The Feudal Economics of Modern Healthcare: How Regulation Turned Medicine into a Fiefdom

Government-created healthcare monopolies are forcing physicians into a kind of serfdom, gobbling up private practices to extract doctors’ labor.

By Richard Menger. He is currently the Chief of Complex Spine Surgery at the University of South Alabama and is on the faculty of the neurosurgery and political science departments. Excerpt:

"Medicine once mirrored this liberalizing trend. Post-World War II, most physicians owned or partnered in independent practices. They controlled their schedules, negotiated directly with patients and insurers, and bore the risks and rewards of their craft. Private property in medical practice — autonomy over one’s office, staff, and patient relationships — fostered competition and innovation. That world is vanishing. Today, nearly 78 percent of US physicians are employees of hospitals, health systems, or corporate entities. Private practice has collapsed into a shrinking remnant.

The new lords are sprawling tax-exempt “non-profit” health systems. These entities enjoy at least $37 billion  annually in federal and state tax breaks — property, income, and sales tax exemptions — while operating with margins and executive compensation packages that rival for-profit corporations. Many run massive investment portfolios and for-profit subsidiaries. Their community-benefit spending often falls short of the value of their exemptions when measured rigorously; some profitable systems deliver minimal charity care relative to their tax windfall. 

Government policy supplies the moat around these castles. Rule after rule and regulation after regulation favors the big conglomerates. The regulatory reach adds to the lords’ dominion.

By Richard Menger. Richard Menger He is currently the Chief of Complex Spine Surgery at the University of South Alabama and is on the faculty of the neurosurgery and political science departments. Excerpts:

"Certificate-of-need (CON) laws are still on the books in about 35 states plus DC, requiring regulatory approval before new hospitals, surgery centers, or even MRI machines can open. Incumbent systems predictably oppose competitors’ applications, turning state boards into tools of rent-seeking protection. Without CON, independent physicians and ambulatory centers could challenge hospital dominance. With it, local monopolies flourish.

Once entrenched, these systems wield two powerful economic weapons: the 340B Drug Pricing Program and site-of-service payment differentials. Enacted in 1992 to help safety-net providers serve low-income patients, 340B allows qualifying hospitals to purchase outpatient drugs at steep discounts — often 20-50 percent or more — then bill insurers or Medicare at full list price. In 2024, covered entities purchased $81.4 billion in 340B drugs. But studies and reports show the windfall frequently funds facility expansion, acquisitions, and executive pay rather than expanded charity care for the intended populations. Contract pharmacies amplify the arbitrage. The program has become a hidden tax on patients, employers, and manufacturers, with limited transparency on how savings reach the vulnerable.

Site-of-service differentials complete the trap. Medicare — and many commercial payers — reimburse the identical service at dramatically higher rates when performed in a hospital outpatient department (HOPD) instead of a physician’s independent office. A clinic visit, imaging study, or minor procedure in an HOPD can command 125 to 300 percent more reimbursement. Hospitals therefore acquire physician practices, rebrand them as HOPDs, and capture the facility-fee markup. Patients are sometimes seeing the same doctor in the same building but for twice as much.

Physicians are increasingly likely to be employed by these healthcare entities — not because they want to, but because the structure and rules are tilted that way.

The physician receives a salary or production bonus but loses ownership. The patient pays higher coinsurance. Independent practices cannot compete on price because the payment rules themselves favor the hospital flag. Vertical integration explodes. Horizontal mergers compound the effect. Markets once served by several competing hospitals see them consolidate into single dominant systems: one or two health systems control the entire market for inpatient care in half of American cities. Research consistently shows that such mergers raise prices five to 20 percent or more — with little or no improvement, and sometimes deterioration, in quality. Cross-market mergers demonstrate similar price effects after several years.

The physician-vassal’s daily reality reflects the bargain. A neurosurgeon or cardiologist may receive a competitive base salary, malpractice coverage, and administrative relief from his affiliation with a hospital. In return, the doctor must (directly or indirectly) refer patients only within the system, meet RVU targets that prioritize volume over value, and accept corporate dictates on electronic health records and formulary restrictions. They must accept care pathways optimized for margins, rather than patient outcomes. Dissent risks contract non-renewal, often triggering noncompete clauses. 

True entrepreneurship — opening an ambulatory surgery center or cash-pay spine clinic —  requires profound courage and near-inevitable litigation within the framework of CON. The independent doctor who once embodied the free professional has become a salaried cog in a revenue-extracting machine.

Reversing neofeudalism in medicine demands restoring property rights and competition — the very forces that ended medieval feudalism. Policymakers should repeal CON laws nationwide, as several states already have with measurable price reductions and new market players. Implement full site-neutral Medicare payment for outpatient services, leveling the field so independent practices can survive. Reform 340B with transparency mandates, patient-definition tightening, and caps on windfall profits unrelated to charity care. Stop the unnecessary ban on physician-owned hospitals that provide better care at cheaper costs. Antitrust enforcement must scrutinize both horizontal and vertical mergers with renewed vigor. Tax-exempt status for hospitals should be performance-based, tied to verifiable charity care and community benefit exceeding the exemption’s dollar value." 

Paul Krugman Misleads with Statistics

By David R Henderson.

"In his May 12 Substack post titled, “What Happens When Americans Realize How Miserable We Are?” Paul Krugman makes the case that we are more miserable than we think. He writes:

What will happen when Americans realize how miserable we are? Not in all respects, of course. But my guess is that relatively few Americans realize how much we are falling behind other nations on basic aspects of a civilized life, like health and safety.

The first graph he uses to make his case is a comparison of deaths from road injuries. Deaths include deaths of drivers and passengers and deaths of motorcyclists, cyclists, and pedestrians. He compares the United States with Portugal and France.

His measure is deaths per 100,000 population.

I’ll say that again: His measure is deaths per 100,000 population.

Do you see a problem? I do. In which of the three countries are the miles driven per person highest? Think about how undense our population is and how low our gas taxes are, all compared to the numbers for Portugal and France, and you know the answer: Miles driven per person are much higher here; fatalities are highly positively correlated with miles driven.

But let’s make sure. In 2025, American vehicles traveled 3.28 trillion miles. In 2024, Portuguese vehicles traveled 79.7 billion kilometers, which is 49.5 billion miles. In 2024, French vehicles traveled 377.7 billion miles.

Let’s do the simple math on vehicle miles per person.

U.S. population in 2025: 341.8 million.

Portugal’s population in 2024: 10.75 million.

France’s population in 2024: 68.5 million.

So:

U.S. vehicle miles per person: 3.28 trillion divided by 341.8 million = 9,596.

Portugal’s vehicle miles per person: 49.5 billion divided by 10.75 million = 4,604.

France’s vehicle miles per person: 377.7 billion divided by 68.5 million = 5,514.

So the average U.S. vehicle travels 108% more than the average Portuguese vehicle and about 74% more than the average French vehicle.

What all that means, of course, is that the relevant comparison, deaths per miles traveled rather than per resident of the country, shows a much small difference among the three countries.

As a check, I asked ChatGPT to compare fatalities per million miles between the United States and Portugal. Here’s what it said.

Country

Fatalities per million vehicle miles

Source basis

United States

0.0126

2023

France

0.0085

2021–2023 average

Portugal

0.0134

2021–2023 average

United States vs. France

The U.S. rate was about 48% higher than France’s:

France’s reported rate was 5.3 deaths per billion vehicle-kilometres, which converts to 0.0085 per million vehicle miles.

United States vs. Portugal

Portugal’s rate was about 6% higher than the U.S. rate:

Portugal’s reported rate was 8.3 deaths per billion vehicle-kilometres, which converts to 0.0134 per million vehicle miles. The ETSC report notes that Portugal’s vehicle-distance figure excludes motorcycles, so this comparison is not perfectly clean; including motorcycle mileage would likely lower Portugal’s rate somewhat.

Now go to back to Krugman.

His graph shows the United States being about 200% more dangerous than France and over 100% more dangerous than Portugal. But norming by vehicle miles driven rather than population shows the United States being 48% more dangerous than France and comparable to Portugal.

Big difference.

Krugman made a living by carefully examining macroeconomic data and data on international trade. It’s too bad that didn’t use his analytic tools on this one."

The compound interest of innovation: Wi-Fi and the power of unlicensed spectrum

By Brian A. Rankin of CEI.

"Investors understand the power of compound interest. Over time, small gains accumulate into exponential growth.

Innovation often works the same way. One breakthrough creates the foundation for the next, which enables another. Over time, innovation compounds, producing transformative economic and technological change.

Few technologies better demonstrate the compound interest of innovation than Wi-Fi.

In 1985, the Federal Communications Commission (FCC) took a novel and consequential step. It opened three spectrum bands for unlicensed use. At the time, these spectrum bands were dismissed as “junk bands.” Yet those supposedly worthless bands were put to many productive uses, including Wi-Fi.

While exclusive-use licensed spectrum forms the core of modern mobile networks, Wi-Fi relies on portions of unlicensed spectrum that anyone can use on a nonexclusive basis. This spectrum is also decentralized: there are no license payments or centralized control for users, though Wi-Fi devices remain subject to FCC certification and certain technical requirements.

This openness allowed Wi-Fi to proliferate and drive affordability. Coffee shops, hotels, airports, hospitals, libraries, and countless other locations routinely offer Wi-Fi at no cost. And a single residential broadband subscription can serve an entire household with many connected devices. The average home now has more than 21 connected devices, each connected at no incremental cost.

The result is extraordinary consumer value and affordability.

In 2020, when the FCC opened an additional 1,200 MHz of spectrum within the 6 GHz band for unlicensed use, the agency found that unlicensed devices relying on Wi-Fi and other technical standards had “become indispensable for providing low-cost wireless connectivity in countless products used by American consumers.”

The educational benefits alone are substantial. In a survey of more than 16,000 undergraduate students across 71 US institutions, 96 percent said that Wi-Fi was the most important technological feature for studying. Wi-Fi has transformed how teachers and students communicate, allowing them to safely share homework, documents, and files over a school’s network.

Business applications are also significant. A recent report by ABI Research shows an increase in Wi-Fi usage across business and enterprise environments. The report found that “virtually all business, from sprawling multinational enterprises to independent mom and pop shops, depend on Wi-Fi for daily communications and commerce.” It concluded that Wi-Fi serves as a “key enabler” of the disruptive innovations that will define tomorrow’s economy.

Health care is another example. Wi-Fi-enabled telehealth services allow medical professionals and patients to communicate more efficiently and conveniently, saving both money and time. A recent study found that 71 percent of Americans are comfortable receiving virtual care for the treatment of common mild illnesses, while that 66 percent are comfortable using it for chronic disease management.

These innovations emerged because policymakers created an environment where entrepreneurs and technologists could experiment freely. One innovation led to another, and then to another – compounding over time into a communications ecosystem that has transformed modern life.

The lesson for policymakers is straightforward.

Innovation flourishes when government creates space for experimentation. The success of Wi-Fi and unlicensed spectrum demonstrates the extraordinary economic and consumer benefits that openness, flexibility, and light-touch regulation can produce.

That is the compound interest of innovation."

Academia's Leftward March

By Steve Stewart-Williams. Excerpts:

"According to a recent paper by Nathan Honeycutt, 74% of US faculty identify as liberal, 15% as moderate, and only 11% as conservative. Remarkably, more faculty identify as “far left” or “very liberal” than with any position right of center."

"The first graph shows the increasing dominance of the left in academia from the late 1960s to the early 2020s. As you can see, liberals and leftists have always outnumbered the rest, but the skew has grown increasingly strong over time. And not only have conservatives become vanishingly rare, so have centrists."

 

U.S. Airlines and Carmakers Need to Go Global

Policies that insulate them from competition created the conditions that led to bailouts and bankruptcies

By Clifford Winston of the Brookings Institution. Excerpts:

"While we rightly celebrate the 1978 Airline Deregulation Act, airports and foreign competitors that could serve U.S. routes weren’t deregulated. Public airport monopolies and duopolies allow airlines to raise fares. With foreign carriers prohibited from flying domestic U.S. routes, domestic fares have been kept artificially high even while load factors approached 85% just before the Iran war. As a result, when a domestic shock hits, the system lacks the diversified global networks and capital depth needed to absorb the blow.

The car industry suffers from a similar condition. While the automakers aren’t currently liquidating, they are operating on a margin-over-volume strategy that has pushed the average transaction price of a new car to a record $50,000. This wasn’t a natural market evolution. It was manufactured by decades of trade barriers.

From the 1964 “Chicken Tax” to the 100% tariffs on Chinese electric vehicles in 2025, Washington has walled off the American consumer. These barriers have allowed domestic makers to abandon the low-cost econobox segment entirely, focusing instead on $80,000 SUVs. Because they are shielded from the $15,000-a-car global competitors that are modernizing fleets in Europe and Asia, automakers have become addicted to a narrow, affluent demographic."

 

When Rudy Giuliani Made New York Great Again

His recent successors failed to learn the lessons of the great reformist mayoralty of the 1990s

By Myron Magnet. Excerpts:

"in 1994 . . . Crime had skyrocketed in the preceding decades, with murders doubling in the 1960s and doubling once more over the next two decades before reaching 2,154 in 1991—one every four hours, roughly. Dope dealers hustled on the street alongside pushy panhandlers and prostitutes. Derelicts slept alongside graffiti-smeared buildings. An epidemic of car break-ins led owners to post “No Radio” signs in their windows, and auto alarms blared indignantly at all hours. Businesses fled: The 116 major corporate headquarters in Gotham in 1971 had dwindled to 49 by 1995. Small-business owners buzzed customers in through locked doors and, at closing time, rolled down metal security gates, luring graffiti vandals."

[Giuliani] "grasped the theory of social scientists James Q. Wilson and George Kelling that stopping small crimes would prevent more serious crimes, just as replacing a broken window halts more window-breaking by showing that somebody watches and acts. He had seen this theory proven in the subways in the two years before his election, when Robert Kiley, head of the Metropolitan Transportation Authority, kept subway trains and stations hosed clean of graffiti and transit police chief William Bratton started arresting turnstile jumpers and graffiti vandals. Crime in the subways began to fall. When Mr. Giuliani entered City Hall, he named Mr. Bratton the city’s police commissioner." 

"arresting “squeegee men” who smeared dirty rags across motorists’ windshields, holding them hostage for a “contribution.”"

"Police stopped, questioned and frisked those suspected of carrying weapons or casing a business, dissuading the ill-intentioned from packing guns while reducing shootings. Mr. Bratton made computer maps of crime hot spots and concentrated cops where thugs operated. City Hall’s revolutionary idea was that cops should prevent crime"

"Murders fell 20% to 1,561 the first year and a further 58% to 649 in 2001"

"the Giuliani administration started an ambitious workfare program. Welfare offices became “job centers” and set welfare recipients to painting park benches, raking leaves and cleaning courtrooms. Recipients learned discipline and gained self-respect. Many moved into conventional jobs and, as in the nation as a whole, caseloads dropped dramatically." 

‘The Well-Educated Child’ Review: Where Love Meets Learning

How did Harlem Village Academies improve student performance? The charter network’s founder lays out her philosophy of education

By Naomi Schaefer Riley. Riley reviewed the book The Well-Educated Child: How the Principles and Practices of Quality Thinking, Agency, and Ethical Purpose Cultivate Deeper Learning by Deborah Kenny. Excerpts:

"It is true that for the schools catering to wealthier families, assessments are the floor and not the ceiling. No one in Scarsdale is impressed when more than 90% of students pass the Regents exams or are marked “proficient” on statewide tests. The teachers don’t teach to the test, but students learn the material they need to know through the school’s curriculum. There are exceptions. Many wealthy schools embrace the “whole language” approach to reading, but the parents acted as a backstop, ensuring that their children learned how to read even if they didn’t learn it well in school. Unfortunately, children from less-wealthy and less-educated families don’t have that advantage, and so they often fall further behind."

"Similarly, Ms. Kenny is a fan of restorative justice. She doesn’t like systems of demerits where students behave well only because of extrinsic rewards. Though she assures readers that students do suffer consequences, including suspension, for infractions, the goal at HVA is for students to understand what they have done wrong and to make amends. Of course, the way restorative justice is practiced often lacks real consequences and, again, research suggests it has led to more dangerous schools and poorer academic results. Similarly, her belief that smaller class sizes and higher teacher pay will improve our schools has no basis in evidence. (The average teacher salary at Sidwell Friends, where the Obama children went to school, is about the same as that in the New York City public schools.)"

"But Eva Moskowitz, Success Academy’s founder, has the same goals for her students. The test scores are also the floor, not the ceiling. The 20,000 students at her schools read complete books. And they learn to appreciate art and music. In “A+ Parenting” (2023), Ms. Moskowitz recommends great works of literature as well as games and music and movies to help children “become enthusiastic learners.” In the past 20 years, though, HVA’s scores have fallen while Success Academy’s have not. While they are still outperforming many neighborhood schools, Harlem Village Academy East, for instance, only has a 52% proficiency rate in reading. Sorry, Ms. Kenny, this won’t fly in Scarsdale."