Just Say No?
May 23, 2025
Doug Leyendecker
Welcome to This Week’s Leyendecker View
The U.S. healthcare industrial complex is bigger than the entire German economy.
– Scott Galloway
FAVORITE READS OF THE WEEK
Calvin Coolidge’s 1923 Memorial Day speech
60 historic photos from American military history
FAVORITE WATCH OF THE WEEK
Ronald Reagan’s 1982 Memorial Day speech
THINKING OUT LOUD
Just Say No?
Who says inflation is falling?
Forty-one thousand dollars annually for a healthy family of five. That’s not the cost of a luxury vehicle or a year at an elite private school. It’s what my tiny company must now pay for health insurance for one employee and his family. Forty-one thousand dollars before deductibles, even? This staggering sum for a family with no major health issues reveals a fundamental economic dysfunction in our healthcare system.
“Why so much?” I asked my health insurance broker friend.
“The insurance companies are catching up after spending all their Covid money,” he explained. “The free Covid money kept your premiums down.”
So now that the free money from Washington is gone, is health care inflation going to rise even more?
Why have health care costs spiraled so dramatically? Because of the government’s heavy hand in health care, which is similar to what has happened in higher education. When an overly bureaucratic government gets too involved in a private market, it creates a litany of distortions, failures and misalignments, which include:
Obscured Price Signals
The health care market suffers from significantly obscured price signals. In functional markets, prices communicate information, balancing supply and demand while incentivizing efficiency. But in health care, prices remain largely hidden from consumers. When was the last time you knew the cost of a procedure before receiving it? Without knowing costs, there is no mechanism to drive competition and efficiency.
The third-party-payer system amplifies this problem. When consumers are insulated from direct costs, their consumption decisions become disconnected from price considerations. This separation between consumer and payer obliterates the normal market forces that would otherwise keep prices in check. Do doctors even know what they charge, or is it left to their billing experts?
Administrative Waste
The complexity of our health care payment system creates staggering overhead costs. Hospitals and providers employ armies of billing specialists to navigate the byzantine requirements of different insurance plans. Insurers maintain their own substantial bureaucracies to process claims, issue denials and manage appeals.
This administrative layer accounts for an estimated 15-30% of health care spending—hundreds of billions of dollars that provide zero direct health care delivery. Other developed nations typically spend a fraction of this amount on administration.
Concentrated Market Power
Health care provider consolidation, which has been rampant in recent decades, has created regional monopolies and oligopolies with extraordinary pricing power. Insurance markets have also consolidated. In many states, one or two insurers dominate the market, giving them outsized negotiating power with employers while reducing their incentive to control costs. This consolidation creates a market structure where neither side has sufficient motivation to drive down prices.
The ACA’s Unintended Consequences
The Affordable Care Act (Obamacare) was marketed as a solution to health care costs but actually exacerbated many underlying problems. By mandating expanded coverage requirements without sufficient cost controls and the prohibition of risk-based pricing, premiums must, and predictably did, increase.
The ACA’s exchanges accelerated market consolidation as smaller insurers found compliance costs prohibitive. Many regions now have just one or two exchange options, creating de facto monopolies. The employer mandate further shifted costs to businesses like mine, which face ever-escalating premiums and diminishing alternatives.
Perhaps most importantly, the ACA addressed symptoms (coverage gaps) rather than root causes (distorted markets and misaligned incentives). By layering new regulations onto a broken system, it added complexity without addressing the structural defects driving cost inflation.
Regulatory Capture
When the government gets too involved in something, the regulatory value diminishes significantly. Eventually the regulators and the industry they are regulating become so chummy there’s never any productive change, just increasingly unproductive and uneconomic pursuits.
Like in education and at Boeing, the regulatory framework in healthcare has been shaped by industry influence to protect incumbents rather than promote competition and efficiency.
A Suggested Path Forward
How do we get out of this mess, which took decades and layers upon layers of legislation and regulation to create? Far be it for me to know, so I asked my AI assistant, Claude. Here’s what Claude had to say:
“The solution doesn’t lie in simply shifting costs between employers, individuals and government. Rather, we need the following reforms that realign incentives throughout the system:
The challenge with this is that it sounds like we need more laws, more rules, more regulation. How do we unbundle this giant mess? Does it require an abandonment of our current system? Do individuals and companies need to just say no to health insurance in order to force a dramatic reduction in treatment costs?
Until we address health care’s structural issues, we’ll continue to see absurdities like $41,000 premiums for healthy families. This isn’t just economically unsustainable—it’s morally indefensible.
THE RANDOMS
The recent consumer confidence report suggests that confidence has been collapsing, but odds seem reasonable that the data was gathered when the stock market went into the toilet. Follow the stock market, follow the money.
If everyone believes China and other cheap-labor countries make crappy stuff, then maybe “Made in America” can set a new global standard. Cheap crappy stuff that has a short lifespan may actually mean inflation is higher than we think.
The consequences of the government’s massive Covid financial stimulus may not have fully run its course. Are we about to get a Covid financial hangover?
Is anyone thinking about Black Swan risk these days?
The four main publications I read for “news” are The Wall Street Journal, The New York Times, The Financial Times and Bloomberg, all of which are tailored to the wealthy class. This is made obvious by their articles about interior design, high fashion and particularly all the “news” about homes selling for several tens of millions of dollars.
According to Google’s AI, there are just over 900,000 people in the US worth $10MM or more, and there are 4.8 million worth $5MM or more. About 23.7 million households are worth $1MM or more. If the aforementioned publications craft and dominate news narratives, are we to infer the concerns of the wealthy are the only things that matter in the US? What news organizations are serving the other 200 million adults in the country?
The state of New York spends $36,293 a year to educate each student. That’s 91% MORE than the national average. Gosh, they must have some of the smartest people in the world living there.
What does it tell us about the global political and economic elite when the founder and leader of Davos, their “Woodstock” of “great” minds, may have been a corrupt, racist liar?
Have we all become the Burger King generation: “I want it my way, and I want it NOW!”?
ECONOMIC NEWS
Economy
Looked at the US debt clock lately?
College towns go from boom to bust
Vacations are getting scaled back
Houston’s GDP growth leads all cities
Labor
Here’s help with negotiating a job offer
No tax on tips looks to be real
Side hustles are a must for millions
The AI hiring pause is here
BUSINESS
Finance
The pension crowd is on edge
The global savings glut is over
Government debt auction was pukey
Do banks have big private credit risk?
Ivy Leagues are selling PE stakes
Real Estate
The next hot real estate trend? Peace and quiet
Existing home sales slump
Austin’s glow is fading
Portland, OR is a mess
Tech
US shoemaker using tech to grow
What is big tech trying to hide?
Meta can rewire your brain
How innovation influences population
AI
Sam Altman wants to be Steve Jobs
OpenAI raises $11.6 B for data center
Amazon is all in on AI
Google unveils AI chatbot
Energy Transition
The US lithium solution
A $10B AI startup focused on energy
California’s EV mandate is toast
NY wind farm development is back
The Health Care Sinkhole
The MAHA report on children’s health
Can we fix Medicaid?
Medicare is getting super ripped off
Is UnitedHealth gonna survive?
Health care costs are out of control
Another example of big Medicare waste
THE NATION
The Washing-Tone
The House budget/tax bill explained
Trump puts Harvard in the dog house
Trump goes after deepfake creators
US borrowing costs hit 5%
Trump touts another Democrat idea
Republicans want more parents at home
Tariffs
Trump goes after EU and Apple
Tariffs are starting to squeeze profits
Home Depot won’t raise prices
How long do trade negotiations take?
UAE to build $4B steel plant in the US next year
Social Trends
Meet the “stealthy wealthy”
Thrifting is getting cool
The hottest new look is used
Our education report card is REALLY bad
GEOPOLITICS
Global
India’s oil demand surpasses China’s
Is Mexico a failing state?
Pope Leo XIV promotes traditional values
The world’s happiest cities
Another way the US subsidizes the world
Europe
Europe is a tech desert
UK and EU sign post-Brexit deal
Teen terrorists are a growing threat
More electricity crises are coming
Ukraine
Russia and Ukraine begin big prisoner swap
Trump’s position seems uncertain
He tells EU leaders Putin wants more war
EU hits Russia with more sanctions
Zelensky meets with Vance and Rubio
Middle East
Two Israeli Embassy aides murdered in Washington
Israel takes out another Hamas leader
Israel to take over Gaza strip
Some Western countries not happy
October 7 was meant to derail an Israel-Saudi deal
China
China’s race to beat the US
China’s economy stumbles
So they are cutting interest rates
China to reduce alcohol and cigarette spending
War Creep
New North Korea warship capsizes at launch
Trump vows to complete “Golden Dome” fast
Trump builds up military at our border
Germany and UK to develop new deep-strike weapon
China ready to further embrace Russia
MAKING A BETTER YOU
Mind
Get more quiet time.
How to be a great thinker
How about a reason to be cheerful?
A very unique creativity hack
Body
Get more outside time.
This year’s flu vaccine is not effective
How to become a morning person
Realistic and manageable fitness goals
FUN STUFF
Let your hair down, baby! Even if you’re all alone.
The Extraordinary
Can physics explain consciousness?
An astronaut’s amazing photos
Personalized gene editing is here
Children of the ice age
Music That Found Us
Tiny Habits’ “For Sale Sign”
Eurovision song winner “Wasted Love, from Austria’s JJ.
Christy Moore’s “Boy in the Wild”
AI-created hit “YAJU & U”
“Le Carrousel” to calm the mind.
Worth a Watch
Guy Ritchie’s fun Fountain of Youth.
The Damned looks damn good.
Feel good movie, The Marching Band.
Stunning debut feature, Good One.
The Yum Yums
Classic chicken salad
Awesome egg salad
Classic tuna salad
Tried-and-true ham salad
5-ingredient salmon salad
German potato salad
PARTING THOUGHTS
We go through life thinking everyone else has it better than us until we grow up and realize we’re all in our own tiny boats of self-doubt and second-guessing.
–Alexi Pappas
IN CASE YOU MISSED IT
Headhunter’s Secrets: The Interview, The Company Perspective
May 21, 2025
The Tyranny of Good Intentions
May 16, 2025
We’re All Farmers Now
May 2, 2025
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