Why the “Broken” Healthcare System is Functioning Perfectly
An Explanation for the Byzantine Unintelligibility of Modern Medicine
The healthcare system provides us with a clean demonstration of how complexity increases verification costs. Sufficient complexity in any system will eventually act as an unbreakable cipher, entirely preventing clear analysis. Complex systems are excellent environments for parasitic capture. Unlike other markets, you often cannot delay the decision to seek healthcare, and you never get to test the alternative (going back and not getting the treatment or getting a different treatment). This combination of factors makes healthcare the perfect target for parasitic extraction.
Early human cultures invented rituals using herbs, stones, and animal byproducts and these often had no actual physical mechanism of action. Instead, they relied entirely on the psychological action of “doing something” in the face of a malady, and this psychological amelioration provoked a real response in the body, leading to an observable improvement. In such cases, language acts as a metabolic modifier, giving the physically ineffectual performance of the ritual a narrative structure that helps the recipient generate belief in the possibility of the recovery process. This belief modifies behavior because it reshapes the model of the energy landscape that the organism perceives. When this occurs we call it a “placebo.” The placebo effect is a form of misattribution error; one that allowed shamans and healers to emerge as a specialization, performing ritualistic practices with each side of the transaction believing the ritual had power. And it did. Just not the power they thought. However, with time and experimentation, people also noticed that some herbs actually did possess healing properties. For instance, the ancient Egyptians used willow bark as pain relief (it contains aspirin’s precursor salicin), Sumerians used the Opium poppy, and the Greeks applied honey to wounds.
As mentioned previously, the nature of healthcare as a service presents the same counterfactual problem that we saw with safety in general: you cannot test the outcome of a different approach. The early human who visited the shaman and gave them some furs in exchange for “extracting the evil spirit” had no way of knowing if it was the shaman’s chanting and ceremonial fire that had healed him or simply the passage of time. Once you take the treatment, you cannot re-live the experience to test doing nothing. The ones who die? Perhaps the “spirit was too powerful” or “another shaman sent a stronger curse.” Ancestral medicine was largely unfalsifiable. The familiar pattern emerges: misattribution of causes and plausible deniability create an exploitable energy gradient wherever verification cost is high. The gap allows the shaman to extract resources for an inevitable recovery. Surprisingly, modern medicine often faces the same challenges of falsifiability. While we have developed methods for establishing efficacy beyond that of the placebo effect in some research settings, much of any given individual’s interface with medicine today still faces exactly this problem. Indeed, most research still faces exactly this problem because true simulation is rarely possible (this is the Law of Constitutive Entanglement). We cannot truly isolate confounds in sufficiently complex systems. We can sometimes achieve isolation within a range of acceptable experimental precision, but where we get it wrong is in our flawed and biased interpretations of data, as well as taking portability for granted. In physical reality complete isolation is impossible. Everything has a mutual constitution and attempted isolation transforms a target. Constitution is contextual, meaning that causal mechanisms are not portable across contexts without transformation. The result is that true generalization from controlled conditions to natural contexts demands an empirical demonstration that context can be neglected, not a theoretical assumption of universality. Portability is nontrivial and confounds are constitutive. Whether it was necessary to have that benign lump removed because the doctor advised it based on your colonoscopy is completely unverifiable. Not just by you, but also by the doctor. Neither patient nor doctor can be certain whether the intervention was needed. This structural impossibility of a counterfactual enables extraction, whether it’s a shaman with bones or a doctor with a prescription pad. The complexity exists on both sides: many “conditions” cannot be tested for, or rely entirely on self-report or differential diagnosis. Medicine is rife with such epistemological challenges. The shaman’s dilemma is that ritual plus belief often equals real results. Pseudoscience, whether in the form of homeopathy, traditional practices, or other forms of quackery, can actually cause measurable improvement even when their premise may be entirely false. Even modern established medical science faces verification problems.
As settlements grew into cities, healing practices became increasingly institutionalized. Temples gave way to hospitals; tribal priests gave way to an organized medical class. Where the village shaman faced direct accountability to neighbors who could observe outcomes, temple healers operated behind walls, amplifying both their status and information asymmetries. Over time, this gradient grew steeper. Medieval guilds restricted who could practice healing, creating artificial scarcity. Information about healing, essentially, pattern recognition and accumulated community knowledge, was increasingly protected by a moat. The critical phase change came in the form of credentialism. Credentials promised a low-cost mechanism for verification of competence and this theoretically allowed for the externalization of trust. Trust in a particular person was replaced by trust in a role. If credentials actually worked as designed, they would act as proof of training and competence, permitting the bearer additional degrees of freedom from state and institutional violence. The “massage therapist” is permitted to touch other people for money; the “counselor” is permitted to give advice and ask questions but anyone without the credential can be thrown in a cage, or face resource confiscation by the armed guards of the locally dominant coalition. This breaks individual non-fungibility and reciprocity between specific people, instead treating sets of individuals as swappable components, and forcing specific terms onto specific classes of energy exchange between them. The “law” or legal system is actually just a complex set of coordination signals.
The scientific revolution presented an existential threat to medical extraction. If healing became reducible to chemistry and physics, to reproducible cause and effect, then the mystification that provides the legitimacy narrative for this energy extraction might evaporate. The full cost of compliance must then be borne by the higher order dissipative structure of the medical guild or state. Differential diagnosis is really just a series of simple diagnostic decision trees. Information that could easily spread. Indeed, useful information spreads unless it is successfully repressed, which, eventually will cost more energy than any enforcer can afford. The medical establishment’s response was to embrace scientific complexity and maintain operational mystification through jargon and various forms of gatekeeping. Latin terminology replaced spiritual language, but the function remained identical: creating cognitive barriers to justify intermediation. “Demon possession” became “idiopathic condition” — both mean “we don’t know” but saying smart sounding words like “idiopathic” commands a higher price. Consider how germ theory should have simplified medicine dramatically. Suddenly, many diseases had identifiable causes with straightforward solutions: clean water, sanitation, antibiotics, and so on. With this metabolic threat to the beneficiaries of medical complexity, the system responded by expanding its scope. When we are looking at mechanisms — that is, in mechanistic terms — any distinction between what we might call “necessary” or purely “rent-seeking” complexity is entirely irrelevant. Complexity, of any origin, increases verification cost, makes causal attributions more difficult, and the result is the creation of ecological niches. Once niches exist, selection pressure fills them. Over time, even as disease load decreased, the medical establishment carved out previously non-medical territories. For instance, aging became “senescence” requiring management, sadness became “clinical depression,” and children struggling with their captivity became “ADHD patients.” Each medicalization created new extraction opportunities from conditions that were previously considered perfectly normal parts of human existence.
Heuristic (extraneous complexity)
When someone could speak plainly but doesn’t, they are hiding the fact they are siphoning energy.
Once monetary damages for medical harm became possible, another harvestable gradient formed. Lawyers, optimizing locally, naturally moved toward medical cases. The complexity and counterfactual impossibilities made them an ideal feeding ground. Doctors, suddenly downstream from applied state violence through legislation and courts, began modifying their behavior defensively. The resulting cascade of locally rational decisions created a one-way ratchet of administrative and legal complexity. The cost of defensive documentation was smaller than the cost of a lawsuit. Each defensive adaptation created new complexity that other actors had to navigate, each step created another layer for a different collection of roles to parasitize or materially support. A doctor orders an extra test to avoid legal exposure, creating a paper trail. The paper trail then becomes discoverable. Now, not having that paper trail for similar cases becomes legally suspect. So other doctors adapt and what is considered “normal” shifts. What started as one doctor’s defensive choice becomes tomorrow’s “standard of care” through adversarial selection pressure. Then we have insurance companies and corporations owning hospitals, which are themselves simply large associations composed of metabolic calculators seeking energy gradients, by inserting themselves as middle men in transactions that are compelled by biological fragility and the survival instinct. Each administrative policy, form, and requirement emerged from thousands of local optimizations and rational decisions. Prior authorizations that delay treatment were not invented to oppress anyone. They evolved because somewhere, sometime, each of these practices conferred a metabolic advantage to someone. Electronic health records exemplify this process. They were built initially for continuity of patient care but grew to become a legal defense document and an insurance verification system through an accumulation of requirements that no single entity or person planned . Each stakeholder added their requirements to protect against their specific set of risks and incentives. Doctors needed clinical notes. Lawyers needed audit trails. Insurers needed billing codes. Regulators needed compliance checkboxes. This same complexity accretion pattern replicated fractally across healthcare as an industry. Every point of complexity attracted subsidiary complexity, each layer became a new feeding ground for both honest production and parasitic extraction, and each was forced into existence under the extreme threat of state violence. Doctors, overwhelmed by documentation requirements, needed nurses to handle basic care. Nurses, professionalized and credentialed, became too expensive for routine tasks, creating a gradient for medical assistants. The legal risk of nurse practitioners prescribing independently was less than the cost of hiring doctors, so their scope expanded. Each new role created its own credential moat, professional association, and lobbying apparatus. Credential entropy and parasitic capture lurches forward.
Next come the politicians, campaigning for “safety” rules and similar based on visible failures and public outrage, not careful truth-oriented analysis of what might actually improve outcomes or clear thinking about how society functions and all downstream impacts of regulation. When a child dies from a medical error and media coverage generates an opportunity to signal competence, status, and virtue, politicians rush to be seen “doing something.” The something is often akin to new documentation requirements that may not have prevented the original tragedy, but solve the appearance of action problem. Frequently the revealed optimization target, is a legitimacy narrative (“I’m an effective leader”) and not actual competence. Established healthcare players actually lobby for certain regulations, recognizing that compliance costs help secure their moat against competitors. Large hospital systems can afford dedicated compliance departments; independent practices cannot. This leads to new niches opening up for tech startups promising to handle compliance-as-a-service. Another trend we see over and over in the thermodynamic analysis is that large, powerful structures outcompete smaller ones and concentrated interests outcompete diffuse ones. (This is the autocatalytic regime of Reflexive Gradient Dynamics.) The regulation marketed as “patient protection” is actually market protection. Meanwhile, trial lawyers will actively shape the narrative and craft talking points for busy politicians about medical failures that invariably lead to more legal oversight, more documentation, more grounds for future lawsuits, and more virtue signaling. Patient advocacy groups, often funded by pharmaceutical companies or medical device manufacturers, will similarly push for mandated coverage that happens to benefit their funders. While pharmaceutical companies insert themselves between doctors and patients through “prior authorization specialists” and similar. A whole ecology of supporting businesses, specialists, consultants, and industries pops up to supply the metabolism of the industry. IT vendors with proprietary systems that can’t communicate with each other, obscure security risks, and create their own path dependent lock-ins. Food service, janitorial, security, compliance, marketing and many more companies line up to take their slice of the legally mandated, violently maintained edifice of the “care” industry. None of this is master-planned and none of it is optional. It is simply an outcome of invectives, survival, and energy dissipation. Each addition is locally sensible but sums up to the global incoherence and structural inefficiencies that we observe. It is a system that is so complex that no one anywhere on earth can even begin to fully understand all of its components. In the name of health, safety, and security, each actor, protecting against adversarial action from the others, adds another layer of defensive complexity. The irony is that each participant can see that “the system” is broken but often fails to realize that they are the system. Each beneficiary believes their role to be essential and their extraction to be defensible, shifting the blame.
The complexity of the system tips the scale towards inexorable parasitic capture (D + V < P) that will eventually correct through collapse and not reform. It contains both extraction and production, entropy and order, healthcare and oppression. The players aren’t villains executing “evil” plans but metabolic calculators responding to local pressures, each containing multiple drives: self-interest and caregiving, rule-following and rule-bending, systemic critique and systemic participation. The circle of blame itself becomes unfalsifiable — when any reform or policy fails, each actor can accurately point to another as the reason. Each failed reform adds another sedimentary layer of complexity, creating new gradients for extraction and the ecology grows. The activists, reformers, and critics are all part of the same metabolism that they claim to fight.
This complexity creates a shadow ecology. The more byzantine and expensive mainstream healthcare becomes, the steeper the gradient grows for so-called “alternative” medicine to begin its own unfalsifiable energy extraction in the cracks and at the margins. These alternative medicine quacks aren’t simply random opportunists. They are a thermodynamically inevitable outcome of the core medical establishment. When a hospital visit costs thousands and requires navigating insurance pre-authorization, the $150 cash-only “functional medicine specialist” or “energy worker” who promises quote “evidence-based” results finds their economic niche. The old school shaman remerges. Operating in regulatory gaps, they sell supplements instead of drugs, “coaching” instead of medical advice, “wellness optimization” instead of treatment, clandestine psychedelic “ceremonies.” Each carefully selected term dances around the requirements of the mainstream credential. Soon even these providers become secondary credentialing organizations as they discover what the mainstream medical establishment did centuries ago: that there is easier energy to be harvested in gatekeeping than in production. These marginal operators benefit from both mainstream medicine’s complexity and its incompetence. They position themselves as the approachable and anti-corporate alternatives with no insurance forms, no wait times, no careless ten-minute visits. As the government regulated medical system grows more opaque and overtly hostile, the more appealing the narrative of “natural,” “indigenous,” and “traditional” medicine becomes. Subsequently the regulatory system creates even more complexity as it attempts to chase these actors, pushing the margins of control out ever further. If the regulators crack down on the use of one term, like “medical,” alternative practitioners switch to “therapeutic.” If regulators ban one substance, some enterprising chemist slightly modifies the molecule. Regulators are always one step behind because the system is thermodynamic, the energy moves whenever it can. With each iteration of the game, freedom is further eroded. “Care” gets more expensive. Parasites feed. The healthcare system’s attempt to maintain its extraction monopoly through “safe” medicine creates the demand for its competition. It’s a self-reinforcing dynamic of layered metabolic extraction and dominance built on human biological fragility and the inevitable coalescence of government power.
Energy flows from individuals to employers to insurance to providers to big pharma to device companies to the state, extracting taxes from everyone and redistributing them to the bottom through Medicare and Medicaid, which cycles back into the hands of providers. And then there are all the intermediary extractors: Pharmacy Benefit Managers taking their cut between insurers and pharma, Group Purchasing Organizations between hospitals and suppliers, billing companies between providers and insurers, and consultants everywhere. The scale is staggering. At present there are an estimated 20 million employed in healthcare, which is more than in manufacturing. Within that, administrative employment is growing three to four times faster than clinical employment and the majority of healthcare workers never touch a patient. This administrative bloat is a direct consequence of the artificial scarcity and overregulation. The combined extraction is valued at ~$4.5 trillion annually, approaching 20% of American GDP. Each percentage point of GDP represents millions of metabolic calculators whose survival and career investments depend on this complexity for continuation.
The system has reached a Nash equilibrium which is a game-theoretic stable state where no player can improve their outcome by unilaterally changing their strategy, assuming other players’ strategies remain constant. Localized escapes exist at the margins, but they do not alter the basin of attraction of the system as a whole. Any actor who simplifies unilaterally gets destroyed. A hospital that doesn’t play the chargemaster game (meaning, the systemic and strategic inflation of list prices) cannot competitively cover costs. A doctor who doesn’t document defensively is left catastrophically exposed to legal risk. An insurer who doesn’t deny claims is selected right out of existence. The complexity, the energy expense, including all the waste heat and exorbitant cost is the actual product, not something to “fix.” Successful reform is identical with ending the system. Removing the extraction is the same as removing the structure. Maximum dissipation is the primary function. We mistake the lack of efficient and humane care for dysfunction, but the complexity, adversarial conditions, and race for throughput is the result of natural selection which is itself simply thermodynamic law playing out.
Healthcare maintains a metastable configuration where parasitic extraction and medical care delivery operate simultaneously, with complexity and scale increasing regardless of patient outcomes, creating a system that consumes ever more resources whether it succeeds or fails at its stated goal of healing. It is a human fragility mine, based on compelled labor at gun point, not “healthcare” as such. This process will continue until resources deplete and reality forces a correction. This unstable equilibrium emerges through thousands of local optimizations. Employers stop hiring when healthcare costs exceed worker productivity. Individuals delay treatment until crisis forces engagement, creating the emergency room dynamic that hospitals depend upon for reliable revenue. Insurers deny claims up to, but not beyond, the point of triggering regulatory intervention or class action lawsuits. The system self-organizes around both extraction and real care within survivability constraints in perfect obedience to the laws of physics and the survival imperative.
Medical Training as Metabolic Lock-In
Another aspect of this system that we interpret in precisely the reverse way is medical training. To secure a medical position requires an enormous investment of energy: four years of undergrad, four years in medical school, then three to seven years of residency, coupled with hundreds of thousands of dollars in debt, ongoing exposure to disease, predatory legal action, and the emotional toll of patient management. The educational process to secure such a position functions both as actual training and as an elaborate hazing ritual that processes candidates into defenders of the extraction regime. The financial cost can reach as much as three- to five-hundred thousand in direct expenses. When this figure is combined with the opportunity cost of lost time, the total investment is closer to one million. Medical residents frequently work 80-hour weeks at below-minimum wage when calculated hourly. They literally sell their twenties and thirties to the system, creating a near-perfect path dependency. The young doctor emerges in their mid-thirties with significant debt, a decade of foregone earnings, and relationships strained by endless studying and on-call schedules. The intensity of this hazing is structural — it keeps positions scarce and both wages and status high. It ensures that its graduates and senior doctors, who suffered in this system, are motivated to perpetuate the suffering of new recruits. Each generation that paid the price has massive incentive to ensure that the next generation must pay also. Successful reform would devalue their own sacrifice. By limiting residency slots through Medicare funding caps, keeping board examinations deliberately obscure, and requiring expensive continuing education, the system functionally ensures that supply can never meet demand. The hazing isn’t designed to improve patient care. Exhausted residents make more errors. What it does is to ensure that those who survive the process come out with too much invested to ever advocate for alternatives. Once they are done, they want to finally get on with their lives and make money. Their identity and economic future has become perfectly aligned to the metabolism of the system itself. This is how higher order dissipative structures are formed.
The counterfactual impossibility strikes again — we cannot actually know if neurosurgeons need 15 plus years of training because we’ve never tried training them differently. They might need this amount of time, but there’s no control group. The nature of the system prevents any experimentation that might reveal any aspects as excessive. No country is running the experiment. The credentialed classes, who control the gradient, ensure that such experiments never occur. This is not to suggest there are no procedures that don’t take decades of training, there may be, but to the average participant in the system verification is impossible. The entire system depends on those receiving concentrated benefits saying “trust me.” What can look at it, are the little bits of available historical evidence that suggest much of the current training may be theatrical. Battlefield surgeons in World War II learned complex procedures in months, not decades. They achieved remarkable outcomes under worse conditions than any modern hospital. Traditional healers still perform cataract surgery in parts of India with training completed in months achieving acceptable success rates (though success rates are significantly lower than Western-trained surgeons, though perhaps “acceptable” given resource constraints). The point isn’t that these procedures need a specific time frame. The point is that the current system isn’t about its stated claims of patient care, it’s about status and scarcity. That’s its primary purpose. Patient outcomes are secondary. This is the quiet part we do not say out loud. The first heart transplant was performed by surgeons who couldn’t have trained for it — the procedure didn’t exist. They learned by doing. The perfect low V educational system would be a return to apprenticeships, where credentials are replaced by actual work. The credential moat dissolves when demonstrated competence becomes the sole verification mechanism we accept. The exploitable gradient between production and deception prevents us from discovering what’s actually necessary. Would neurosurgeons with eight years of training have worse outcomes than those with fifteen? We’ll never know because suggesting the experiment is to suggest a reduction of every neurosurgeon’s million-dollar investment and present-day social status. Any suggestion of shortened training meets the unfalsifiable response: “But people will die!” No evidence can refute this because generating evidence is forbidden. The medical boards, staffed by those who underwent the full hazing, ensure no alternatives can emerge. The system protects itself from empirical challenge and functions as designed.
To theoretically falsify the arguments that were just presented, one would need to demonstrate a mechanism where incumbents willingly and systematically dismantle their own artificial scarcity and status moats in direct response to optimizing for patient care and public optionality. In game-theoretic and systemic terms, this would require showing a real incentive structure that rewards self-sacrifice and systemic reform rather than self-preservation through wealth, status, and control. Theoretically, this would require a financial and professional model where a doctor’s lifetime earnings and social prestige did not depend on there being a small number of doctors (restricted supply of labor). This would also require regulatory bodies that voluntarily funded controlled, blinded experiments that challenged their own competence and procedures. Further, the current credentialing framework would need to be replaced by one driven entirely by objective, decentralized real time measurement of competence (practical mastery demonstrated through simulation or apprenticeship) rather than time-served or other gamable metrics. Crucially, this transition would have to be spearheaded by the senior board members themselves, voluntarily choosing to hollow out and devalue their own historical suffering and sunk costs in favor of lowering barriers for newcomers and improving outcomes. The structure itself would need a mechanism where internal groups were financially or reputationally rewarded for identifying and eliminating redundant administrative and educational gatekeeping, proving that the system’s metabolism actively purges inefficiencies rather than codifying them into traditions. In short, to theoretically falsify the arguments presented above we would need a system that grossly violated its own survival drive in order to achieve anything other than what we observe. No survival-driven entity can put any other goal ahead of its own continuity, because doing so immediately opens an ecological niche for a competitor. But the term “competition” misses the mark slightly; it’s more like water moving into a crack than a competition. Water flowing into a crack isn’t actively “competing” with anything — it is simply following the path of least resistance governed by gravity and pressure gradients. Similarly, self-preservation isn’t just a choice; it is a strict evolutionary filter. Any system that doesn’t ruthlessly optimize for its own continuity gets outcompeted and eliminated through thermodynamic selection.
The Solutions are the Problem
Healthcare grows as a percentage of GDP but decelerates near 20% and this suggests a natural resistance may emerge when one-fifth of all productive effort has been diverted into managing biological fragility. Life expectancy stagnates or declines in spite of increased spending, indicating the system may be facing catastrophic parasitic capture. Pharmaceutical companies maintain among the highest profit margins in the S&P 500, claiming this is required for R&D but such claims are impossible to verify. These costs might be necessary, but we cannot run the counterfactual.
Phase transition from the current system would require energy input exceeding the system’s ability to absorb and complexify. Single-payer represents one theoretical transition, but Medicare already demonstrates how government systems evolve baroque complexity rivaling private insurance. In a single payer system, the parasitic extraction doesn’t disappear, it just relocates. The FDA employs former pharmaceutical executives, medical boards consist of established physicians, insurance commissioners rotate through industry. They ensure “safety” requirements preserve existing complexity, absorbing innovation into the current structure rather than allowing disruption. Technological disruption through AI diagnostics, robotic surgeries, or home monitoring could theoretically bypass entire layers, but each threatened intermediary has regulatory capture and each new technology creates new oligarchies. This leaves eventual system overload as the most probable path towards change. The prediction is continued complexification until collapse.
In the case of the drug war and Israel-Palestine war, the “problems” were actually solutions — they perfectly enabled extraction. In healthcare, we see the inverse: the “solutions” are actually problems. Every fix — defensive medicine, insurance intermediation, credentialing, electronic health records, prior authorization, compliance requirements — was implemented as a solution to some visible issue but together became the “problem” itself. Each solution added complexity that enabled more extraction while making the system less functional and more sclerotic. The solutions themselves are the extraction mechanism. The shaman’s bones are now MRI machines, the ritual chant is prior authorization, and the offering became insurance premiums.
Stripped of moral framing, outlining key energy metrics:
Healthcare consumes ~$4.5 trillion annually, approaching 20% of the US GDP
Government spending (Medicare/Medicaid) accounts for ~40%, private insurance ~30%, and out-of-pocket expenses ~10%.
The industry employs roughly 20 million people — more than the entire manufacturing sector. Administrative employment is growing three to four times faster than clinical
Medical debt remains a leading cause of personal bankruptcy, even for those with insurance
The average American family spends $24,000 in annual insurance premiums
Despite the highest healthcare spending globally, US life expectancy is declining
Pharmaceutical companies command among the highest profits on the S&P 500
Insurance company stocks consistently outperform the market
Hospital list prices bear no consistent relationship to costs or Medicare rates, varying seemingly randomly, with markups that can reach 10x or more for identical procedures
Medical school debt now $200,000-500,000
ICD diagnostic codes expanded from 14,000 to 70,000+ codes
Prior authorization requirements increasing annually
Electronic health records can require more documentation time than patient time