Job Lock and Victor Fuchs – American Healthcare Chronicles

Two questions have run through this series without a clean answer.

The first appeared in Edition 1: what happens when you leave your job? The employer-based system was built for a world where people stayed at companies for life. Nobody asked what happened when they didn’t.

The second appeared in Edition 5: what happens when costs have no ceiling? Medicare passed with no price controls — physicians and insurers set their own fees, and the federal government paid whatever was charged.

By the 1990s, both questions were arriving as lived reality for millions of Americans.

As healthcare costs rose through the 1980s and 1990s — driven partly by uncapped Medicare incentives, partly by the tax exclusion that rewarded ever-richer benefit packages — employer insurance became more valuable. And more dangerous to lose.

Each stakeholder was responding rationally to their own incentives.

Insurers, operating in a market where pre-existing conditions could be excluded, charged more for individual coverage and less for group plans. The math heavily favored staying with an employer.

Employers, benefiting from the tax exclusion, offered richer plans to attract talent. The more generous the plan, the harder it was to leave.

Patients faced a calculation that had nothing to do with job satisfaction or productivity. Before the Affordable Care Act, roughly 27% of non-elderly adults had a condition that would likely cause them to be turned down for individual coverage. For those people, leaving an employer wasn’t inconvenient. It was a genuine financial risk.

So, workers with employer-sponsored insurance were 25% less likely to voluntarily change jobs. They stayed on the job 16% longer and were 60% less likely to leave voluntarily. “Job lock” showed up three ways.

Workers stayed in jobs they disliked because switching employers meant losing coverage or facing exclusions for pre-existing conditions. Entrepreneurs didn’t start companies. Imagine you are a software engineer with a diabetic child or a designer whose spouse had MS — the individual insurance market was expensive, unreliable, and hostile to anyone with a medical history.

Finally, workers delayed retirement. Too young for Medicare at 62 or 63, they kept working because three years without coverage could wipe out a lifetime of savings.

A Gallup study found one in six American workers with employer-based insurance staying in jobs they wanted to leave, purely out of fear of losing coverage. The effect was strongest among lower-income workers — the people with the least ability to absorb the risk.

This takes us right back to the Victor Fuchs quote I keep coming back to:“Part of the problem is that we have not decided what we want our healthcare system to do.”

Job lock is a precise illustration of what that means. The system was never asked to preserve labor mobility. It was never asked to encourage entrepreneurship, or allow early retirement, or enable career changes. It was asked to cover employees — and it did that. Everything else was a side effect nobody counted.

The productivity lost to mismatched workers, the companies never started, the innovations never pursued — none of it showed up in a healthcare spending report. It was the cost of a system built for one era, running in a different one.

Good vs. great product strategy

A good product strategy is a well-articulated sequence of steps explaining how a team will achieve a goal. The logic is sound — it goes after goals that are valuable, leans into the organization’s superpowers, and leverages unique strengths. Something customers want, that the team can uniquely deliver, that builds on what they already do well.

But a good product strategy is still just something on paper.

It becomes great only when it meets the market. When it’s tested with customers, sharpened by reality, and forced to confront what’s actually true versus what was assumed. That contact is what brings it to life.

Until then, it’s a thesis. A good thesis is a good thing — but it does not a strategy make.

Be careful what you manifest

I knew of a team whose leaders had it in their heads that the executive team had no trust in them.

A negative thought like that ascribes negative intent. And in every action the executive team took subsequently, they found confirmation.

Over time, the team started playing more defense as every action involved worrying about criticism and exec reactions. They stopped playing offense. They got less funding — which further cemented this belief. The spiral continued till the exec team ended up losing trust. A self-fulfilling prophecy.

I also know of a team who were objectively in a worse situation than this team. However, they turned it around simply through the absence of that limiting belief.

You see this with people too. Start with a negative assumption, ascribe negative intent, play more defense, spiral. The original thought manifests itself.

Optimism and pessimism are both self-fulfilling prophecies. What we think about, dwell on, and give our attention to has a way of becoming real.

Be careful what you manifest.

Bryce Canyon National Park

#OurWorldIsAwesome – Edition 21 | Context on this series – we live in a beautiful world and National Parks are akin to the crown jewels of this planet. These landscapes remind us of the fine balance and complexity woven into the fabric of the world around us. Every time I spend a while inside one of these places, I’m reminded of how precious that balance is, and how much it matters that we try to understand the complexity and our own small role within it.

I think that’s what awe really is. We reach for the word “awesome” in the moments something helps us see our own insignificance — and windows into nature do that for me every time. So this is my small way of sharing it, and passing it along.

There’s a tree at Bryce Canyon whose roots hang a foot or two above the ground, gripping nothing but air. The soil that once held them has eroded. In a way, the tree is standing on the memory of a floor that no longer exists.

The whole landscape was made this way — by rain, snow, and ice patiently working the rock, freezing and thawing close to two hundred times a year, carving a plateau into a forest of stone spires over millions of years.

These stone spires are called “hoodoos” and their life tells a fascinating tale.

The most striking stretch is a dense maze of hoodoos called the “Silent City.” Standing above it, you really do feel like you’re looking down at a city — streets, towers, walls — except nothing moves and nothing makes a sound.

The name, to me, was symbolic of the quiet beauty of Bryce Canyon National Park. A reminder that everything that shaped this beautiful place happened quietly.

Just water and time patiently working away, day in and day out over many centuries.

People and dots

A lesson I keep reflecting on: given time and opportunity, people surprise you.

Some unravel in unexpected ways when the going gets tough. Others come through in those same circumstances. And some have a knack of following a poor first impression with interactions that just keep getting better.

It’s in our nature to form first impressions and have strong initial reactions. But those first impressions are just single data points — dots. Best to make decisions based on lines, not dots.

The $12,873 Six-Mile Ride – American Healthcare Chronicles

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.

Mathe shared a fantastic post by David Oks that made for a powerful sequel to last week’s post on “EMTALA”. I’ll weave David’s notes (which you should read in full) with some additional context as we continue pulling on the thread of “how did we get here.”

In July 2023, a 25-year-old named Jagdish Whitten was hit by a car crossing a street in San Francisco. He waved off the ambulance that arrived and called a friend instead.

Doctors found a mild concussion, a broken toe, some bruising. Because of the traumatic nature of the injury, they transferred him to San Francisco General — the city’s only trauma center. This time he had no choice. A six-mile ambulance ride, an evaluation, and he was sent home the same night.

Weeks later: a bill for $12,873 or $737 per mile traveled. $314 for cardiac monitoring. $151 for infection control. $11,670 as a “base rate.” After an appeal, his insurer covered $9,967. Whitten paid $2,900 out of pocket — more than any other part of his hospital experience — for a ride he never chose.

This is not an anomaly. About half of privately insured Americans who take an emergency ambulance ride receive an out-of-network bill. A 2024 poll found 23% of Americans have avoided calling an ambulance because of cost.

To understand why, we need to go back to 1965 — and to a vehicle that served two purposes depending on who was being carried.

As late as 1966, about half of the country’s ambulance services were run by funeral homes. Hearses were among the few vehicles that could carry a patient lying flat. In rural areas, funeral homes scanned radio frequencies for accident reports so they could dispatch before a competitor. The attendant sent was whoever was free and medical training wasn’t a requirement.

These rides were cheap — which is why, when Medicare classified ambulance transportation in 1965, it treated rides as a per-ride fee billed after the fact. At the time, that made sense.

Then everything about ambulances changed.

CPR arrived in 1960. Portable defibrillators in 1965. Paramedics emerged as a profession. A 1966 National Academy of Sciences report found that a soldier gravely wounded in Vietnam had a better chance of survival than a motorist seriously injured on an American street. Funeral homes fled the industry. Fire departments stepped in. Professional EMS systems were built — trained crews, expensive equipment, stations staffed around the clock.

The cost structure transformed entirely. However, the 1965 payment structure did not.

Ambulance services are not transportation businesses. They are readiness businesses. The cost of dispatching an ambulance on any given call is trivial. The cost of keeping it staffed, equipped, and available around the clock is enormous.

Medicare sets its own rates well below that cost. The average transport costs roughly $2,673 to provide. Medicare pays around $329. Billing Medicare patients for the balance is illegal. Medicaid pays even less.

The privately insured absorb the rest of the cost — i.e., every Medicare shortfall, every Medicaid gap, every idle hour of standby readiness. The result: 4.5 million Americans now live more than 25 minutes from the nearest ambulance station. Rural residents make up more than half of that population. The billing system that overcharges urban patients is simultaneously bankrupting rural services entirely.

When Congress passed the “No Surprises Act” in 2020 — banning surprise billing across most of emergency care — ground ambulances were the single explicit exception. Restricting ambulance billing, Congress concluded, would render much of the industry insolvent.

So the exception remains. People wave off ambulances at accident scenes. A 25-year-old with a broken toe calls a friend instead.

Victor Fuchs put it plainly in 1996: “Part of the problem is that we have not decided what we want our healthcare system to do.”

A system that had answered that question would have asked a simpler one first: who pays for the ambulance nobody called, but everyone needs standing by?

Until that question has an answer, the bill goes to whoever is unlucky enough to need the ride.