The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
... William Penn's Quaker Colonies
plus medicine, economics and politics ... nearly 4,000 articles in all
Philadelphia Reflections now has a companion tour book! Buy it on Amazon
Philadelphia Revelations
Try the search box to the left if you don't see what you're looking for on this page.
George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
Cost analysts maintain it really does cost ten dollars to write a simple business letter, so maybe it's no surprise when hospitals charge ten dollars to administer an aspirin tablet.
But there's also another form of hospital overcharging. Mark-ups of prices of several hundred percents over audited costs are routine in hospital bills. These are not hidden cross-subsidies, either; they emerge on the yearly audit as multi-million dollar "losses", neatly balanced by "contractual allowances". Translated, these are discounts to insurance companies.
Why do hospitals raise prices, then turn around and discount them? Why do they overcharge, then call it a loss when they write it off?
It's an important question, because it results in confronting patients without insurance with much larger bills than the effective price to insured ones; patients who can't afford to pay are charged more than those who can.
The old-time system of hospital wards to care for people who couldn't pay have been replaced by collection departments and hospitals are very aggressive in pursuing the very people who can least afford to pay, and who are grossly overcharged in the first place.
Health savings accounts with high deductibles were conceived as a way for people to self insure but they have been thwarted by hospital overcharges. Since HSA deductibles are guaranteed, hospitals perpetuate their present largest source of loss -- unpaid deductibles. So why do hospitals continue to post abusively-high prices for patients without large-insurance-company coverage?
Until hospital officials come forward with a coherent defense of their practices, outsiders can only guess at motives. Start with the old legal approach of "Cui bono?" (Who might have a motive?) and divide the answers into those with a motive and those with the means. The line-up will then consist of hospitals, insurance companies, limited-license practitioners, and the state government. Limited licensees, acupuncturists and the like, surely must hate high-deductible health insurance because their fees mainly fall below the two or three thousand annual deductibles. Old-line health insurance companies also have plenty of motive to keep out competitors, fearing antitrust action if they get too obvious. That leaves the state government.
States have ample power over hospitals. Substantial annual payments are negotiated with hospitals for Medicaid services, charity care, and educational grants and subsidies. Tax exemptions are repeatedly challenged and re-negotiated, and overall non-profit corporations are entirely creations of the state legislature. So, unless it is a violation of federal law, the state government has the means to compel hospitals to do anything. Power, yes, but where is the incentive for states to wish for exorbitant hospital prices? Or confer monopoly status on certain insurance vendors by according them sweetheart discounts?
All current plans for "reforming" health care involve providing government-paid insurance to those without. Will the result be to permanently institutionalize the artificially-high public prices to be paid in full by the government? If so, you can well understand why hospitals support these "reforms".
So hospitals are no better than stores that mark up their prices and then loudly proclaim that they will give you a discount. 200% mark-up, 10% off; terrific.
The legislation removes the hampering restrictions of the 1995 Law. What follows is a brief outline of the main features of the HSA/MSA clause in the 2003 law,
U.S. Capital
as published by the main authorizing committee, the House of Representatives, Committee on Ways and Means. From this point forward, more specifics of the program will probably be written by the Executive Branch and published in the Federal Register. The Ways and Means Committee will continue to exercise oversight authority, however, in conjunction with the Senate Finance Committee. As a consequence, statutory modifications of the program are likely to appear in future annual budget reconciliation acts, or else in any new Medicare amendments. The legislative route map becomes more understandable when it is recalled that Medicare itself is considered to be an amendment (Title XVIII) of the Social Security Act.
Working under the age of 65 can accumulate tax-free savings for lifetime health can needs if they have qualified health plans.
A qualified health plan has a minimum deductible of $1,000 with $5,000 cap on out-of-pocket expenses for self-only policies. These amounts are doubled for family policies.
Preventive care services are not subject to the deductible.
Individuals can make pre-tax contributions of up to 100% of the health plan
deductibles. The maximum annual contributions are $2,600 for individuals with
self-only policies and $5,150 for families (indexed annually for inflation).
Pre-tax contributions can be made by individuals, their employers, and family
members.
Individuals age 55-65 can make additional pre-tax "catch up" contributions of
up to $1,000 annually (phased in).
Tax-free distributions are allowed for health care needs covered by the insurance policy. Tax-free distributions can also be made for the continuation
coverage required by Federal law (i.e., COBRA), health insurance for the
unemployed, and long-term care insurance.
The individual owns the account. The savings follow the individual from job to
job and into retirement.
HSA savings can be drawn down to pay for retiree health care once an
individuals reach Medicare eligibility age.
Catch-up contributions during peak savings years allow individuals to build a
nest egg to pay for retiree health needs. Catch-up contributions allow a married
couple to save an additional $2,000 annually (once fully phased in if both
spouses are at least 55.
Tax-free distributions can be used to pay for retiree health insurance (with no
minimum deductible requirements), Medicare expenses, prescriptions drugs, and
long-term care services, among other retiree health care expenses.
Upon death, HSA ownership may be transferred to the spouse on a tax-free
basis.
Contain rising medical costs- HSA's will encourage individuals to buy health plans that better suit their needs so that insurance kicks in only when it is truly needed. Moreover, individuals will make cost-conscious decisions if they are
spending their own money rather than someone else's.
Tax-free asset accumulation- Contributions are pre-tax, earnings are tax-free, and distributions are tax-free if used to pay for qualified, medical expenses.
Portability- Assets belong to the individual; they can be carried from job to job and into retirement.
Benefits for Medicare beneficiaries- HSA's can be used during retirement to pay for retiree health care, Medicare expenses, and prescription drugs. HSA's will provide the most benefits to seniors who are unlikely to have employer-provided health care during retirement. During their peak saving years, individuals can make pre-tax catch-up contributions.
Employer-based health insurance can be viewed as a lingering vestige of feudalism, or maybe Federalism. Employer-basing evokes images of the mansion on the hill, overlooking the factory and a little village of workers, allowing an eternal debt to the entrepreneur in the mansion who risked life and fortune to make the industry flourish. When a worker in the factory was injured, it really was the duty of the owner to see he was cared for. In fact, about 25% of major businesses are still controlled by the founding family, where notions of paternalism are taken more seriously. At least one mutual fund even specializes in family-owned and controlled businesses and can demonstrate that such attitudes really are an important asset. Unions, of course, sneer at such nonsense, while the owner-entrepreneur, in turn, reacts with fury at the implicit ingratitude. The Roebling family (of the Roebling Steel Company, builders of the Brooklyn Bridge, etc.) is famous for an epic performance with its company town, and there are a thousand such tales, starting with George Washington and his plantation. Although it is now difficult to see the slightest trace of feudal beginnings in the present administration of Blue Cross and other health insurance corporations, benign feudalism was in fact the foundation stone for employer-based health insurance.
And while most of them would deny it, it accounts for some of the vigor with which union leaders insinuate themselves into the board rooms of the present successor health insurance corporations, like schoolboys sitting on a vacant throne. It would go too far to describe the seventy-year struggle for national health care as entirely based on these primeval victories, but something does remain of that idea. In the 1920s, the big problem was to get people to buy health insurance. Civic-minded employers played such a leading early role in promoting this distinctively American solution it was often called an employer-based system. Dominating hospital boards of trustees, businessmen exerted peer pressure to spread the health insurance message. It became the right thing to do if you wanted to be regarded as the right sort, yourself. Even today, healthcare in many cities would suffer considerably if employers suddenly withdrew support.
In their civic role as hospital trustees, businessmen also recognized early that employer insurance mainly eased the cost load for the working population, and became less comfortable for outsiders, while insurer management increasingly recognized employer groups were the most profitable clients. Some of this was the inevitable tendency of all large customers to be more demanding of better treatment and to get it. This recognition became more apparent in scarcely two generations, as workers emerged as the healthiest, least expensive segment of our population. As a consequence, more assertive employer representatives professed uneasiness about employee premiums cross-subsidizing the rest of the population, even though it was always obvious that people with an income are the only ones available to help people without income. There was thus stubborn resistance to the idea that the main function of health insurance was to act as a transfer agent of health costs between age groups, unfortunately without a written contract to do so. There was then a period when the expedient was imagined that employed persons supporting their dependents, children and elderly parents, might cover the need more or less adequately. Eventually, government programs for the elderly and for the poor were recognized to be absolutely essential additions; by 1965, we had Medicare and Medicaid. Taxes were just a redistribution system on a larger scale, but Lyndon Johnson was in a hurry and those Great Society programs went unclarified as potential equivalents for the same goal: working people recycling funds for non-working ones. Unfortunately, 1965 was about the time the American post-war international trade balance turned negative, eventually forcing a recognition that the "pay as you go" financing systems designed for Medicare and Medicaid would be unsustainable until our trade balance turns positive again, which could be the same as saying "forever".
Current premiums (mostly from healthy people) are used to pay current costs (mostly generated by older, sicker people) on the assumption that new young subscribers will always outnumber sick older ones. Not a safe assumption.
Even large cost savings from nearly eliminating the common causes of healthcare delivery expense, like peptic ulcers, tuberculosis, polio, typhoid, malaria, heart attacks. strokes and rheumatic fever -- could not overcome the instability of balancing increasing non-worker costs on a steadily diminishing base of worker costs. "Pay as you go" requires quite a suspension of disbelief to be called anything but a Ponzi scheme. And the essence of a Ponzi scheme has been made widely familiar by the Bernie Madoff example of it. Current premiums (mostly from healthy people) are used to pay current costs (mostly generated by older, sicker people) on the assumption that new young subscribers will always outnumber sick older ones. The retirement of the baby boom bulge had been predictable for sixty years but was ignored. Even today, it is pronounced impossible to happen a second time. It became an informal banking system for healthy working-age people to store up savings for those later life eras of heavy health expenses when they would be unable to work. Unfortunately, it was implied without a written contract and thus was always a "best efforts" promise.
Even benevolent employers had to worry that our international competitiveness could not withstand the strain of it. Although most citizens, businessmen or not, probably did not understand why it was true, attempting to lower worker health costs through Managed Care HMOs proved to be a self-defeating disaster, combining worker antagonism with further upward-leveraging of employee premiums to support it; even so, it never addressed the underlying basis of the problem. Reform of hospital cost-shifting against employee groups was equally futile, as described in later paragraphs because such pushing on the balloon caused it to bulge out among the uninsured, who mostly transformed it into bad debts for the hospital. Unfortunately, cost-shifting which in 2008 generated a proposed solution as dumping the system's growing medical expenses on the backs of those with high premiums but low usage, became translated into a shift onto the backs of those who could not even afford their own costs. It violated the long-established tradition that those with the highest medical costs should pay the highest premiums, without proposing a way to make it politically acceptable. It must be evident that the solution supported here is a benevolent return to the concept of "Each ship on its own bottom," because of alarming signs of class warfare in the concept that one group must support another group against its will. The general concept here advanced as a more palatable substitute is individual lifetime insurance. A short-term concession would be to call for modified individual lifetime policies as a transition step. The success of even this proposal must frankly depend on the hope that interest rates will return to normal, and that cures for cancer and Alzheimer's disease are on some future scientist's horizon. No solution to this problem should be presented as free of problems, but it is equally unproductive to throw things against a wall, just to see what sticks.
To repeat an inconvenient truth: "service benefits" means cost is not a responsibility of the patient or his employer. It has been transferred to the hospital and the insurance company to "work it out", which they mainly do by raising prices or shifting them to outsiders.
Employer-basing is far from perfect, as are service benefits, but at least they only minimally distort the medical system. They do create the potential for the employer to invade employee privacy, and real awkwardness arises when the employee wants to change jobs, a situation often known as "Job Lock". Difficult as these features do make things, we are about to learn whether eliminating them by Obamacare will seem worth the disruption. First, transferring insurance to that of a new job needs rough uniformity between policies of different employers, and therefore hampers competition between insurance companies. A second seeming requirement is to recognize that a sick employee is an expensive employee, by creating pooling arrangements with "healthiness credits" and "sickness debits", unfamiliar concepts generated by "pre-existing conditions", which will not be changed by writing pre-existing condition clauses. Sweeping these perfectly sensible reservations aside without addressing their merits will not be helpful. It will be interesting to see how well Obamacare manages this difficult issue. Ultimately, most of the issue reduces itself to an extra charge (or discount) on the premium for the policy of the new employer. Since the Health Savings Account and catastrophic illness policies do not commonly include service benefits, they can be much more restricted to money issues with an indemnity resemblance. (Explanation: a service benefit is to pay all the costs of an appendectomy. An indemnity pays $5000 if you get appendicitis.) Therefore, indemnities also suit themselves better as a common denominator for quarrels between successive insurance carriers. To shrug off the Job-Lock issue by saying this problem has no solution is to say that employer basing has no place in health insurance, other than the present patchwork causing so much dissension. The public seems to be demanding some solution. Of the compromises available, the Health Savings Account imposes the least contortion because it requires a dollar settlement rather than an agreement to the open-ended limits of pain and suffering, weakness and disability. An employee with a disability needs to change jobs, but he is an expensive employee in the eyes of the new employer. His costliness occurred while his health was the responsibility of the first employer, but how is that to be transferred? Large employers will prefer a money solution, unnecessarily ending the employee's career. This problem cannot be solved unless health insurance is either permanent or freely transferrable; permanent is better because its costs are set in advance of the disability. Transferrable means costs are established after the fact by a referee who knows insurance will pay. To repeat an inconvenient truth: "service benefits" means cost is not a responsibility of the patient or his employer. It has been transferred to the hospital and the insurance company to "work it out", which they mainly do by raising prices or shifting them to outsiders.
Many problems will prove to be non-problems, while unanticipated problems are inevitable.
Even after conceding the advantages of permanent insurance, there remain problems. Increasing employment mobility collides with variable state regulation of insurance. That awkwardness is mandated by the McCarran Fergusson Act which is more or less guaranteed by the Tenth Amendment of the Constitution, challenged by the Roosevelt Court-Packing uproar, and tracing ancient origins to Thomas Jefferson and the anti-Federalists. Litigation could be protracted. Nevertheless, the idea of creating individually owned, lifetime health insurance is so attractive it is hard to say it is impossible and easier to say its traditional alternatives are worse. Health costs concentrate in the first and last years of life, while the several-thousand-dollar premiums would be largely unspent for long periods of time, gathering interest for many decades (in periods with normal interest rates) that might largely pay for the whole thing. Therefore, although it is attractive to design a program within existing laws, it is probably more feasible to examine the legal impediments and conduct a protracted campaign to modify them in many small ways. That is essentially why this proposal is offered as a Grand Strategy rather than a legislative package. When legal obstacles are proven to be intractable, it is then necessary to design workarounds. Many problems will prove to be non-problems, while unanticipated problems are inevitable.
Obamacare designers probably expected most of its problems to come from small business; they seem to have forgotten about ERISA, which presents some health insurance alternatives. Taking nearly a decade to design, ERISA is likely to withstand most attempts to change it.
Other Transition Problems To return to more mundane issues, it also generates vexing political problems to go from employer-basing to any government-dominated system, if you have allowed one segment to have a tax-deduction while denying it to another segment. At first, transferring the cost from employee to employer is a gift from one to the other. But in time, the employer adjusts, and the costs return to the employee as a reduction of wages; almost all economists agree this invisible readjustment occurs. But when one segment of the business has adjusted the pay-packet to pay for the fringes, while another segment has not, the unfairness surfaces abruptly when it does surface. That is the unfortunate situation with the coming program, and it accounts for much Tea Party rancor. Employers who have previously reached a tacit agreement that they won't offer health benefits, but will pay a little more in the pay-packet, will suddenly be confronted with a new cost which their bigger competitors have long since absorbed. In short, it is likely that small business will be much more hostile to the approaching Obamacare than big business, because they will genuinely be hurt more by it. Just what has been solved by delaying the implementation of large groups by a year is unclear; it does sound as if it had things backward. Perhaps a problem emerges from conflict with ERISA.
The mundane but ultimate downside of employer involvement is that top management of major companies seldom give healthcare a high enough priority on their time, thus allowing unions and human resources departments (their philosophical successors on the company payroll), to speak for the company in important forums, with the effect of appreciably softening price concerns. When top management was again drawn into a visible role by the Managed Care ("HMO") fiasco, the business-school approach did not distinguish itself, so government and academia have become less deferential, perhaps even hostile, to business. The final word on the role of employers in the transformation of an employer-based system by the Affordable Care Act has yet to emerge. Much will depend on how gracefully the transition is managed.
In 1963 the Studebaker automobile company went bankrupt, leaving half its employees without anyone to pay the promised pension benefits. Congress soon resolved such things should never occur again and convened a Congressional task force to devise a law which would make employee benefits survive, even after the parent company went under. Negotiations took almost ten years and were said to craft a law that could not be amended, thus assuring employees their pensions would be independent of the fortunes of the company itself. Somewhere near the end of this long process, someone asked why it could not extend from pensions to health insurance as well. Almost as an afterthought, health insurance acquired some new features which had never really been considered in the past. ERISA (Employee Retirement Income Security Act) was enacted, signed by President Ford in 1974 and almost immediately began to change the whole discussion of health insurance. The suggestion I would make is that this legislation takes care of interstate health insurance, and seems to have created very little dissension. It might, therefore, contain some features which peacefully solve the same problem of reconciling a mobile and itinerant population with the Tenth Amendment.
Interstate Commerce Commission Seal
Because the Constitution provided for only a limited set of powers for the Federal Government, and the Tenth Amendment repeated the point for strong emphasis, every power not expressly given to the Federal, and not expressly forbidden to the States, was to be a power of the States. And that included health insurance. The Court-packing uproar of 1937 considerably strengthened the power of the Federal Government to extend its ability to regulate commerce. Indeed, advocates of this movement have been at pains to describe the Interstate Commerce Clause as merely "the Commerce Clause", as if to pretend it had never said anything else. However, the authors of ERISA (the Employee Retirement Insurance Security Act) expressly included pre-emption clauses which rather unnecessarily provide that Federal Law and Regulation should supersede state powers in that area.
There was a conflict here, in which ERISA apparently had to behave as though the Tenth Amendment did not exist. The conflict was never resolved by the Supreme Court, probably because it was so evident that business was delighted to have a thousand mandated benefits in state laws undermined by Federal pre-emptions. Concerted efforts by labor lobbyists had succeeded in putting everything they could imagine into health benefits packages, which were then exempted from income tax. Health insurance became "first dollar coverage", greatly increasing its scope. Because it included many low-cost items, its insurance administrative costs were unduly high; and because it included birth control, it was even a welcome respite for the Court system from the excited lobbyists on both sides of that inflammable issue.
Unfortunately, much of the behavior in the health insurance world is political rather than economic. Consequently, big businesses were mainly interested in is having one fifty-state insurance umbrella rather than in winning arguments in public. The use of federal regulation allowed them to have nation-wide insurance with uniform benefits, and it probably allowed them a wider set of insurance choices at lower prices. Moreover, it helped the Human Resources departments of the major corporations to have their way unhampered, and get rid of such nuisances as obstetrics for male employees. In the original negotiations, labor unions were bought off by allowing them to run their own "independent" health plans, but eventually, they went back to searching law books for loopholes. And the conflict between the "supremacy clause" and the Tenth Amendment was certainly a logical one to pursue because one mandated Federal regulation, and the other precluded it. Twenty-six states place taxes on provider institutions and most of them use the tax money to draw down federal matching money at anywhere from 1:1 to 1:4 levels, which is then returned to hospitals as "disproportionate share hospital" reimbursement. Other states use tax incentives to force third-party administrators to restructure benefits in a way that mirrors regulation.
By far the commonest set of dodges take advantage of judicial opinions that the states could regulate what was insurance, whereas the Federal regulation mostly applied to "self-insurance". The feeble distinction was whether lump sums were paid to an insurance company to distribute, or whether the parent employer distributed the money directly. By extension of this principle, reinsurance was taxed, payments to hospitals were federally regulated. The principle of risk-sharing was dragged into discussions which relegate state regulation of stop-loss arrangements, especially those with low attachment points, as indistinguishable from pure insurance; while self-insurance and experience rating are state regulated. What to do about "pure" insurance with a high deductible is less clear. (This may be one subtle reason why first-dollar coverage, in some ways the least desirable insurance form, is treated as a default, while Catastrophic coverage, which ought to be the basic protection, is relegated to a status bordering on outlandish. By treating huge costs as the responsibility of local charity, this arrangement tends to make them remain so.) That is, by inserting a fictitious intermediary, the regulation supposedly changes from federal to state. The model for this would seem to be one-bank holding companies. Consequently, trial lawyers have taken to suing the fiduciaries of trustees, leading to the comment that "You would have to be a lunatic to agree to be a fiduciary." The longer all of this goes on, the more tangled it will probably become, so the Supreme Court is probably under heavy pressure to pick a suitable case, and decide it.
Affordable Care Act
Shortly after the Affordable Care Act was passed, big business employers were given a one-year deferral of mandated coverage. The tangle with insurance exchanges for small employers (fewer than 50 employees) does somewhat justify getting that part straightened out, before taking on the much larger issue of employees in the large groups. But there is probably much more to it than that since large employers have the ability to hire assistance in the technicalities, and could probably quickly do many things small employers could not contemplate. Since it was elected to do the more difficult job first, this explanation is unconvincing. We are left uncertain: whether a big business has walked out, is bluffing its intention to walk out later, or has some other use for the extra delay. A secret Republican promise to offer more favorable terms, in exchange for help in the 2014 elections, would probably not be difficult to obtain. Meanwhile, uncertainty whether state mandates for low-cost medical items apply or not hangs over the surprisingly high deductibles being placed on insurance plans in the exchanges. For Catholic voters, it is critical whether they will be compelled to include birth control pills; for Health Savings Accounts, eliminating low-cost state-mandated benefits is important for high-deductibles to work. And for Obamacare, if state-mandated low-cost issues must be covered, it is hard to see how high deductible policies could work, how alternative co-payments can be avoided, and therefore how lowered costs can be imagined.
Henry Kaiser
Pre-empting state-mandated benefits is not the only issue that could be used for trade. Everybody has been curiously silent about the egregious unfairness of the Henry Kaiser tax exemption for employee benefits, with no deduction at all for the self-employed. The solution seems quite simple: preserve tax neutrality by lowering the tax exemption for employees by about a quarter, but extend the result to everyone. There are so many more employees than self-employed, that the exemption for self-employed could be paid for with quite a small downward adjustment of the exemption for employees. For this tax inequity to persist for seventy years, somebody is being pretty stubborn.
Note: Later in this book we discuss investment returns, and ERISA regulates huge dollar amounts of employee pensions, many of which are in trouble because they are underfunded. Most of the investment is subject to 1-2% fees of one sort or another, which would disappear if the investment switched to index fund investment without fees of more than 0.25%. Rather than let the City of Detroit, or the States of New Jersey and Rhode Island, go bankrupt because of unfunded pensions, it would seem worth-while for some politician to sweep out the investment advisors and purchase index funds. If it seems like a lot of trouble, just imagine what might happen if your political opponent in the next election, suggested it first.
This is the second of several volumes on rearranging all the pieces of lifetime healthcare financing. Without adding any substantial money, it begins to appear an entire lifetime of healthcare, plus the extended longevity/retirement it provides, might be paid for with rearrangements of what we already spend. Notice what has been added: "plus the extended longevity/retirement it provides". Since retirement and Medicare coverage begin at the same time, and by some calculations average retirement is five times as expensive as Medicare, that's a lot of reduction of healthcare costs in order to fund retirement benefits out of a constrained funding source. So what's missing is a time limit. Medicare funding would increase quite a lot in fifty years, so fifty years from now the math might come out right. The hard part is to find a bearable transition during the fifty years, because you can't spend the same money twice. The public might well prefer no plan at all, if the alternative is to wait half a century to get what even seems a good plan on paper.
Moreover, two key steps are not exactly ready for incorporation into an extended scheme. The working years of life, from age 25 to 65, are covered by disputed and undisputed portions of the Affordable Care Act, pending lawsuits before the federal courts, and the political positions of the two political parties about how they should be modified or repealed. We must first debate the most realistic outcome for the ACA, and see if this or any other plan could coordinate with it.
The second gap is the same as the first, on a different level. We learned from the 1965 Medicare launch that much of the healthcare load was merely a catch-up of a backlog, far exceeding the cost of forgiving its revenue obligation. People like my own mother never contributed any revenue, but received benefits for forty subsequent years. If we repeat this blunder, our problems will multiply from it.
But don't get desperate. That does not exhaust the toolbox of leftover revenue sources for paying for retirement. After we learn what the public wants to do in the next few years, there are still many untapped financing sources, some of them only explainable later. For example: (1.-2.) We have not identified a retirement direction for the remaining three quarters of the Medicare withholding tax, nor any of the Medicare premiums. (3.) As mentioned, working-age persons make inadequate contribution toward their own retirement, because we were late in recognizing that improved healthcare resulted in longer retirements. (4.) The last-years-of-life rearrangement would pay for half of Medicare's twenty years with four years contribution at the present rate (That's half the cost in return for 20% of the revenue). (5.) Considerable reduction of premiums for employer-based health insurance can be anticipated from transferring obstetrical costs to the baby, removing childhood health costs from the employed parents. (6.) Reduced Medicare deficits, now financed by bond sales to foreigners, should ease the government cost of healthcare. (7.) Even though group health insurance is heavily subsidized by employer tax deductions, the system is not entirely free, and employers should benefit. (8.) If savings of this sort are aggregated and saved at compound interest, one expects substantial contributions to retirement income. (9.) A rather small transfer of the foregoing savings to the contingency fund should appreciably ease the competition for investment income between the public and its financial intermediaries. There can be guarded optimism, therefore, that the discord and unexpected reversals of any such elaborate scheme, can eventually be overcome.
At this stage in the book, these left-over revenue sources may not mean much to the reader. But they are repeated at the end of the book, to be taken up as actual revenue sources after the public has a chance to digest what the book has suggested, and the politics of the twenty-first century have defined what is left to do.
The main new funding sources discussed in this book are:
1. Putting an end to pay-as-you go and collecting compound interest on unspent revenue.
2. Utilizing the Health and Retirement Savings Account to invest a lifetime of savings in the total equity market through index funds.
3. Re-arranging the financing of lifetime health care to optimize the first two mechanisms. In particular, recognizing compound interest rises faster at its far end. The J-shaped curve of Medicare financing already suits this need perfectly. The financing of childcare is the reverse, an L-shaped curve, however. It forces contortions on the system to pay for it.
In summary, our problem somewhat resembles a bank in a crisis. We hold long-term assets, making healthcare seem easy. But a shortage of ready cash makes insolvency seem inevitable. Many banks have collapsed in that dilemma, unable to work out a credible plan, find a patient backer, or the steadiness to stay a stormy course. Healthcare financing must be balanced more carefully, to avoid a similar fate.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
