You’re Doing it Wrong Part 11: Government Interference

The Government Broke Healthcare, Insurance Stole the Wallet, and DPC Wants a Monthly Retainer

Introduction

We are taking a quick step back from healthcare and health insurance to launch a broader series: You’re Doing It Wrong. In this 15-part series, we expose the counterproductive and risky tactics that corporate leaders use—tactics that inflate the cost of their products and services, ultimately passing the bill to you, the consumer. In this eleventh installment in the series we are going to explore the lack of thinking behind expecting the government to solve (any) problems.

Why take a break from healthcare? Simple: there is no real news.  The AI hype is getting worse and will never pan out; EMR vendors still haven't realized that you cannot document encounters with text or narrative language; and insurance companies rip off everyone. So, we are stepping back and looking at the bigger picture.  If you need your weekly dose of healthcare, read our article Health Price Transparency isn’t the Panacea Everyone Seems to Think.

Healthcare in America is broken, but the standard diagnosis is wrong. The popular narrative claims that a greedy market has failed patients, demanding even greater state oversight to restore order. This article will prove the exact opposite. Government intervention is not the cure for our healthcare crisis; it is the primary engine driving high costs, administrative bloat, restricted access, and degraded patient care. Decades of heavy-handed regulation, price fixing, and structural distortion have broken the natural mechanics of supply and demand. Until we acknowledge that public policy has systematically destabilized the medical system, every attempt to fix healthcare through expanded government intervention will only compound the damage.

The Situation

The healthcare system operates like a heavily protected cartel where state policy and flawed market assumptions compound each other.

• Price Signal Destruction: Mandated fee schedules and government-driven third-party payer mechanisms sever the direct link between consumer demand and provider pricing. Without transparent prices, consumers cannot shop, and providers have no competitive incentive to reduce costs.
• Certificate of Need (CON) Cartels: In many states, providers must obtain government permission before opening new facilities, adding hospital beds, or purchasing advanced medical equipment. This system grants government-sanctioned local monopolies to incumbent health systems, artificially suppressing the supply of care.
• Explosive Administrative Bloat: Modern regulations force hospitals and medical practices to dedicate massive resources to coding, compliance, and billing administration rather than patient treatment. Physician growth has remained relatively linear, while healthcare administrative headcount has grown exponentially over recent decades.
• Regulatory Capture by Incumbents: Federal and state health policies are heavily influenced by well-funded lobby groups representing major insurers, hospital networks, and pharmaceutical manufacturers. These policies often raise barriers to entry that protect large industry legacy players while squeezing out smaller independent practices.
• Suppression of Free-Market Care Models: Regulations frequently restrict cross-state medical licensing, limit scope-of-practice for non-physician providers, and create tax disadvantages for non-traditional arrangements, stifling low-cost innovation.
• Supply-Side Rationing: When state-run or heavily regulated systems attempt to control total expenditure without using market prices, they must control supply. This invariably leads to long wait times, delayed specialized care, and bureaucratic rationing.
• The Fallacy of Patient Shopping and Boutique DPC: Expecting patients to price shop is unrealistic. Patients want to see the practitioner they know and trust.  Meanwhile, standard DPC functions as an expensive luxury retainer where doctors drop panel sizes from 2,500 to 500 patients, raising out-of-pocket costs and worsening the primary care doctor shortage for everyone else.
• Government-Mandated FHIR & HL7 Standards: Fast Healthcare Interoperability Resources (FHIR) and Health Level Seven (HL7) protocols look like the ultimate tech breakthrough for data sharing, but enforcing these rigid, bloated standards via federal mandate has accomplished the exact opposite. Instead of creating seamless interoperability, these legacy data specs force clinics to deploy complex API middleware and army-sized IT teams just to translate basic clinical events into federally mandated formats—treating health data like electronic tax forms rather than structured operational data.
• The Law of Unintended Consequences: Government interventions routinely create secondary market distortions that worsen the precise problems they were meant to solve, driving higher costs, administrative friction, and market consolidation.

• Employer Tax Exclusion (1942 Stabilization Act): WWII wage controls forced employers to offer tax-free health benefits to attract talent, inadvertently locking insurance to employment, insulating patients from true costs, and inflating demand.
• EMTALA & Emergency Room Crowding (1986): Unfunded mandates requiring emergency rooms to treat all patients regardless of ability to pay turned ERs into default primary care clinics for the uninsured, forcing hospitals to cost-shift onto paying patients.
• Medicare Part D Coverage Gap ("Donut Hole"): Well-intentioned spending caps created a temporary mid-year gap where patients paid 100% of drug costs out-of-pocket, leading patients to skip maintenance drugs and end up in high-cost emergency care.
• ACA Risk Adjustment & Insurer Flight: Regulatory mandates meant to protect high-risk pools resulted in unpredictable financial penalties for smaller health co-ops, forcing dozens into bankruptcy and leaving rural counties with single-provider monopolies.
• HITECH Act & Electronic Health Record (EHR) Bloat (2009): Federal mandates for EHR adoption led to massive clerical overhead, forcing doctors to spend two hours on data entry for every hour of patient care and driving record physician burnout.
• 340B Drug Pricing Program Expansion: Intended to help safety-net hospitals buy cheap outpatient drugs for low-income patients, loopholes incentivized health systems to buy out independent practices and arbitrage prices against private insurers.
• Inflation Reduction Act R&D Shifts (2022): Capping small-molecule drug prices earlier than biologics gives pharmaceutical companies a structural incentive to pull investment from accessible oral pills toward expensive specialty injectables.

The Logical Conclusion

If government regulation continues to protect incumbent interests, the system will solidify into a cash extraction engine for corporate health systems and insurance conglomerates. Through heavy lobbying and regulatory capture, these behemoths harvest far more than their fair share of healthcare dollars, relying on legislative mandates to guarantee their margins. Meanwhile, small independent practices, community hospitals, and everyday patients are forced to subsidize this institutional greed through suppressed reimbursements, complex billing hurdles, and skyrocketing out-of-pocket costs. If this trajectory remains unchecked, independent practices will be completely wiped out, merged into massive corporate networks, or pushed into boutique cash-only niches. The end result is a permanent state-protected duopoly: bloated health conglomerates extracting maximum revenue while state regulators ration care in an attempt to control the inevitable wreckage.

The Short Answer

Fixing healthcare requires replacing subjective narrative text with discrete, structured data at the clinical encounter level. Data allows us to see the care provided without medical coding, enabling the coverage company to evaluate and pay for procedures in real time as they are documented.  Automating the health insurance revenue cycle through data allows us to dismantle the administrative moat protecting giant insurers.  Cutting out the big insurers cuts more than half (close to 65%) from the cost of health coverage altogether.  

Paying a reference-based price of 150% of average Medicare across all healthcare would eliminate rate negotiations and networks and level the playing field between big hospital systems and small or rural carriers.

Paying immediately, with no pre-authorization, denials, delays or adjudication of any kind cuts the costs of all the systems the insurance carriers spend to deny care.  Almost 12% of claims are denied originally.  Of those 70% are eventually paid. 65% of the denied claims are never resubmitted.  We suspect that 97-99% of all claims would be paid eventually, if practices and hospitals corrected and resubmitted the claims.   We submit that 97% to 99% of all claims would be paid eventually if practices and hospitals corrected and resubmitted them. It is far cheaper to absorb that 1% to 3% than to play the deny-and-resubmit game repeatedly on both ends.

The Slightly Longer Answer

A realistic healthcare overhaul requires rebuilding the technical and operational foundation of healthcare finance to strip power from lobbied cartels and restore market balance:

• Shift from Narrative Text to Discrete Data: The root cause of administrative bloat—and the primary moat of major insurers—is clinical documentation written in unstructured text, requiring legion-sized billing departments to translate notes into billable codes. Documenting encounters directly as discrete data allows the system to evaluate care rules instantly, eliminating the claim-denial and manual adjudication legacy insurers rely on.  With this data driven architecture we as the coverage company detect and pay for covered procedures in real time.
• Deploy Automated Health Coverage via Three Flexible Delivery Methods: Once clinical encounters are natively data-driven, automated coverage can be deployed without middleman lock-in, cutting system costs by about 65% and preventing corporate health systems from extracting excess revenues. Depending on the population, market, and employer needs, automated coverage operates through three distinct mechanisms:

1. Direct Universal Care (DUC): Eliminates revenue-cycle friction entirely for baseline population health, directly funding care delivery without setting up private paywalls or shrinking physician capacity.
2. Automated Direct-to-Provider Claims: Retains fee-for-service or capitated frameworks where needed, but processes and pays claims instantly at zero administrative cost via automated data validation.
3. Integrated Employer/Private Coverage: Allows private or self-insured plans to interface directly with clinical data inputs, eliminating third-party administrator (TPA) overhead while maintaining customized benefit designs.

• Break Up State-Protected Cartels: State legislatures must repeal Certificate of Need laws and lift cross-state licensing barriers to strip large hospital networks of their legislative monopolies. Removing rigid federal administrative mandates levels the playing field, allowing small independent practices to thrive without needing massive corporate compliance departments.
• Move Beyond Transparency Tools: Stop expecting patients to comparison shop in emergency rooms, specialized treatment settings, or anywhere else. They will not do it. Systemic reform must focus on eliminating the administrative revenue-cycle machine and breaking up lobbyist-backed monopolies, rather than shifting the burden of price discovery onto patients who already have enough on their plate.
• Move to Reference Based Pricing: Eliminate rate negotiations, and networks by paying 150% of Medicare to everyone all the time.

Conclusions

We have proved that government interference, fueled by intense lobbying from insurance conglomerates and high-revenue hospital systems, is one of the root causes of healthcare dysfunction. Naive market fixes like price transparency tools and boutique DPC retainers miss the target entirely. Public policy engineered this crisis by sanctioning corporate cartels, destroying price signals, and enforcing a bloated administrative regime that forces small hospitals, practices, and patients to subsidize corporate greed. True reform will not come from more regulatory patches or telling vulnerable patients to shop like retail consumers. It requires completely rethinking the system architecture: capturing clinical care as structured data, automating insurance operations to strip out middleman extraction, and leveraging all three delivery methods of automated health coverage to break up protected monopolies, protect independent medicine, and restore functional care delivery.

Remember, this is part eleven of a fifteen-part series on how businesses are mismanaged by leaders who were never trained in the intricacies of doing whatever it is that their company does.  That however is no excuse for basic incompetence.  We are demonstrating not only the problems of modern business, but real, viable solutions.

I will be putting out one or maybe two articles per week.  If you liked what you read or want to relate your personal experiences, contact us here, on our site, SentiaHealth.com, our parent company SentiaSystems.com, or send us an email to info@sentiasystems.com or info@sentiahealth.com.  By here I mean drop a comment below—feel free to tell me I’m a cotton-headed ninny-muggins—or reach out directly.