Many people don’t get it, it’s really expensive, even in countries with non broken healthcare systems (not the us) costs increase rapidly and no one is sure how the systems will remain solvent with the same level of care given today. The way things are currently done are entrenched but not sustainable, that’s when disruptions are apt to appear.
When I look at the US, the symptom -> diagnosis hypothesis is not anywhere near the most expensive bit. If you have a medical issue and AI works effectively for this then it saves you maybe one trip to your GP. Your insurance probably still requires your GP to provide a referral to a specialist. If insurance companies allow for AI to be used in place of a referral then you save this trip. But you still need all of the stuff to confirm a diagnosis. And you still need all of the treatment.
If you don't have a medical issue and an AI system tells you this then you save yourself a trip to a specialist and the associated diagnostic tests. Again, this saves a bit of money but is nowhere near the bulk of medical expenses. And it has to be able to do this without any diagnostic testing, just based off of your reported symptoms.
Even if AI diagnosis works flawlessly we save a bit of money but absolutely do not revolutionize the cost of the industry.
Salaries for healthcare workers make up only a small portion of expenditures. You do not want to avoid a trip to your GP for an AI system.
It'll be great at first while in development. But when profits need to be generated, seeing a specialist will get harder. There will be less wiggle room. I predict we will see more GP utilization.
I mean, if we're talking Christensenian disruption, that happens in neglected markets rather than currently dysfunctional ones. There's no shortage of actors wronging money out of health care so there's not a disruptable space per se.
It's really just not there yet. I've been in medical school for >3 years now and have been using the latest models with good prompting. They have gotten much better, but I still see misses that my classmates would easily catch. This is not acceptable in healthcare. It's certainly not getting 100% on all my assignments, which are a step below the complexity of real-world clinical practice.
Before medical school, I was not so sure of the quality of your average doc. Now having spent a year in clinical practice across various settings, I am extremely reassured. I can say with certainty that a US trained doctor is miles ahead of AI right now. The system sucks really bad though and forces physicians to churn patients, giving the impression that physicians don't pay attention/don't care/etc.
because in america at least, the supply of doctors is kept artificially low. that combined with exploding administrative headcount, means patients are getting pretty terrible, expensive service.
Physician compensation is around 9% of healthcare spending. The number of non-physician providers (NPs, PAs and specialists like physical therapists and podiatrists) has also exploded over the last 20 years. We have far more overall providers per capita than we did 20 years ago.
I don't think physician compensation per se is a good metric for capturing the effect of lack of providers, because some of the increased costs are due to the bottlenecks in the services per se, in terms of procedure costs and types of procedures offered. I also don't think the number of providers per se under the current regime, without deregulation or reregulation of practice boundaries, is representative of what would happen if there were changes in those boundaries. Adding more optometrists 5 years ago isn't the same as changing what they're allowed to do. It also doesn't address what cost increases would have been without an increase in the number of providers.
9% might also seem pretty big to me if it's out of all spending and doesn't include other provider compensation? What if overall healthcare costs went down, but physician compensation stayed the same? Would that then be a problem because it was an increased proportion of the total costs — fat left to be trimmed, so to speak?
There are many problems that don't have anything to do with providers per se, but I also don't think you can glean much by extrapolating to more of the same, especially compensation per se.
If lack of physicians is leading to an increase in costs, you’d expect to see physicians capturing a large part of that increase. There are situations where that wouldn’t hold, but it requires moving away from the simplest explanation that fits the data.
We don’t have to extrapolate from physician compensation though. We know that providers per capita have increased, but costs have continued to skyrocket. Therefore a lack of providers is not the immediate cause of the increase.
In addition to increasing the number of providers, the scope of practice for non-physician providers has almost universally increased.
All of this doesn’t prove that increasing the number of physicians wouldn’t lower costs some amount, but it does show that the increases over the last 20-30 years requires some other explanation.
Because insurance companies incentivize upward price momentum. The ones who innovate and bring the prices down are not rewarded for their efforts. Health inflation is higher than headline inflation because of this absence of price pressure
I sympthatise with the argument. We should test it against real world data.
Eg your argument would predict that healthcare price inflation is not as bad in areas with less insurance coverage. Eg for dental work (which is less often covered as far as I can tell), for (vanity) plastic surgery, or we can even check healthcare price inflation for vet care for pets.
Dental and vanity surgeries aren't happening in a vacuum. There are baseline costs eg. anesthesia, recovery medications, medical machinery etc which are all bloated due to the rest of industry not being under price pressure (rising tide lift all boats)
It's similar to how AI data center buildout race is raising the prices for consumer electronics in 2026 and beyond. The suppliers have no incentive to sell lower cost products to tiny niche
I just looked it up, and apparently health care costs for pets has gone up in price even faster than for humans.
Pets typically don't have medical insurance, and any insurance that does exist there has a radically different regulatory regime than for humans.
Since 1980 for the US:
CPI has gone up by 3.16% on average per year (x4.17 in total). Human healthcare costs by 4.9% per year (x8.96 in total). And pet healthcare costs by 6.49% (or x17.87 in total).
Technological advancement seems like a pretty big culprit here? An MRI wasn't available at any price in 1982 so the fact that it's available now makes it look like "imaging prices have gone up" even though the imaging that was available in 1982 is cheaper now than it was then.
The uninsured medical market is actually quite efficient. e.g. lasik surgery can actually be done for very reasonable rates with full price transparency.
Lasik has gone down in real price over the years, yes.
But dental and vanity cosmetic surgery have gone up by that metric. Dental is less covered by insurance for most people. Vanity cosmetic insurance is covered for almost no one.
Vet care for pets has gone up a lot more than healthcare for humans.
This argument doesn’t make sense to me. Insurance companies are structurally incentivized to minimize payouts across the board. They want hospital bills lower, physician compensation lower, and patient payouts as small as possible. If insurers had unilateral power, total medical spending would collapse, not explode.
The real source of high medical costs is the entity that sets the hospital bill in the first place.
The explanation is much simpler than people want to admit, but emotionally uncomfortable: doctors and hospitals are paid more than the free market would otherwise justify. We hesitate to say this because they save lives, and we instinctively conflate moral worth with economic compensation. But markets don’t work that way.
Economics does not reward people based on what they “deserve.” It rewards scarcity. And physician labor is artificially scarce.
The supply of doctors is deliberately constrained. We are not operating in a free market here. Entry into the profession is made far more restrictive than is strictly necessary, not purely for safety, but to protect incumbents. This is classic supply-side restriction behavior, bordering on cartel dynamics.
We see similar behavior in law, but medicine is more insidious. Because medical practice genuinely requires guardrails to prevent harm and quackery, credentialing is non-negotiable. That necessity makes it uniquely easy to smuggle in protectionism under the banner of “safety.”
The result is predictable: restricted supply, elevated wages, and persistently high medical costs. The problem isn’t mysterious, and it isn’t insurance companies. It’s a supply bottleneck created and defended by the profession itself.
Insurance companies aren't innocent angels in this whole scenario either. When the hospital bill fucks them over they don't even blink twice when they turn around and fuck over the patient to bail themselves out. But make no mistake, insurance is the side effect, the profession itself is the core problem.
> This argument doesn’t make sense to me. Insurance companies are structurally incentivized to minimize payouts across the board. They want hospital bills lower, physician compensation lower, and patient payouts as small as possible. If insurers had unilateral power, total medical spending would collapse, not explode.
They absolutely do not.
They have their profit levels capped at 15% by law and regulation. That means if the insurer wants more absolute dollars of profit, prices must go up.
It also means that if they push prices down they necessarily have less funding to administer those plans, even if the needs are the same (same number of belly buttons, same patient demographics and state of health).
As you note there's also other variables, but this claim: "Insurance companies are structurally incentivized to minimize payouts across the board" is absolutely and categorically not so.
Physician reimbursement is only ~9% of national healthcare expenditures.
I tell you this with certainty as a 3rd year medical student: If physician wages go down and tuition stays as is, no one will do this. Intrinsic motivation to help people evaporates as soon as you see how enshittified healthcare in the US has become.
I do agree that medical school is far too restrictive to get into (For MD schools at least). However, if you want to make medical school easier to get into: Where will all those students rotate at for their clinical years? There aren't enough spots in hospitals to jam students in.
Stop taking aim at the people that sacrifice so much to help you. Take aim at the real drivers of healthcare expenditures: administrative bloat.
>Where will all those students rotate for their clinical years? There aren’t enough hospital slots.
This is a policy fiction. Residency slots are capped by federal law, not by hospital capacity. The Balanced Budget Act of 1997 froze Medicare-funded residency positions, and despite modest expansions decades later, the cap remains largely intact. Teaching hospitals routinely report excess clinical volume relative to trainee supply. The bottleneck is artificial and regulatory, not logistical.
>Stop taking aim at people who sacrifice so much to help you. The real cost driver is administrative bloat.
This framing collapses under scrutiny. Administrative bloat is real and well-documented, but pretending physician incentives are irrelevant requires willful blindness. Numerous studies show that U.S. physicians earn multiples of their OECD peers while delivering no commensurate advantage in outcomes. Many doctors are motivated by altruism, but many are also motivated by status, income, and professional gatekeeping—normal human incentives in a high-prestige, high-pay profession.
Further, high patient throughput is not an accident. Fee-for-service reimbursement structurally rewards volume over care quality. Seeing 20–30 patients a day is not a moral failure of individual doctors, but it does predictably lead to burnout, emotional detachment, and assembly-line medicine. Incentives shape behavior. Ignoring that is not compassion, it’s denial.
>Physician reimbursement is only ~9% of national healthcare spending.
That statistic is repeatedly used as a rhetorical shield, and it shouldn’t be. Cost systems do not fail because of a single oversized line item; they fail because multiple protected constituencies simultaneously extract rents while deflecting blame. Administrative overhead, defensive medicine, pharmaceutical pricing, hospital consolidation, reimbursement incentives, and physician compensation are jointly optimized for revenue, not outcomes.
Nine percent of a multi-trillion-dollar system is not trivial. More importantly, physician compensation is not isolated—it drives downstream costs through referral patterns, test ordering, procedure rates, and resistance to scope-of-practice reform. Treating physicians as a sacred class exempt from economic critique is precisely how you end up with a system that is unaffordable, unaccountable, and structurally resistant to reform.
If the argument is “9% is too small to question,” then by that logic no component is ever large enough to examine in isolation, which is how dysfunctional systems persist indefinitely. Real reform requires abandoning moralized narratives and admitting the obvious: healthcare costs are the product of aligned incentives across many actors, and physicians are not magically outside that system simply because the story is uncomfortable.
We are yet to see major, nationwide physician strikes. If that is what it will take for society to realize the value provided, so be it. Without physicians, there is very little healing going on. You can't say the same for so many other roles.
This is why I look up to physicians. The fact that you'll hold all of our lives hostage with the words, "Don't fuck with my salary, I'm valuable." That commands respect. More Darth Vader respect than Mother Theresa respect.
The solution is single payer. Any attempt to solve this with technological band aids is completely futile. We know what the solution is because we see it work in every other developed nation. We don't have it because a class of billionaire doners doesn't want to pay into the system that allowed them to become fabulously wealthy. People who are claiming AI is the solution to healthcare access and affordability are delusional or lying to you.
There are good reasons to think single payer systems are not the answer. The numerous documented inefficiencies and inconveniences they suffer from don't need repeating here.
And many single payer systems around the world only appear to work as well as they do because the US effectively subsidizes medical costs through its own out of control prices.
Compare: Google's founders can buy all the yachts they could possibly eat, yet Google Searches are offered for free.
If we could get healthcare to that level, it would be great.
For a less extreme example: Wal-Mart and Amazon have made plenty of people very rich, and they charge customers for their goods; but their entrance into the markets have arguable brought down prices.
> Google's founders can buy all the yachts they could possibly eat, yet Google Searches are offered for free.
Google searches cost many billions of dollars: your confusion is because the customer isn’t the person searching but the advertisers paying to influence them. Healthcare can’t work like that not just because the real costs are both much higher and resistant to economies of scale but, critically, there aren’t people with deep pockets lining up to pay for you to be healthy. That’s why every other developed country sees better results for less money: keeping people healthy is a social good, and political forces work for that better than raw economic incentives.
We know that from observing evidence such as how much the government pays out in welfare to Wal-Mart employees.
Customers continue shopping there because human beings are typically incapable of accepting a short-term loss (higher price) for a long-term gain (product lasts more than three uses).
> We know that from observing evidence such as how much the government pays out in welfare to Wal-Mart employees.
That's a weird metric. If tomorrow Wal-Mart laid off all employees and replaced them with robots, they would surely be worse off, but by your metric Wal-Mart would look less evil?
> Customers continue shopping there because human beings are typically incapable of accepting a short-term loss (higher price) for a long-term gain (product lasts more than three uses).
I mean, I could tell you are disingenuous from the get-go, so it is not surprising you would take an off-the-cuff metric which is accurate right now and invent a strawman scenario where I might continue to use it beyond a point where it makes sense.
Likewise, I would not use my flippant 3 times metric regarding durability to cover the quality of produce.
Well, feel free to propose a different metric for seeing how Wal-Mart is evil. And instead of Wal-Mart firing all employees, we can have a look at the more plausible scenario of Aldi vs Wal-Mart. Aldi runs a different labour model: their shifts are much more intense but pay more. Their model can't and doesn't utilise the kind of older and less fit people that Wal-Mart employs.
You have to look at the counterfactual of what these people would do, if Wal-Mart weren't around. You seem to implicitly assume that they'd be getting higher paying jobs somewhere else (so they wouldn't have to rely on welfare)? If so, what's stopping those people from switching to these better jobs right now, even while Wal-Mart is still around?
And sure, let's disregard how many times you can eat your groceries. That was a cheap shot. However I think quality vs price trade-off is something customers have to make for themselves anyway. Who am I to judge their choices?
And Google search, a service on the level of a public utility, has been degrading noticeably for years in the face of shareholders demanding more and more returns.
Comparing something to a public utility is not me saying it's literally a public utility. Google runs a monopolistic service that is essential to a lot of our public life, in a segment that has high cost of entry and infrastructure cost. They make the service worse to make more money. It should be a regulated utility like electricity or railroads, we should have a public alternative like the post office is to UPS, or it should be nationalized. The situation gets more dire when you consider their browser monopoly.
Other search engines exist. Bing is right there, and Microsoft is more than willing to eat the high cost of entry and infrastructure cost.
> It should be a regulated utility like electricity or railroads, we should have a public alternative like the post office is to UPS, or it should be nationalized.
I agree that electricity and railroads should be regulated like Google Search.
It's really weird that snail mail in the US is a government monopoly. When even social democratic Germany managed to privatise them.
> The situation gets more dire when you consider their browser monopoly.
Don't a lot of people in the US use iPhones? They don't ship with Chrome as the default browser, do they?
(And yes, Safari is built on top of the same open source engine as Chrome. But you can hardly call using the same open source project a 'monopoly'. Literally anyone can fork it.)
The existence of few competitors is not proof that monopolistic power doesn't exist and isn't being leveraged. Saying Google isn't monopolistic is being willfully wrong. You're more wrong when we look at the browser market, and Google has lost anti-trust suits on this very topic in the past couple years.
A public mail service is required by our constitution. It's cheaper than the private options and often the only option for many rural areas. It's not a monopoly.
> A public mail service is required by our constitution.
Where does it say so in your constitution? All I can find is the postal clause which Wikipedia summarises as follows, but whose full text isn't much longer:
> Article I, Section 8, Clause 7, of the United States Constitution, the Postal Clause, authorizes the establishment of "post offices and post roads"[1] by the country's legislature, the Congress.
The Postal Clause certainly allows the government to run a public postal service, but I don't see how the constitution _requires_ it. It doesn't even require the federal government to regulate postal services, it merely allows it.
Perhaps I missed something?
> It's cheaper than the private options and often the only option for many rural areas.
If you want to subsidise rural areas, I would suggest to do so openly, transparently and from general taxation. At least general taxation is progressive etc. Instead of just making urban folks pay more for their mail, whether they be rich or poor.
I would also suggest only subsidising poor rural areas. Rich rural areas don't need our help.
IDK, the owners of retail clothing chains buy yachts and yet that sector is jaw-droppingly efficient at delivering clothes to people. Executives can be annoying tools but I don't think their pay is the problem.
Shame those same owners have plenty of money for buying yachts and not enough money to pay their sweat-shop employees a living wage or to provide decent work conditions. Executives don't "earn" huge paychecks, they merely exploit others by figuring out a way to not pay them their worth.
Seriously? Spending a night in a hospital results in a $10,000 bill (though the real out of pocket is significantly cheaper. God help you if you have no insurance though). Healthcare in the US is the thing that needs the biggest disruption.
But no business is going to fix it. The market is captured. Only a radical change of insurance laws is going to have any impact. Mandate that insurance must be not for profit. Mandate at least decent minimal coverage standards and large insurance pools that must span age groups and risk groups.
These solutions are often proposed as easy fixes but I'm skeptical that they actually will do much to reduce healthcare costs. Healthcare is fundamentally expensive. Not-for-profit hospitals and for-profit hospitals don't really substantively differ in terms of out-of-pocket expenditures for patients; I find it difficult to imagine that forcing insurance companies to be nonprofit would do much to reduce costs.
> large insurance pools that must span age groups and risk groups.
What you describe (community rating) has been tried and it works. But it requires that a lot of young, healthy people enroll, and seniors receive most of the care. In an inverted demographic pyramid like most Western economies have, this is a ticking time bomb, so costs will continue to rise.
> Mandate at least decent minimal coverage standards
I think a better solution is to allow the government to threaten in negotiating prices with companies as Canada does; it greatly reduces rent-seeking behavior by pharmaceutical companies while allowing them to continue earning profits and innovating. (I understand a lot of the complaints against big pharma but they are actually one of the few sectors of the economy that doesn't park their wealth and actually uses it for substantive R&D, despite what the media will tell you, and countless lives have been saved because of pharma company profits)
Essentially the gist of what I'm saying, as someone who has been involved with and studied this industry for the better part of five years, is that it's much more complex than what meets the eye.
There are a lot of not-for-profit insurance companies and they aren't noticably cheaper, though I'm not in HR and they may well be cheaper for the employer.
Many hospitals are already non-profit. That doesn't seem to bring down prices. Why would you think that this would work for insurance?
Profit isn't even a big part of the overall revenue.
> Mandate at least decent minimal coverage standards
I assume you want higher coverage standards than what currently exists? Independently of whether that would be the morally right thing to do (or not), it would definitely increase prices.
> and large insurance pools that must span age groups and risk groups.
Why does your insurance need a pool? An actuary can tell you the risk, and you can price according to that. No need for any pooling. Pooling is just something you do, when you don't have good models (or when regulations forces you).
> Why does your insurance need a pool? An actuary can tell you the risk, and you can price according to that. No need for any pooling. Pooling is just something you do, when you don't have good models (or when regulations forces you).
Wuh? The more diverse the pool, the lower the risk. Your way of thinking will very quickly lead to "LiveCheap: the health insurance for fit, healthy under 30s only" for dollars a month, and "SucksToBeYou: the health insurance for the geriatric and chronically disabled" for the low low cost of "everything you have to give".
There's insurance which allows you to convert an uncertain danger into a known payment. And then there's welfare and redistribution.
By all means, please run some means testing and give the poor and sick or disabled extra money. Or even just outright pay their insurance premiums.
But please finance that from general taxation, which is already progressive. Instead of effectively slapping an arbitrary tax on healthy people, whether they be rich or poor. And please don't give rich people extra stealth welfare, just because they are in less than ideal health, either.
Just charge people insurance premiums in line with their expected health outcomes, and help poor people with the premiums using funds from general taxation. (Where poor here means: take their income and make an adjustment for disability etc.)
We _want_ the guy who loses 5kg and gives up smoking to get lower insurance premiums. That's how you set incentives right.
> The more diverse the pool, the lower the risk.
No. The diversification comes from the insurance company running lots of uncorrelated contracts at the same time and having a big balance sheets. For that, it doesn't matter whether it's a pool of similar insurance contracts, or whether they have bets on your insurance contract, and on the price of rice in China, and playing the bookie on some sports outcomes etc. In fact, the more diversified they are, the better (in principle).
But that diversification is completely independent of the pricing of your individual insurance contract.
Have a look at Warren Buffett's 'March Madness' challenge, where he famously challenges people to predict all 67 outcomes of some basketball games to win a billion dollar. Warren Buffet ain't no fool: he doesn't need a pool, he can price the risk of someone winning this one off challenge.
This is going to pretty rapidly devolve into cheap for healthy and insanely expensive for those that aren’t. Genetic propensities will be a lifelong financial burden. Cancer patients will get priced out and die.
If you want to subsidise these unfortunate people, please just do so openly. Don't be all sneaky, sneaky about it by banning accurate risk assessments.
In any case, what you are saying is only true, if you buy your health insurance second to second on the spot market.
Insurance companies are more than happy to enter long running contracts, where you both agree today on (the algorithm for) the premiums for the next twenty years or even until the rest of your life. That's pretty common with life insurance and disability insurance already.
The above already exists, but if you allow some speculation: you could even envision people buying insurance for their kids before conceiving them. That way you don't have to worry about pre-existing conditions.
(Well, if the parents already have heritable conditions that would make the kids more likely to have expensive medical problems, those would push up their premiums. But then: perhaps these people should think twice about burdening a potential kid with these issues.
Compare how in Cyprus where sickle cell anemia is prevalent, even the Catholic church demand you get screened, before they'll marry you.)
If you really want specialised in-kind welfare, you can get people a voucher for the catastrophic version of 'unconceived baby insurance'.
Basically, you can buy insurance against insurance premiums being expensive.
Disruption, yes, in the sense that the current system needs to be overhauled. But this is a space that's frequented by the SV and VC space and "disruption" has very different connotations, usually in the realm of thought that suggests some SV-brained solution to an existing problem. In some edge cases like Uber/Lyft, this upending of an existing market can yield substantial positive externalities for users. Other "heavy industry" adjacent sectors, not so much. Healthcare and aviation, not so much.
Even SpaceX's vaunted "disruption" is just clever resource allocation; despite their iterative approach to building rockets being truly novel they're not market disruptors in the same way SV usually talks about them. And their approach has some very obvious flaws relative to more traditional companies like BO, which as of now has a lower failure-to-success ratio.
I don't think you'll find many providers clamoring for an AI-assisted app that hallucinates nonexistent diseases, there are plenty of those already out there that draw the ire of many physicians. Where the industry needs to innovate is in the insurance space, which is responsible for the majority of costs, and the captive market and cartel behavior thereof means that this is a policy and government issue, not something that can be solved with rote Silicon Valley style startup-initiated disruption; that I would predict would quickly turn into dysfunction and eventual failure.
Enshittification has done a lot of damage to the concept of "disrupting" markets. It's DOA in risk-averse fields.
The profit in insurance is the volume, not the margin. Disrupting it will not dramatically change outcomes, and will require changes to regulation, not business policy.
Agreed. I'd also argue that there will always be the issue of adverse selection, which in any system that doesn't mandate that all individuals be covered for healthcare regardless of risk profile, will continue to raise costs regardless of whether or not margins are good or bad. That dream died with the individual mandate, and if the nation moves even further away from universal healthcare, we will only see costs rise and not fall as companies shoulder more and more of the relative risk.
