February 4, 2026

Modern Medicine

It's four different industries in a trench coat.

"Modern" usually means efficient. A modern kitchen is a machine for cooking. But Modern Medicine isn't "Modern" in that sense. It does four things poorly instead of one thing well. This is the story of how we automated the miracle, monetized the maintenance, and lost the human touch.

1890 – 1930

The Kitchen Table Era

It's the 19th century. There is no "System." There is no AMA. A doctor is just a guy you went to middle school with who maybe read a few books or apprenticed for a summer.

If you broke your leg, he set it in your bed. If you needed surgery, he did it on your kitchen table. Infection was a bigger risk than the injury. Your doctor was just as likely to kill you as cure you, but you didn't expect much else.

The Patient Experience

Terror & Comfort. The doctor chloroformed you in your own bed. You paid in cash or chickens. It was intimate, but dangerous.

The Doctor Experience

Cowboy Logic. You boiled tools on the stove. You were a tradesman, not an elite. You competed for "Lodge contracts" to make a living.

The "Snake Oil" Reality

We have this myth that the "Snake Oil" era was just people selling colored water. But the truth is, you could walk into a general store and buy cannabis, morphine, or chloroform.[1] Coca-Cola actually contained cocaine.

And the thing is: They worked. Not on the pathology—heroin doesn't cure lung cancer—but they absolutely solved the symptom (the cough).

In this era, a "Prescription" wasn't a permission slip. It was just a recommendation from a guy you trusted. You could ignore him and buy the morphine anyway. It was the era of total autonomy.

The "Gentrification" of Medicine (1910)

Rich people looked at these "kitchen table" doctors and were horrified. So they hired Abraham Flexner to tour the country. His report closed 80% of medical schools—specifically the ones for poor and rural doctors—and mandated the expensive "Johns Hopkins" model.[2]

The Result: We got better science, but we wiped out the community doctor.

The Lost Alternative: The Lodge Practice

In 1905, a Polish immigrant in Chicago didn't need insurance. He joined a Fraternal Lodge. For a few cents a month, the Lodge doctor would treat his entire family. It was a communal, flat-rate system that worked. The AMA destroyed it, labeling it "unethical" to protect doctor profits.[3]

1940 – 1980

The Golden Miracle

Before WWII, hospitals were going broke. So they tried something radical: Prepayment. "Pay us a little now, and if you get sick later, we'll cover it."

Then, the government froze wages during the war (1942). Companies couldn't pay you more, so they offered to pay your hospital bill instead. Suddenly, money was no object.[4]

It was the "Jetsons" era. Doctors were running the hospitals, not businessmen. If a patient needed something, you did it. Who cares what it costs? The company is paying. We were making miraculous advances—antibiotics, polio vaccines—so spending like drunken sailors felt justified.

The Patient Experience

The Free Lunch. You stayed in the hospital for two weeks for minor surgery. You ate steak. You felt like royalty. You never saw a bill.

The Doctor Experience

The Captain. You had total authority. You ordered every test. You were the hero of the age.

The "Permission Slip" (1951)

While we were spending freely, we also decided we needed control. In 1951, the Durham-Humphrey Amendment passed.[5]

Overnight, the "Prescription" transformed from advice into a legal requirement. The pharmacist—who used to be a chemist making drugs from recipes—was turned into a vending machine that only unlocked with a doctor's key.

We told ourselves: "This will solve addiction! Doctors will only give drugs to people who really need them." (Spoiler: It didn't work).

The Pharmacist's Paradox

We demanded pharmacists become geniuses (Doctor of Pharmacy degrees, 90th percentile SATs), yet legally stripped them of the power to use that knowledge. We created a class of over-educated, under-utilized experts counting pills for a living.

The Legal Shield: ERISA (1974)

Why can't you sue your insurance company when they deny life-saving care? Because of ERISA. It was meant to protect pensions, but it accidentally made employer-sponsored plans immune to state lawsuits. It is the invisible force field protecting the industry.[7]

1990 – 2010

The Algorithm & The Manager

Eventually, the bill came due. We couldn't afford to treat everyone like royalty at the Taj Mahal.

So we brought in the Middle Managers. We thought if we just hired enough guys in suits with stopwatches, we could find the "waste." We invented "Standard of Care"—not necessarily to heal you better, but to give us a legal shield against lawsuits. "I did what the manual said, so you can't sue me."

The Patient Experience

The Gatekeeper. "Utilization Management." You have to ask permission to see a specialist. Your doctor is too busy typing to look at you.

The Doctor Experience

The Hamster Wheel. You are managed by metrics. You spend your day fighting for "Prior Authorization." You are an employee.

The Surplus Panic (1997)

Here is where it gets cynical. In the 90s, doctors were making a killing. People from all over the world wanted to come here to practice.

That was a problem for the "Cartel." A surplus of doctors would lower salaries. So, we passed the Balanced Budget Act of 1997, which capped the number of residency slots.[6]

We legislated a shortage to keep wages high.

The Tech Contrast

At the exact same time (1998), we tripled the number of visas for software engineers. Tech chose "Abundance" (importing talent). Medicine chose "Scarcity" (building a moat). That's why your iPhone is cheap and your surgery is expensive.

2010 – Present

The Bureaucratic Sludge

Now we are in the era of the "Affordable Care Act." We told insurance companies: "You can't make too much profit. We are capping your margin."

It sounded great. But if your profit is capped at 15% of the total cost, how do you make more money? You increase the total cost.[8]

We accidentally incentivized the insurers to let prices skyrocket, because 15% of a big number is better than 15% of a small number.

The Price Arbitrage

Hospitals bought the clinics. Why? Because they can charge double for the same MRI if it's done in a "Hospital" building. It's an arbitrage game.[9]

The Vertical Stack

The Insurer owns the Pharmacy, which owns the Doctor. It's a closed loop designed to extract maximum value from you, the "member."

The Trench Coat Revealed

So, is "Modern Medicine" a failure?

No. It's just a misnomer. We are trying to make one system do four different things: 1. Fix your broken leg (Acute). 2. Manage your diabetes (Chronic). 3. Cure your flu (Nuisance). 4. Solve the mystery (Rare).

We put them all in a trench coat and called it "Healthcare." We optimized it for the expensive stuff (Trauma/Mystery) and completely broke the cheap stuff (Nuisance/Chronic).

The "Asylum Swap"

We claim we closed the "inhumane" asylums of the past. In reality, we just swapped the building. The three largest mental health facilities in America today are Rikers Island, Cook County Jail, and LA County Jail.[10] We didn't solve the problem; we criminalized the patients.

The Verdict

We didn't build this monster on purpose.

We built it by solving one narrow problem at a time, with zero regard for how the pieces fit together. We are the mechanic who fixed the brakes by cutting the fuel line.

It turns out, if you optimize every individual component without looking at the blueprint, you don't get a Ferrari. You get a machine that explodes when you turn the key.

The "Accidental" Bipartisanship

The weirdest part? This isn't political.

We love to fight about "Socialism vs. Capitalism," but the history doesn't fit either box. The wage freezes were FDR (Democrat). The HMOs and corporate shields were Nixon (Republican). The Residency Caps were a boring bipartisan budget deal.

There is no grand ideology at work here. Just a century of wonky, pragmatic decisions that made perfect sense in the moment, but incrementally destroyed the whole.

The Timeline of "Good Ideas"

  • 1910:
    Problem: Quacks.
    Solution: Make Medical School Elite (Flexner).
    Result: We killed the affordable community doctor.
  • 1942:
    Problem: Wartime Inflation.
    Solution: Job-based Insurance.
    Result: We divorced the patient from the price.
  • 1946:
    Problem: Lack of Access.
    Solution: The Hill-Burton Act (Hospital Construction Grants).
    Result: We moved care from the community to the "Factory," trading human relationships for anonymous transactions.[11]
  • 1951:
    Problem: Drug Safety.
    Solution: Prescription Mandates (Durham-Humphrey).
    Result: We turned the pharmacist into a vending machine.
  • 1997:
    Problem: Fear of Surplus.
    Solution: Residency Caps.
    Result: We legislated a permanent doctor shortage.
  • 2010:
    Problem: Corporate Greed.
    Solution: Cap Insurance Profit Margins.
    Result: We incentivized insurers to drive costs up.

We have spent a century perfectly solving the wrong problems. And now we are standing in the middle of a laboratory filled with genius solutions, wondering why the patient is still dying.

Sources & Notes

  1. The "Snake Oil" Ingredients: Late 19th-century proprietary medicines like "Dr. King's New Discovery" commonly contained morphine and chloroform. See Chlorodyne (Wikipedia) and Science Museum Group.
  2. The Flexner Report (1910): Funded by the Carnegie Foundation, this report led to the closure of over half of US medical schools. See The Flexner Report ― 100 Years Later (PMC).
  3. Lodge Practice: A common model in the early 1900s where fraternal orders hired doctors on salary. See Lodge Doctors and the Poor (FEE) and How Government Solved the Health Care Crisis (YouTube).
  4. Stabilization Act of 1942: The origin of employer-sponsored insurance (ESI). See Stabilization Act of 1942 (Wikipedia) and The History of Reimbursement.
  5. Durham-Humphrey Amendment (1951): The law that legally distinguished between OTC and Prescription drugs. See History of American Pharmacy.
  6. Balanced Budget Act of 1997: Capped the number of Medicare-funded residency slots. See Fact Sheet: Medical Residency Training Caps (AHA).
  7. ERISA (1974): The law that often prevents patients from suing self-insured employer plans. See ERISA: A Close Look at Misguided Legislation (AMA Journal of Ethics).
  8. Medical Loss Ratio (ACA): The "80/20 rule" caps insurer profits at a percentage of spending. See Explaining Health Care Reform: Medical Loss Ratio (KFF).
  9. Hospital Price Arbitrage: The "Facility Fee" phenomenon. See How Consolidation Drives Up Costs (PhRMA).
  10. Mental Health Facilities: The largest mental health providers are correctional facilities. See Serious Mental Illness in Jails and Prisons (Treatment Advocacy Center).
  11. Hill-Burton Act (1946): Federal grants that funded hospital construction. See A (Brief) History of Health Policy (PMC).