The economic fortunes of mom-and-pop businesses are diverging from those of their larger counterparts — a pre-existing gap that now appears to be getting bigger, faster.
Why it matters:
The evidence is in the private-sector labor market, that in recent months, has been propped up by large companies as smaller firms — typically responsible for 40% of U.S. employment — shed workers.
The big picture:
Larger businesses have been able to adapt to a tough economic backdrop — historic tariffs, high interest rates and a more cautious consumer — in ways far more challenging for small companies with fewer resources.
“It’s evident that medium and large firms are better positioned to weather what’s going on,” said ADP chief economist Nela Richardson.
“They can set prices, they can change suppliers. They can hire contractors instead of permanent employees in a more sophisticated way. They can hire globally, not just in their local region. They have more tools in the toolbox,” Richardson said.
By the numbers:
The hiring gap between small and big businesses is getting worse, a fresh sign that small business firings are holding down jobs growth across the economy.
As we mentioned yesterday, the private sector shed 32,000 jobs in November, according to payroll processor ADP. Small firms — those with fewer than 50 employees — accounted for all of the losses.
Those businesses reported a net loss of 120,000 jobs, the most small businesses have cut since the pandemic’s onset. Larger businesses grew, but not enough to offset the cuts elsewhere.
“Small business hiring reallystarted to slow in April and I attribute some of this to tariffs and the higher cost of doing business that small companies are much less able to absorb,” Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, wrote in a note.
“The natural reaction is to cut costs elsewhere and we know that labor is their biggest cost,” Boockvar added.
The intrigue:
Bloomberg recently reported that there are more small businesses filing for bankruptcy under a special federal program this year than at any point in the program’s six-year history.
Subchapter V filings, which allow firms to shed debt faster and cheaper, are up 8% from last year, according to data from Epiq Bankruptcy Analytics.
Chapter 11 filings — a process used by larger businesses — are up roughly 1% over the same time frame.
Threat level:
Main Street is bearing the brunt of an economic slowdown in ways that might make it even harder for small shops to compete with larger companies.
One bright spot: Despite that pain, applications to start new businesses — ones likely to employ other people — remain notably higher than in pre-pandemic times, according to the latest data available from the Census Bureau.
What to watch:
The Trump administration shrugged off the ADP data that indicated a hiring bust. Commerce Secretary Howard Lutnick told CNBC that the cuts were due to factors unrelated to tariffs, like immigration crackdowns.
That hints at a debate among monetary policymakers, who are trying to gauge how much weak jobs growth is a byproduct of fewer available workers.
But ADP had earlier told reporters that small businesses generally had less demand for workers — not that staff weren’t available for hire.
The software monopoly that powers American hospitals wasn’t built for the data, speed, or intelligence the future of medicine demands.
Epic Systems is an American privately held healthcare software company, founded by Judy Faulkner in 1979, and has grown into the largest electronic health record (EHR) vendor by market share, covering over half of all hospital patients in the U.S.
Epic dominates American healthcare today. But so did Kodak in photography and GE in industry. Its software runs the country’s hospitals, determines the workflows clinicians, nurses and clinical support staff use, and shapes what data gets captured (or more often, what gets lost). It also serves as the front door for healthcare data for the patients it serves. Dominance has never guaranteed a future. Epic’s position reflects the architecture of the past, not the one emerging now.
More importantly, the sheer volume of activity occurring in these hospitals means they are collectively running thousands of experiments, mini clinical trials, and critical observations daily. The stakes are enormous: billions of dollars in drug discovery, the efficiency of clinical trials (currently plagued by poor recruitment and high costs), and the potential for better, personalized care. The data generated in these environments is the single most valuable, untapped resource in all of medicine.
However, this monumental source of value is being throttled by outdated infrastructure, and it shows. It’s hard to imagine a world where AI is used to its full potential in healthcare while Epic is still running the show. The ideas are oppositional at their core.
The Massive Data Problem
Technology is accelerating faster than any legacy system can keep up with. AI is reshaping every major industry, and healthcare will be forced to catch up. However, this essential transformation is structurally incompatible with the dominant system of record.
To put it bluntly: Epic has a data problem. A massive data problem. Not just imperfect data — structurally flawed data. What Epic captures is fragmented, delayed, and riddled with inconsistencies. Diagnoses become billing codes that distort reality. Interventions like intubations, pressor starts, and ventilator changes appear hours late, if at all. Outcomes are incomplete or missing. What remains isn’t a clinical record in any meaningful sense but a billing ledger dressed up as documentation. No model can learn reliably from that.
But the deeper problem is the data Epic never sees. Some of the most valuable information in modern medicine: continuous monitoring streams, ventilator logs, infusion pump data… never enters the EHR in a structured or analyzable form. In many cases, it isn’t captured at all.
I recently brought Roon (a well-known engineer at OpenAI) and Richard Hanania(a public intellectual/cultural critic)—both advisors in my new venture, in full disclosure—to one of the largest academic medical centers in the country. Both watched torrents of millisecond-scale data spill off monitors. Streams that could reveal what’s happening in the brain, heart, and vasculature. Valuable data… all vanished instantly. None of it logged. None of it stored. None of it correlated with outcomes. Roon captured this shock in a viral post on X/Twitter, essentially describing how hospitals are filled with catastrophic events like sudden cardiac death, yet we save none of the time-series data that could teach us how to prevent the next one. His shock distilled what people in technology grasp immediately and what healthcare has normalized: industries where human life isn’t exactly top of mind record everything; hospitals, where the stakes are life and death, learn almost nothing from themselves.
In Silicon Valley, losing data like this is unthinkable. In healthcare, it barely registers.
Epic was never built to ingest or learn from this scale of data. It was built to satisfy billing requirements, regulatory checklists, and documentation workflows. That is the beginning and end of its architecture. It is not a learning system, much less an AI system. It is not even a modern data system. And that is the root of Epic’s downfall.
The Cultural and Financial Moat
Epic is famous for its internal commandments — principles Judy Faulkner wrote decades ago:
Do not acquire.
Do not be acquired.
Do not raise outside capital.
(If you haven’t heard it, the latest Acquired podcast episode on Epic is essential listening)
But the same rules that built its empire now limit what it can become. What was once a strategic strength is now its ceiling.
The next era of healthcare software demands investments that were unnecessary when the EHR was the center of gravity. Building AI-native infrastructure: real-time data pipelines, device integrations, large-scale compute, continuous model training, semantic normalization — requires not millions but tens of billions of dollars. Most companies facing that kind of leap can raise capital, acquire talent, or merge with partners. Epic has ruled all of those options out.
Epic’s formidable market share is anchored by a massive customer sunk cost. With implementation fees often exceeding a billion dollars for large systems, the financial and political inertia makes replacing the EHR functionally unthinkable. However, this commitment only forces customers to defend an obsolete data architecture. By preventing them from adopting novel solutions, this inertia doesn’t protect Epic’s long-term viability, it simply guarantees a widening technical gap between the EHR and the transformative potential of AI.
A company optimized for slow, controlled expansion cannot transform itself into an AI-scale enterprise without violating the principles that define it. The culture that kept Epic dominant is the culture that prevents it from catching the next wave. Epic will continue to excel at documentation, billing, and compliance — but those strengths are anchored in the past. The future belongs to systems that learn, and Epic was never designed to learn.
The Shift to Middleware
Meanwhile, the broader economy is being held up by AI. The world’s largest tech companies are pouring staggering sums into compute, data centers, and model training. And all that compute needs rich, complex, high-value data to train on.
Healthcare is the only remaining frontier of that scale.
No other industry generates so much information while analyzing so little of it. No other sector represents nearly 20% of U.S. GDP yet still runs on fragmented workflows and manual processes. And the incentives here are unmatched: improving patient outcomes, reducing costs, eliminating inefficiency, accelerating drug development, modeling disease trajectories, and eventually automating the more repetitive layers of care. There’s even an irony: the very infrastructure needed to enable learning health systems would also finally make billing more accurate.
I’m not writing this to showcase some utopian vision of AI curing all disease. It’s the practical use of technology we already possess. Our limitation isn’t the models; it’s the missing data.
A handful of companies have bet their trillion-dollar valuations on this: OpenAI, Google, Amazon, Nvidia, Apple, Oracle. They are spending hundreds of billions a year on AI infrastructure and need high-volume, high-quality datasets to justify that investment. Healthcare produces oceans of exactly that kind of data, and most of it evaporates. The companies that learn to capture and structure it will define the next layer of healthcare infrastructure. Whether they integrate with Epic, build around it, or replace it is almost secondary.
What matters is that none of them are waiting for Epic.
Clinicians won’t either. Once tools exist that unify the data hospitals already generate, reduce workload, eliminate administrative drag, and answer the questions clinicians actually ask — What happened? Why did it happen? What should we do now? — the center of gravity will shift. Clinicians will live inside those tools, not inside an interface built for billing.
Epic can still exist, but it doesn’t need to function as healthcare’s operating system. There’s precedent for this in every major industry: the core orchestration/data layer eventually recedes into the background while workflow and data intelligence move up the stack. At that point, the EHR becomes background infrastructure or middleware. The intelligence/workflow layer becomes the real operating system. Epic will undoubtedly resist this shift, yet its attempts to maintain total control of the clinician interface will ultimately collide with the utility and data gravity of AI-native systems.
Epic becomes the backend: essential, invisible, and no longer the place where the practice of medicine occurs.
Regulatory modernization around HIPAA, interoperability, and data liquidity will be essential, but that is a conversation for another essay.
Epic isn’t vanishing tomorrow. Large institutions rarely do. But its relevance is eroding in the only domain that will matter over the next decade: the ability to harness data at a scale and fidelity that makes AI transformative. It can keep its commandments, preserve its culture, and reject outside capital — it just can’t do all that and remain the central platform of hospital data in an AI-native future.
I know plenty of people who are politically right-of-center – and they want to rein in Big Insurance just as much as people to the left.
Some of my closest family and friends have nearly polar opposite political beliefs than mine. And these are not family members I’m only with on holidays (like during Thanksgiving dinner later this week) or friends I only see on Facebook. These are people I love and communicate with weekly — sometimes daily. They’re my people.
And I’d say that my people largely fall into two distinct right-of-center sub groups:
The first group:
USDA grass-fed Trump supporters who like Jeanine Pirro and Blue Lives Matter bumper stickers.
And the second group:
Nonpolitical and anti-establishment 20-30 somethings who make their own beef-tallow.
(And both groups are patient enough to keep a Bernie-t-shirt-owning-lib, who listens to The Daily (like myself) in their lives.)
We don’t all agree on vaccines. We don’t all agree on the Gulf of America. And none of them agree with my mullet. But what we all do agree on is that through backroom deals and moneyed influence, big corporations pull Washington’s levers and squeeze American families at every chance they get – all to make their Wall Street investors and executives richer. And, as readers of HEALTH CARE un-covered undoubtedly know, Big Insurance may be the perfect example of those deals and influence.
That’s where my people and I meet in our venn diagram. While we have many sticking points, Big Insurance is not one of them.
And this is not just qualitative on my end. Poll after poll proves that my people are not the exception to the rule. An October KFF poll showed that a majority of Republicans who align with the MAGA movement (57%) said Congress should have extended the enhanced premium tax credits for Affordable Care Act (ACA) plans, and a new study by Undue Medical Debt found that 62% of Republicans blame health insurance companies the most for the medical debt crisis in the country.
The deeds of the health insurance industry have grown so rotten and their stench so unavoidable that even the President has caught a whiff. On Truth Social last month, President Trump posted about “BIG,” “BAD” and “Money sucking” health insurance companies. His message reverberated in the media and on Wall Street and helped bring this issue even more to the forefront.
President Trump’s post on Truth Social attacking the health insurance industry.
But here’s the thing: Trump’s post isn’t the tip of the spear but rather the caboose following a long train of Republicans (and their voters) who as of late have begun to focus on Big Insurance. In the last six months, we’ve seen Representative Marjorie Taylor Green call on Republicans to take on Big Insurance, former Representative Mark Green (R-TN) introduce legislation to crack down on Big Insurance’s prior authorization tactics, and Pam Bondi’s Department of Justice open a criminal investigation into UnitedHealth Group’s Medicare Advantage business – all moves that have been historically uncharacteristic of their political bents but nonetheless are, in one way or another, raising the heat on Big Insurance.
If the latest news out of Washington tells us anything, it’s that conservatives are largely on the same side as many of the most liberal voices when it comes to health insurance reforms.
While my people may not speak the same health care language or advocate the exact same solutions that many health care reform advocates or left-of-center folks would raise, the differences are largely just in the terminology used. For instance, my people are not going to mention Medicare for All or a public option as an answer to our country’s health care woes. Those phrases have been carefully tarred and feathered by the insurance industry as “socialism” to hold back both centrist and Republican voters and policymakers from putting guardrails in place that would cut into the industry’s immense profits. But again, it’s the terminologies that have been discredited – not the sentiment behind them.
On more than one occasion, when talking with my people about health insurers, they have straight-up volunteered that they think “insurance companies should be outlawed.” That belief, last time I checked, was to the left of even Senators Elizabeth Warren and Bernie Sander’s proposals to finally establish universal coverage for every American by expanding Medicare to cover all of us.
Another one of my people, who handles financials for the North American-sector of a sizable global company in the home-technology space, FaceTimed me last week to show me his computer screen while he was crunching the companies’ health care costs.
Photograph of a slide used during the company town hall showing the company’s health care costs vastly outpacing the rate of inflation.
In anticipation for a company-wide town hall, he had to make a slide showing that the health insurance costs for his company’s U.S.-side had increased (on average) 20% over the past several years – including a projected 25% jump in 2026. He couldn’t believe it. “Show this to Wendell,” he said.
And that’s the thing:
Nobody can believe how out-of-control Big Insurance has become.
Where my people and I meet
It’s fair to say that I think more about health care policy than the average bear. And it’s true that my people have had me in their ear talking about these issues for nearly a decade. But as I noted above, polling shows that while certain solutions may not be as popular, the desire for action is clear and exists sans my yapping.
Over years of conversations, there have been some major themes that have stuck. I will list them below:
Big Insurance is the villain in health care: With its army of slick lobbyists and spokesmen on TV, Big Insurance is the epitome of the D.C.-swamp monster that so many Americans disdain. Between 2014 and 2024, just seven for-profit health insurers amassed $543.4 billion in profits (of which they spent $618 million on lobbying during that time) all while 100 million Americans owe $220 billion in medical debt and Americans’ life expectancy is ranked 48th in the world.
Big Insurance and it’s cushy government handouts: Nearly all of Big Insurance’s growth has come from contracts it engineers with the federal and state governments in the form of managing Medicaid, Medicare Advantage and some Veteran health services. These contracts are not the invisible hand of the free market but rather cushy government handouts that have allowed just seven for-profit health insurance conglomerates to capture $10.192 trillion in revenues between 2014 and 2024.
Big Insurance has grown too big: Big Insurance companies are buying up the entire health care landscape – from physician practices to pharmacies. That is why independent physicians are an endangered species and why an independent pharmacy closes nearly every day in this country.
Big Insurance hurts the little guy: American small businesses often see double-digit yearly increases in health insurance costs that stifle Main Street America’s growth and stop Americans from being entrepreneurs altogether. And, not to mention, if businesses weren’t being raked over the coals for more premium dollars year after year, more money could be paid to workers.
I included this list because I think we are at a watershed moment in the health care debate and reforming Big Insurance is no longer a wedge issue. It’s a bridge issue.
I don’t know what comes next
Because the long standoff between Republicans and Democrats to open the government finally came to an end this month – without the ACA subsidy extensions – Big Insurance reform (and health care reform broadly) has become an unaddressed priority in American politics.
In the current moment, if Republican electeds were smart, they’d read the writing on the wall and focus on rooting out an actual source of widespread waste, fraud and abuse found in health insurance companies’ private Medicare Advantage, Medicaid and military businesses. That’s an issue that polls incredibly well with conservatives. Just tackling Medicare Advantage, for example, could save taxpayers somewhere between $80 and $140 billion annually.For reference, the DOGE website claims it has only clawed back $214 billion in total since January.
Republicans could also work with their political opposites (and fulfill a campaign promise) to pass a worthwhile health insurance reform package that builds on (or possibly replace) the consumer protections of ACA and fills the loopholes of well-intended rules that have been exploited and manipulated by Big Insurance.
And it wouldn’t be a one-party trick. For what it’s worth, I think most Democrats in Washington would be on board with anything that lessens the corporate grip Big Insurance has on our country’s public programs and improves the ACA. In the last year, we’ve already seen Democrats link with the country’s current controlling party to introduce bills that would bring meaningful change to Big Insurance:
Senators Elizabeth Warren (D-MA) and Josh Hawley (R-MO) introduced legislation that would stop health insurance companies from owning pharmacy benefit managers (PBMs);
Senators Jeff Merkley (D-OR) and Bill Cassidy, M.D. (R-LA) introduced the No UPCODE Act to curb taxpayer-sponsored overpayments to health insurers; and
These unlikely partnerships in Washington are happening because what my people (and all people) want is a health insurance system that guarantees comprehensive coverage for all of us, without forcing folks to choose between biopsies or groceries. Everybody I know – left, right and in between – wants a health care system that doesn’t bury families under mountains of medical bills or force them to attend unnecessary funerals. And all rational people want an insurance system that doesn’t buy off its buddies in Washington to serve their Wall Street daddies.
I want to scream from the mountaintops that health insurance reform is not just a moral or economic issue. It’s a winning issue.
Americans have had it. Most of Washington seems motivated. And now is the time for health care, patient and consumer advocates to change their tune and stop (just) preaching to the choir. Advocates for reform need to get their message to the corners of the country that they may have written off — or found too difficult to bridge — because the ground for health care reform is fertilefor change. And I think all people are ready.
Thanksgiving is in a few days. And in times of heightened political polarization, the dinner table – filled with folks sharing a myriad of different opinions – can become a battleground between courses of mashed potatoes and pumpkin pie. But if I can gleam anything from what I see as a bi-partisan kumbaya against Big Insurance, it’s that even with all the reported divisiveness, we have one less thing to argue about.
And because of that – I don’t know what comes next – but what I do know is that the 2026 midterms and the 2028 presidential election will be about health insurance reform. And whichever political party takes that seriously is going to seize the day.
For an economy that’s rapidly expanding, the usual drivers of job creation sure aren’t carrying their weight.
Why it matters:
Anemic job growth in key sectors is a sign that there is more underlying weakness in worker demand than the low unemployment rate might suggest.
It makes for a weaker starting point, as companies see new opportunities around the corner to use AI to automate their work.
It’s not a new trend: These sectors showed weak job creation or outright job losses for the last couple of years of the Biden administration.
But it is striking that a GDP surge fueled by data center and AI investment hasn’t been enough to generate more robust hiring.
By the numbers:
Overall employment is up 0.8% over the 12 months ended in September, but the hiring has been driven in significant part by health care, state and local government, and other less cyclical sectors.
Manufacturing employment is down 0.7% over the last 12 months. Tariffs are weighing on the sector, but its job losses long predate the Trump trade wars, with year-over-year job losses for more than two years.
Temporary help employment, which tends to be a volatile indicator underlying growth trends, is down 3%. It has been losing jobs for three consecutive years.
Two other sectors that tend to correlate with overall economic momentum, transportation and warehousing and wholesale trade, are also adding jobs at rates below that of overall job growth (0.6% and 0.2%, respectively).
Stunning stat:
As Bloomberg flagged, two sectors — health care and social assistance, and leisure and hospitality — accounted for more than 100% of net job gains so far in 2025.
Excluding those sectors, employment dropped by 6,000 jobs in the first nine months of the year.
Zoom out:
There’s not much reason to think these numbers are driven by AI-related opportunities for companies to increase productivity and rely on fewer human workers, particularly given that the phenomenon isn’t new.
But it is more plausible that seeing such opportunities on the horizon has made companies more reluctant to hire in the absence of overwhelming need.
BlackRock chief investment officer for global fixed income Rick Rieder wrote in a note after last week’s jobs report that “what we think we are seeing now is … essentially a hiring pause in anticipation of AI.”
Of note:
A report out this morning from the McKinsey Global Institute finds that AI and robotics technologies could, in theory, automate 57% of U.S. work hours.
“AI will not make most human skills obsolete, but it will change how they are used,” the authors find. “As AI takes on common tasks, people will apply their skills in new contexts,” they write, such as less time researching and preparing documents and more time framing questions and interpreting results.
The bottom line:
Beneath the headline numbers, there is some good reason that attitudes toward the job market are glum.
The Trump administration is shaking up how health systems are paid for outpatient care with a plan that could reduce Medicare hospital spending by nearly $11 billion over the next decade.
Why it matters:
It’s a big step forward for “site-neutral” payment policies that have been touted as a way to save taxpayers and patients money, but that hospitals say will lead to service cuts, especially in rural areas.
Driving the news:
Medicare administrators on Friday finalized a proposal to reduce what the government pays hospitals to administer outpatient drugs, including chemotherapy, at off-campus sites.
The move would equalize payment rates to hospitals and physician practices for the same services — an idea that Congress debated last year but didn’t act on in the face of aggressive hospital lobbying.
Medicare now pays about $341 for chemotherapy administration in hospital outpatient facilities, compared with $119 for the same service delivered in a doctor’s office.
Medicare next year will also start to phase out a list of more than 1,700 procedures and services only covered when they’re delivered in an inpatient setting.
What they’re saying:
The policy changes will give seniors more choices on where to get a procedure and potentially lower out-of-pocket costs at an outpatient site, the Centers for Medicare and Medicaid Services said.
Some health policy experts said the change will help make Medicare more affordable.
“We hope the administration will continue its efforts and adopt site neutrality for other services in future rules,” Mark Miller, executive vice president of health care at Arnold Ventures, said in a statement.
The other side:
“Both policies ignore the important differences between hospital outpatient departments and other sites of care,” Ashley Thompson, a senior vice president at the American Hospital Association, said in a statement.
“The reality is that hospital outpatient departments serve Medicare patients who are sicker, more clinically complex, and more often disabled or residing in rural or low-income areas than the patients seen in independent physician offices.”
Hospital outpatient departments still will see an $8 billion overall increase in their Medicare payments in 2026.
But the Trump administration contends that new technologies and other factors are shortening recovery times for procedures done on an outpatient basis.
Between the lines:
Health systems still scored a small win when CMS dropped a plan to speed up the repayment of $7.8 billion in improper cuts the first Trump administration made to safety-net providers’ reimbursements in the federal discount drug program.
The policy would have clawed back the money from hospitals’ Medicare reimbursements. Scrapping the idea “helps preserve critical resources for patient care during an already challenging time,” Soumi Saha, senior vice president of government affairs at Premier, said in a statement.
Still, CMS said it may try again in 2027. And law firm Hooper Lundy Bookman is already sending out feelers to hospitals willing to challenge the version of the repayment plan that will go into effect next year, per an alert sent Friday night.
What we’re watching:
Whether health systems challenge the site-neutral payment changes. The hospital payment plan came weeks later than expected and will make it harder for facilities to update billing, revise their budgets and train staff, Saha said.
The administration is also launching a survey of hospitals’ outpatient drug acquisition costs next year, which is seen as a prelude for cutting reimbursements under the discount drug program.
Harvard psychologists Daniel Simons and Christopher Chabris ran a now-famous experiment in the late 1990s. They showed students a short video of six people passing basketballs and told them to count the number of passes made by the three players in white.
Halfway through the film, a person in a gorilla suit walks into the frame, beats its chest and exits. Amazingly, half of viewers — both then and in multiple recreations of the study — never notice the gorilla. They’re so focused on counting passes that they miss the obvious event happening right in front of them.
The authors call this “inattentional blindness.” And you don’t need to visit a research lab to see it. It’s everywhere in American healthcare.
Policymakers, business leaders and medical societies are all busy counting their own pass equivalents: metrics like insurance subsidies, premiums and enrollment numbers.
As a country, we need to stop counting passes long enough to observe how the gorilla negatively affects people everywhere: in Washington, in boardrooms, in workplaces and in rural communities. Only then can we confront the gorilla head on.
1. The gorilla in Washington
In Congress, lawmakers spent 43 days debating how to reopen the government. The fight centered on whether to continue funding the enhanced premium tax credits that have made coverage more affordable for roughly 20 million lower-income Americans who purchase health insurance through the Affordable Care Act’s online exchanges.
Democrats argued that ending those payments in 2026 would cause premiums to spike and make care unaffordable. Republicans warned that continuing them would add nearly $400 billion to the federal deficit over the next decade. Both believed they were protecting Americans from financial harm. And both were right. If the cost of providing medical care isn’t reduced, neither the federal government nor the average family will be able to afford it.
The United States spends $14,885 per person each year on medical care while the next highest-paying nation, Switzerland, spends $9,963 per person with far better clinical outcomes, according to the Peterson Center, .
If the U.S. could cut the spending gap between American and Swiss healthcare in half, our nation would save $700 billion annually. Those savings could help maintain ACA subsidies, lower out-of-pocket costs for families and reduce federal deficits.
But the gorilla inflicts financial damage far beyond just the ACA exchanges. Between federal funding cuts and eligibility changes, analysts warn that millions of Americans enrolled in Medicaid will become uninsured starting in 2026. Meanwhile, because federal law limits Medicare payment growth to the rate of inflation, hospitals make up lost revenue by charging private insurers and their enrollees more (already about 250% of Medicare rates). Ultimately, employers and workers will pay the price.
2. The gorilla in corporate America
America’s C-suite leaders are conducting the business equivalent of counting passes. Instead of confronting the cost of medical care itself, they’re focused on comparing premiums, raising deductibles and choosing plans with narrower physician networks.
But without major changes in how care is delivered, no plan will remain affordable.
The average cost of family health coverage premiums will approach $30,000 next year, with employers paying about $24,000 and workers responsible for the rest, according to an October KFF survey of 1,862 non-federal public and private firms. A projected 9% premium increase means employers and employees together will spend roughly $2,500 more next year per worker — limiting wage growth, hiring and investments in innovation.
America doesn’t have an insurance problem. It has a medical cost crisis.
3. The gorilla in the workplace
While workers focus on wages, benefits and job security, the same cost crisis threatening businesses and government is about to hit them hard.
More than half of U.S. adults receive health insurance through an employer. But as medical costs rise, companies are turning to automation and generative AI to reduce their expenses.
Amazon offers a vivid example: the company eliminated 14,000 office and professional roles and announced plans to combine robotics with generative AI to replace as many as three-quarters of its warehouse workforce. The company plans to create new, higher-skill jobs to maintain the robots, but far fewer (and not for the same people who were displaced).
When workers lose employer-based insurance, they don’t stop getting sick. They turn to Medicaid or subsidized exchange plans. That strains government budgets, lowers hospital reimbursements and pushes insurers to raise commercial premiums even higher.
Unless the cost of medical care drops dramatically, the gorilla’s impact will reverberate throughout society.
4. The gorilla in rural hospitals
The cost crisis is devastating people everywhere, but perhaps nowhere more than in rural America. Over the past two decades, 150 rural hospitals have closed or stopped offering inpatient services. Another 700 facilities (nearly one-third of those remaining) are at risk of shutting down.
With small patient populations and high fixed costs, many rural hospitals can no longer provide inpatient care. But instead of reducing the high cost of care delivery, most communities pursue short-term relief: emergency grants, temporary bailouts and added Congressional funding.
These efforts can delay closure, but they don’t change the math. Even when hospital beds are empty, the buildings must be staffed, heated, insured and maintained, turning every day into a financial loss.
To survive, the model will have to change, and painful sacrifices will be necessary.
Addressing the gorilla everywhere
The United States can dramatically reduce healthcare spending while improving quality. But doing so will require a structural overhaul, not incremental tweaks. Three major opportunities already exist.
1. Shrink our hospital footprint
America maintains far more hospitals than it needs, with many offering duplicate services at high fixed costs. A more sustainable system would:
Eliminate overlapping specialty programs in crowded markets.
Small rural hospitals could transition into 24-hour emergency and urgent-care hubs supported by telemedicine and reliable, low-cost transportation to larger facilities.
2. Prevent diseases before they happen
According to the CDC, more effective control of chronic diseases would reduce medical costs up to $1.8 trillion by preventing as many as half of all heart attacks, strokes, cancers and kidney failures. Three pragmatic opportunities include:
Every complication avoided is a hospital admission, ICU stay or surgery that never happens and is never billed.
Pay for value, not volume
Healthcare’s fee-for-service payment system rewards doing more, not doing better. Capitation — fixed monthly payments to physician groups and hospitals — flips the incentive structure, rewarding improved health, not just disease treatment.
Under capitation, prevention becomes financially rewarded, chronic diseases are managed earlier and more effectively, and care shifts to high-quality, cost-efficient settings, including outpatient facilities and virtual platforms.
The result is a virtuous cycle: healthier patients, fewer complications and significantly lower cost.
No single group — government, employers, patients or clinicians — can solve this crisis alone. Success will require all stakeholders to overcome their inattentional blindness and confront the gorilla together. The only question is how much worse things must become before we do.
HENRY KOTULA 