"A Healthcare Excellence Agenda for the New Administration"
New plans from my partner at 8VC
Dear Readers,
As you’ve probably heard me say before, healthcare is broken in America. As with many other broken systems, there’s an amazing opportunity in 2025 to fix it — both with policy and technological improvement. At 8VC, where we invest in and build companies, including many in healthcare and therapeutics, we see every aspect of the system and the way government affects it: the types of care that is prioritized or discouraged, the innovations that are slowed, the crooked incentives and outrageous spending.
Sebastian Caliri is my partner at 8VC who works on healthcare. He’s one of the best systems thinkers out there, especially on the system he’s devoted his career to improving. Sebastian himself is on extended leave from the Stanford MD program, and holds degrees in molecular biophysics from Yale.
His piece, shared on our 8VC blog, summarizes our view, and gets into specifics about what we are suggesting to the new administration for federal policy changes. You can read the whole piece for the detailed plan, but here’s a teaser:
1. Reform healthcare payments
2. Eliminate barriers to market entry
3. Liberate healthcare data
4. Accelerate scientific inquiry
5. Address fraud and abuse
There are some great people going into the administration to lead the Dept. of Health and Human Services and Center for Medicare and Medicaid Services, among other entities. Very smart, and very bold is the name of the game. My old friend Jim O'Neill will be RFK Jr's deputy at HHS; we and talented friends we admire are also close to Mehmet Oz (CMS), Jay Bhattacharya (NIH), Marty Makary (FDA), and more.
We’re lucky that they’ll have great advice from innovators like Sebastian as they work to fix this critical area for our civilization.
Here’s the piece. — Joe
In 2023 the United States federal government spent about $1.5T on healthcare. It is the single biggest component of the federal budget: double the $817B allocated to defense, sixty times NASA’s $26B budget, and about 100-fold more than the $16B spent on securing our borders.
Our healthcare system is not making us healthy
For $800B a year, America boasts the strongest military force on planet Earth. How much health does $1.5T buy us? One answer is “not enough”. Despite astronomical spending, by a number of measures America is actually getting sicker every year:
Obesity: Chronic disease like obesity in American adults has gone from 13.5% in 1980 to over 40% today.
Maternal mortality: Vastly more American mothers are dying in childbirth today than in the Reagan era, despite advances in medical technology and investment in modern hospital facilities.
Drug overdoses: Drug overdose deaths have grown by more than tenfoldsince 1980. And in just the last decade, the rate of alcohol use deaths is up 70%.
Cancer in young adults: The incidence of cancer in young Americans has alarmingly climbed by 35% since the mid 1980s.
Life expectancy: Life expectancy has barely improved over a forty year period.
Now pick five friends at random and give them each a call. Ask each of them if they have had a bad experience with our healthcare system: a confusing bill, a primary care visit cut short by a busy doctor, or a situation where they have had to repeat, for the thirty-fourth time, their detailed medical history. You don’t need to make the calls, you say? You know the answers already?
Doctors don’t have it much better. Physicians leave medical school holding $265k in debt before beginning years of earning less than minimum wage during residency. Endless documentation and compliance requirements drive many healthcare professionals to burnout.
Read the whole piece: A Healthcare Excellence Agenda for the New Administration | 8VC
I'm afraid that Joe Lonsdale's partner's ideas do not impress me.
So far, all that has been accomplished by the electronic medical records drive has been to put small physician practices out of business. They have not been able to absorb the overhead involved in implementing these symptoms, so that they have been forced to lose their independence, primarily to hospital-owned conglomerates.
The other ideas also are beside the point. If you change the metrics for compensating health care providers, in the end all you do is give them a different system to be gamed. What you have to do is reduce the incentive for *consumers* to obtain procedures that have high costs and low benefits. That means doing something unpopular, like making them pay out of pocket for a higher share of spending or else denying them coverage for some procedures.
You've hit the nail on the head. Recall that health insurance became married to a person's employer during WWII, an arrangement where "business" people effectively became involved in medical care in the HR office, and later in the doctor's office.
Frankly, the modern health insurance system has become a Soviet-style jobs program that otherwise captures, and shares, peoples' very sensitive personal information. In hindsight it appears that, generations ago, the insurance industry mapped out a long game to accomplish these ends.
Doctors are told by the tech industry that the tech industry understands that electronic records permanently complicates and slows down the work of a doctor. Coming to the rescue of the tech industry are lawyers who argue that the 2% improvement in safety offered by electrical systems is worth the gazillions of dollars that patients pay to subsidize the work of tech/insurance workers in a hospital.
The tiny-percent improvement in patient safety offered by tech workers in the hospital is more than completely offset by all the increased disease burden and death associated with jumping through insurance and computer-system hoops. This is easy for a doctor to see who has practiced in countries with neither insurance companies or computerized record systems. This is impossible to accept for tech people who cannot see, or routinely do not care about, what is on the other side of their paycheck.
Take home point: if the healthcare industry does not purge tech and clerk jobs, losing them permanently, then any other measure is just reshuffling unnecessary workers in a system where they are ultimately harmful. Such a purge, though, obviously would cause larger economy problems. And so, we effectively kill lots of patients so that healthy tech workers and clerks have a job in a hospital, or in an insurance cubicle somewhere. Soviet Union 2.0