A Learning a Day

I recently started building products focused on healthcare affordability in the US. As I was ramping up on a new space, the biggest question that sparked my curiosity was: how did we get here? This question is the inspiration for this weekly series chronicling the decisions, accidents, and breakthroughs that built the US healthcare system.

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By 1954, employer-sponsored health insurance had been growing for over a decade. But it was built on uncertain legal ground — a patchwork of wartime exemptions, IRS rulings, and informal practice. One adverse ruling could have unraveled the whole thing.

Then Congress passed sweeping tax reform bill with one buried provision.

Section 106 of the Internal Revenue Code of 1954 was simple and deliberate: employer contributions to employee health plans were excluded from the employee’s taxable income entirely. Employers kept their deduction. Employees paid no tax on the benefit. Both sides of the transaction now had a powerful financial incentive to prefer health coverage over cash compensation.

In practice, a $500 raise cost an employee income tax on top. A $500 health plan was worth the full $500 — and the employer could deduct it too. Across every HR department, compensation managers ran the same calculation and reached the same conclusion. This wasn’t a healthcare decision, it was just math.

What made Section 106 particularly consequential was what it didn’t include: a cap. Unlike the tax treatment of life insurance, the health insurance exclusion had no ceiling. The bigger the health plan, the bigger the tax benefit. As healthcare costs rose over the following decades, the incentive to expand coverage rather than question costs grew right alongside them.

Every strength overused has a corresponding dark side. Similarly, a feature of the tax code designed to encourage coverage quietly became a structural barrier to cost scrutiny.

Interestingly, the Internal Revenue Code of 1954 passed on August 16th. Section 106 was a few sentences out of a 1,000 page bill with little debate about its implications for healthcare. It was a tax policy decision that permanently embedded a particular model of healthcare financing into the structure of American life.

Today that tax exclusion has an estimated $500 billion annual impact — making it one of the largest tax expenditures in the entire federal budget. Roughly 160 million Americans still get their coverage through this system.

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A Quick Timeline to put it all in context

To put this in context, here is how the pieces came together across twelve years:

1942: FDR’s Stabilization Act freezes wages. Benefits are exempt. Employers begin competing on health coverage for the first time.

1942–1945: Henry Kaiser and Sidney Garfield scale prepaid healthcare to 200,000 shipyard workers in Richmond, California. Voluntary enrollment reaches 92.2%.

1943: The IRS rules that employer contributions to group health plans are not taxable to employees. Coverage begins growing rapidly.

1945: Kaiser opens his health plan to the public. Membership collapses from 200,000 to 11,000 as the shipyards close. The model survives.

1953: A new IRS ruling creates uncertainty, declaring some employer contributions taxable. The legal foundation of the entire employer-sponsored system wobbles.

1954: Section 106 resolves the ambiguity permanently. Employer contributions are tax-exempt, full stop.

By 1960, nearly 70% of Americans had health insurance. This was a fascinating 20 year period where a wartime workaround, scaled by an industrialist, and cemented by a tax code became the foundation of American healthcare.

The question nobody had fully answered yet: what about the other 30%? That comes next.

For the many things that matter in this life, the relationship between quality and quantity follows the same pattern.

There’s a minimum threshold of quantity that needs to be met first. Below it, there’s no point optimizing for quality.

For example, a relationship needs some baseline of time to build its strength.But beyond that threshold, the only optimization that matters is quality.

Fewer high quality experiences mean a lot more.

Our ability to make the most of this life comes down to developing the habits that minimize the time and energy we spend on things we cannot control — and channeling that intensity toward the things we can.

When someone asks for your opinion on a decision, they oftenaren’t really asking for your opinion. They’re asking for validation on a decision they’ve already made.

In those moments, the most powerful thing you can do for them is to resist giving them that validation. Instead, give them the tools to reason through the decision themselves instead.

That way, the next time a decision like this comes around, they won’t need to seek validation from anyone.

Applicable to when we find ourselves doing this as well.

A year ago, Aswath shared a post titled “It’s mostly vibes.” I’ve found myself thinking about it from time to time and I thought I’d share it in full. Thanks Aswath, this resonated.

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Why do you like people or music instantly — and not others?

You didn’t do a structured analysis. You didn’t create a pros-cons list. You just felt something click — and that was that.

The same goes for cities, coffee shops, relationships, products, and even presidents. Why Brad Pitt over Chris Evans? Why Tokyo over Paris? Toyota or Mercedes? Claude or GPT? Why does one place feel like home and another feel… off?

When I asked a sales lead for our B2B software what makes us win or lose a customer, I expected to hear about features, pricing, or buyer personas. But he shrugged and said, “Honestly, it mostly comes down to whether product managers or execs are on the call.”

There’s a pattern here. And it isn’t logic.

Most of us pretend we live like Spock, but we make decisions like jazz musicians — improvisational, intuitive, all feeling. From friends to lovers, brands to beliefs, the throughline in our choices isn’t reason. It’s resonance.

It’s mostly vibes.

“Vibes” is the best word we’ve found for that gut-level, pre-verbal, ambient sense of rightness — or wrongness — that attaches to people, places, brands, choices, aesthetics. It’s a term that’s both frustratingly vague and oddly precise. 

We feel it when we walk into a room and just know something’s off. When someone’s energy makes us lean in, or recoil. When a song grabs us by the soul, even if we don’t understand the lyrics.

We can’t deny the existence and importance of vibes, but their inner workings still seem like woo. Lately, though, as I’ve been learning about large language models (LLMs), I have a theory.

Think about how LLMs process words. Every word is mapped to a billion-dimensional space — not a strict definition, but a cloud of meaning based on context, association, tone, frequency. The word “cool” can mean chilly, trendy, emotionally distant, or just… a vibe. The model doesn’t “know” what the word means. It just locates it in this billion-parameter matrix and runs some very fast math to figure out what probably comes next.

Everything in the universe is similarly infinitely multi-dimensional. Even you and our preferences are sprawling cloudforms in some psychological hyperspace. 

Most of these dimensions and their values are opaque to you…the conscious mind. You only see a low-resolution, flattened version of reality projected up by your subconscious brain. You don’t perceive raw light or sound. You don’t track every sensory input in their base energy form. You see objects. You hear words. Your brain transforms the complexity into something coherent.

But underneath, your subconscious is operating at a much lower layer of abstraction. It’s processing an impossible amount of raw signals or energy vectors from the universe, and performing millions of matrix multiplications (I imagine a more elegant and poetic version of that) every second to assess: Is this good? Safe? Worth it? Real? And the final compressed result is then beamed into your consciousness as a…vibe. Vibes aren’t irrational. They’re pre-rational. They’re the interface between the infinitely complex and the barely explainable.

We usually think of our consciousness as the pinnacle of intelligence. But I’m positing that it’s merely a different framework of computation; another perspective to improve the answer; but one that we hold dear because it’s the only thing we viscerally experience and understand. What’s happening beneath the surface and all around, unbeknownst to us, is vastly more impressive and far richer. When the best artists and craftspeople are creating or performing, they aren’t thinking; they are mostly vibing. 

The point is that vibes exist, they are powerful, and they are a result of your subconscious considering far, far more factors that are totally invisible to you. 

So what do you do with that? 

You might want to pay a lot more attention to vibes – both what you perceive and what you project. 

Vibes aren’t perfect. They’re shaped by our biases, traumas, upbringing, and culture. What feels “off” to you might simply be unfamiliar. Since vibes control behavior, there’s also a ton of incentive to “hack vibes”. It’s probably the main reason why people and organizations lie. People can’t fake noble intentions or good products, but they can fake a vibe. Which is why your conscious mind still matters – to fact-check and override vibes. 

For oneself, as an individual or as an organization, I recommend cultivating vibes through authenticity and expression. That involves understanding yourself well and expressing that fully and consistently. Not everyone will like your vibe. But your people will find you, and you’ll find them. Trying to please everyone or being neutral is the ultimate vibe killer.In the end, “it’s mostly vibes” isn’t just a cheeky way to explain why you like the color blue or get a weird feeling around Jeff from accounting. It’s a world view — a whole epistemology. 

We live in a reality too complex to fully explain, too layered to decode logically. Our minds can’t track every input. But it appears like our subconscious can do better. 

You are a vibing being, in a vibing universe.

Tune in. 

One of the signs of wisdom is when someone judges another’s actions with the same harshness or lightness with which they judge their own.

The imbalance here is more common. We either judge others too harshly, or judging ourselves too harshly.

The balance between the two is where wisdom, perspective, and maturity lie.

I did some writing growing up — it was part of the curriculum — but not in the way writing is taught in the United States. As a result, my grasp of punctuation and sentence structure has been something I’ve picked up along the way rather than because of formal education.

I know there’s still plenty of room for improvement, but it is a journey.

One of the more surprising recent lessons on this journey has been about em dashes.

Anyone who’s worked with LLMs over the past couple of years knows they love an em dash. It’s become something of a tell for AI-generated writing. My takeaway from noticing this was actually the opposite of what you might expect — I realized I’d been using hyphens where em dashes belonged all along.

So, in a funny way, I’m grateful. These models inadvertently taught me something about English punctuation I should have known sooner. You’ve been seeing more em dashes around here lately. I hope to continue using them in the right places.

The phone is a miracle device.

But the answers to the questions that matter will not be found there.

A simple way to completely change the frame with which we view the world is to view everything that frustrates us or puts us on edge as a lesson from the universe.

It is amazing how transformative “maybe I’m meant to learn something from this” is in a difficult situation.

The key to getting rid of our annoying habits is reaching the point in our self-awareness where those habits annoy us as much as they annoy everyone else.

This requires two things.

First, we need to remove the defensiveness that stops us from honestly acknowledging how our actions land with others.

Second, we need to begin catching ourselves in the act — awareness during the action precedes awareness before the action.

This is easier said than done. But when we get here, we remove all the emotional barriers.

And the emotional barriers are the only barriers that matter.