, the Industrial Revolution was beginning at about the same time, and people who recognized the power of larger markets almost immediately set about attacking state-dominated arrangements, systematically weakening them for a century, and redoubling the attack during the Progressive era at the end of the 19th Century. Attacks on what seemed like an abuse of state power, the power to retain slavery, and later the power to perpetuate white racism, were claimed to justify this attrition of states rights. The ghost of the Civil War hung over all these arguments, restraining those who pushed them too far.

However, the driving force was industrialization, with enlarged businesses pushing back against the confinement of single-state regulation within a market that was larger than that. This restlessness with confining boundaries was in turn driven by railroads and the telegraph, improving communication and enlarging markets, which offered new opportunities to dominate state governments, and when necessary the political power weakens them. One by one, industries found ways to escape state regulation, although the insurance industry was the most resistant, whereas local tradesmen like physicians found it more congenial to side with state and local governments. The 1929 crash and the Franklin Roosevelt New Deal greatly accelerated this dichotomy, as did the two World Wars and the Progressive movement from Teddy Roosevelt to Woodrow Wilson. The Founding Fathers were said to have got what they wanted, which was a continuous tension between two forces, supporting both large and small governments; with neither of them completely winning the battle.

Insurance Monopoly

The medical profession further evolved from a small town trade into a prosperous profession during the 20th century, but the practice of medicine remained comfortably local. Even junior faculty members who move between medical schools quickly come to realize their national attitudes are somewhat out of touch with local realities. For doctors, state licensure and state regulation remained quite adequate, and state-regulated health insurance companies paid generously. State-limited health insurance companies had a somewhat less comfortable time of it, but the ferocity of state-limited insurance lobbying, as exemplified by the McCarran Ferguson Act, perpetuated it. The medical profession watched uneasily as the growth of employer-paid insurance extended the power of large employers over health insurance companies beyond state boundaries, and thus in turn over what had been medical profession's kingdom, the hospitals. And the medical profession also had to watch increasing congeniality with big government extend through businesses, unions and universities, fueled by overhead allowances of federal research grants and finally in 1965, federal health insurance programs. Nobody likes his regulator, but national organizations inevitably prefer a single regulator to fifty different ones. Furthermore, everybody could see that health care suddenly had lots of money, and naturally, everybody wanted some.

There is nothing naturally inter-state about medical care -- except health insurance. {bottom quote}

It was all very well to pretend that health care was out-growing local-state regulation, but those on the inside could uneasily watch the federal/state competition for control, with the federal government repeatedly stacking the deck more in its own favor. Aside from federal program interventions, there is still nothing naturally inter-state about medical care -- except health insurance. Doctors, hospitals, and patients all tend to remain local, but insurance can easily cross state lines if regulation permits. Even in insurance, small states have difficulty maintaining actuarial stability, driving health insurance toward one-state monopolies. With a few big-state exceptions, even most health insurance companies prefer single-state monopoly status to federal regulation because it facilitates marketing. To praise the virtues of insurance competition is fine, but if sharing the local market means struggling for adequate risk reserves, nationwide regulation will inevitably lead to domination by a few big-state insurance companies. Small-state insurers would enjoy access to a national market; but blocked from it, they need to retain a local monopoly to survive. Fleeting thought might be given to Constitutional Amendment, but there are probably always going to be enough states which consider themselves small, to block the two-thirds requirement for Amendment. Imposing nationwide uniformity by force would possibly improve standards, but uniformity is increasing rather than decreasing, so the argument is not a strong one.

To be fair about it, there was not a strong case for state regulation, either. It could have been argued that uniformity and reduced administrative costs favored central regulation over-dispersed control, because of improved efficiency; and few would have argued about it. Until the ACA insurance exchanges crashed of their own weight around the ears of hapless creators, that is, unable to do what Amazon seems to do every day, and raising quite a few embarrassing recollections. Recollections of the mess the Sherman Antitrust Act inflicted on local medical charity in Maricopa County, Arizona. Recollections of the "Spruce Goose" airplane that Howard Hughes made so big it couldn't fly. Recollections of the gigantic traffic jam strangling the District of Columbia every weekend. And, reminders that 2500 pages of legislation remain to be converted into 20,000 pages of regulations which it would take a lifetime to understand. Suddenly, let's face it, retaining state regulation of health care, or not rocking the boat, gets a lot better press. It might even work better than the national kind, especially in an environment where no one expected a perfect solution, and just about everyone had heard of the Curse of Bigness. When we first discovered that use of health insurance added 10% to the cost of health care, it had seemed like an easy place to extract 2% of the Gross Domestic Product for better things, just by streamlining administration. But after the health exchange fiasco, some people begin to wonder if 10% is just what it costs to use insurance to pay for healthcare. If that is the case, perhaps we should look at other ways of paying our bills, not just a different regulator. Nobody would pay 10% just to have his bills paid, if he understood what he was doing.

Philadelphia Reflections

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

Obituary

George R. Fisher, III, M.D.

Stepping out of the Obamacare Frame

Reflections on Age Groups

Data Sources for Health Care

OTHER REVENUE PROVIDERS WITH POTENTIALLY USEFUL MEDICAL DATA, MOSTLY UNUSED

Hospital Cost-Shifting by Age Group, Patient Income, and Payer Class

Albany Conference 1754