Introduction

On the way to my mother’s house for Easter dinner, I heard a rebroadcast on NPR from Stephen Dubner’s Freakonomics Radio. This was a two part series (Part 1 and Part 2) on “sludge” in business and government. By sludge, he means “red tape” or just anything that doesn’t need to be done that makes a process slow and inefficient. Today, we are going to discuss what we meant in the title of this article “You already have nationalized health insurance,” why we say this and what sludge has to do with it all.

The Sludge Problem

One of my friends, Reneé Chiea, is an experienced Compliance Director with a demonstrated history of working in the healthcare insurance industry. Skilled in Government, Medicaid, Medi-Cal, Healthcare Management, and Managed Care, she is a strong compliance professional with a proven ability to build and foster high-performance teams. She advocates for legislation that removes all the sludge. Her stance is that with the ACA and its “heavy handed government regulation” is the cause of our current healthcare crisis. She wrote the following especially for us today:

“Most people are familiar with the fact that after the Affordable Care Act (ACA) was passed there were a number of provisions in it that were immediately challenged in court as unconstitutional. The two most visible were the individual mandate, which required every person in the country to carry health insurance or suffer a steep tax penalty. The second was the creation of the Federally mandated healthcare “exchanges” and government control of the individual insurance market; coupled with the ACA requirement for states to expand their Medicaid programs to allow largely Federal government control of the program. Both were struck down at the Supreme Court as unconstitutional, but what did this do to the structure of the ACA?

First, the individual mandate was a cornerstone of the ACA idea, it required all people to carry insurance or be individually penalized. The idea was that a large number of those paying into the system would be healthy and not using the system; thus, allowing all the money to be used to support high end users of the system or people with “pre-existing conditions.” This was their solution to the problem that existed pre-ACA, where it was difficult to impossible for some people to get coverage. In a traditional insurance underwriting model this high risk status would certainly lend the price to be unaffordable by most people. We disagree that a public policy solution in America should be to penalize everyone to solve an issue for a small part of the population. The individual mandate was ultimately struck down which left a huge funding hole in the plan.

In a desperate attempt to fix this problem, the Obama Administration decided to allocate a large amount of taxpayer money to create the “subsidies” everyone is familiar with now in the exchange system. Since the Obama Administration could no longer force everyone to pay into the system with mandated coverage, they just simply took it out of the populace via taxes. The coverage mandate being struck down in the individual market, coupled with the higher risk of the population in this coverage has made this a financial epic failure. The only reason it hasn’t imploded more visibly is because of the insane amounts of money the government is throwing at it to keep it propped up.

The second issue was with the medicaid expansion and the Federal exchanges being struck down, which created a patchwork throughout the States of how these programs work. This has added unnecessary complexity to the health insurance market. Under Medicaid Expansion not only is taxpayers money used in a direct fashion in these programs, but the Federal government also pays directly for claims. Initially taxpayer money was used to cover 100% of claims for anyone who was covered under “medicaid expansion,” this has been stepped down to 80-90% of the claim. This is why blue states want to expand medicaid to people here illegally, and why they want to push for all states to expand medicaid. This is a numbers game, the more people on the system in any particular state, the more federal money that state can draw for that coverage. As the care is actually “managed” at the state level, if the state can draw more money then they ultimately pay out, then they can pad other medicaid programs or expenses with the difference. It costs them nothing, and they are de facto driving the industry into a government controlled system. All these “drawdown” schemes have been passed, enhanced, and expanded by all the “Omnibus bills” the Democrat party has used for over a decade, such as the more recent American Rescue Plan Act (2021) and the Inflation Reduction Act (2022). These bills allowed additional federal funding to be “drawn down” by States.

The other area we need to address is the commercial market. Traditional employer group insurance has been negatively impacted by this system as well. The initial list of “essential health benefits” (EHBs) mandated in the ACA has been expanded exponentially and continues to be at an alarming rate. Any benefit that is “mandated” for coverage in an insurance market is a direct cost driver to the system. The insurance companies now must do their financial analysis as though any person could seek that level or type of care, and some mandates are exceedingly expensive. Government has also saddled the commercial market with a litany of insane regulations and reporting requirements that drive the need for health insurers to employ whole teams of people to meet. These teams do nothing for the quality, accessibility, or direct delivery of care to members, but they do drive up cost for members and everyone.

Since the original passage of the ACA the government has slowly wiggled its way into the commercial market, to the point that they now control medical providers actions and decisions via the use of health plan contracts. The government puts requirements on the health plans that require them to demand certain things of their contracted provider networks (on threat of contract breaches) that could end in the provider being penalized financially or with other enforcement actions, until they comply. This has also expanded to the point that the government is openly directing health plans to contract with specific entities, use their products, buy their training, and train their staff and contracted providers of their direct choice.

The government reports that for fiscal year 2024 the US spent approximately $4.9 trillion dollars on healthcare. Roughly half of this amount is direct government spending for government programs, so half the system is directly nationalized healthcare already–about $1.9 trillion. The other portion is a mix of employer based plans, direct consumer spending, and a small amount of miscellaneous categories.

There is little room to argue that government run programs are NOT nationalized healthcare; as they DO control the cost markers they are willing to pay. In fact the amount Medicare sets for many services is used as a benchmark in discussions regarding cost of any payment of services (such as, “We pay 150% of medicare”). As to the other half in the commercial market, the industry is so heavily regulated it is laughable to call it a free market.

Commercial Health Plans are required to cover more and more services at zero cost share to the member, including services that previously would not have been considered “medically necessary”. They have restrictions and regulations on how they can set up their networks, they create tons of reports for government from claims to grievances and appeals and everything in-between. They do extensive analysis for a broad range of other reporting requirements that inform government, but have nothing to do with the direct cost of providing care to members. Not to mention the money health plans pay the government in taxes and fees for the privilege of being regulated by them, including reimbursing direct costs for audits, etc.”

It appears to me that Reneé has identified six things that are sludge:

A public policy solution in America that penalizes everyone to solve an issue for a small part of the population.
Medicaid expansion and the Federal exchanges being struck down, which created a patchwork throughout the States of how these programs work.
Federally Mandated Essential Health Benefits that artificially raise prices of everyone.
Government control of commercial markets to the point that they now control medical providers actions and decisions via the use of health plan contracts.
$1.9 Trillion in direct payments makes us almost half nationalized already.
Government restrictions, regulations and reporting that have nothing to do with care for insureds.

This is why healthcare in America is twice the cost everywhere else. Add in the profits, manual processes and cast of hundreds of thousands at each big payer, and you start to understand why we are here and how we got here.

What can we do about it?

The Solution

The solution, of course, is to vote out the government and vote in people who understand what is going on and who can listen to reason. We at Sentia CAN solve the healthcare crisis and we will demonstrate exactly how in a moment, but we need all the sludge removed either first, or concurrently with the rollout of our new product. In a nutshell, we propose to solve the problem by automating everything the health insurance companies do and save about half from the cost of health insurance. This 50% discount is only the portion that the patient pays and doesn’t include the $1.9 trillion detailed previously that could also be eliminated. The Department of Government Efficiency can cut all the jobs they like, but this is the way to truly curb government spending.

That means we eliminate the sludge.

After or while we are removing all the bureaucrats who got us into this mess, then we remove greedy, profit-above-everything, business people in charge of your healthcare. The Commonwealth Fund identified several problems in their paper “U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes” That basically boiled down to two problems:

Health insurance is too expensive
Patient education is largely ignored

When we address these two problems, we fix the US healthcare system.

The Concept

Health insurance companies have three inputs: a practice, a patient and a procedure, and one output: a check to the practice for the procedure performed. That is it. If we automate the process between the input and the output, then we have eliminated everything the insurance company does. The only other thing we will address is the way to educate and incentivize the patient on how to live a healthy lifestyle. That would result in fewer claims, causing reduced rates for everyone.

The Execution

We at Sentia have designed and developed a solution that completely automates health insurance. We provide the Electronic Medical Records (EMR) system to the practice, and when they document a patient encounter, we pull out the procedures performed and pay for them in real time. There are no networks, no adjudication, no denials, no medical coding, no big buildings, no people, no float and most importantly, little to no cost once the system is built. For this service we charge $10 per month plus the actual cost of the risk. Remember that we proved with their own documentation that your health insurance company only returns 46% at most, if all their systems are automated, of your premiums as benefits. We can return the 54% they waste to the patient, in lieu of the previously stated $10 per month, plus the actual cost of the risk. There are other efficiencies we will explain, and a way to manage chronic, behavior-based disease.

Patient Education

Also remember from our previous articles, that treatment for chronic, behavior based disease consumes 84%, or $4.1 trillion of the $4.9 trillion spent on healthcare each year in the US. The average of avoidable deaths per 100,000 in OECD countries is 225. In the US it is 335, or about 1/3 higher. If we could bring the US average down to the OECD average, we would save about $1.34 trillion. That is a further reduction in costs of about a quarter.

How do we do this? We offer financial incentives for people who live a healthier lifestyle as measured by our built-in health and wellness system. This system takes into account measurements taken at the primary care physician’s practice, like height, weight and blood pressure, plus things screened for in blood work. Additionally, there is a mental health screening right in the wellness package. This system looks at all these factors and then prescribes patient education based on the results. At Sentia, this is part of the system. We can tell when the patient opened the patient education and how long they spent reading it, and offer a small discount for simply doing so. A larger discount is offered for reading and following the education, as evidenced by better results in the patient’s health assessment.

The Finances

Let’s look at big round numbers. Let’s say we can save the patient about 50% on their health insurance up front. Let’s say that we save the people of the US another 25% by being educated about healthy living and getting to the average OECD deaths per 100,000. We know that eliminating medical coding, providing a free EMR to the practice and putting compliance and efficacy reporting into that system will save each and every practitioner an additional $77,000 or about 2% of the total. If we total all that up, we see more than 75% savings. That means that we would have not only the best healthcare on the planet but also the cheapest.

Conclusion

We have shown a way to save more than 75% from the cost of health insurance and have addressed both of The Commonwealth Fund’s two conclusions about health insurance in the US: cost and education. We have all of this written and deployed in a prototype application. The only thing we really need to get this all started is to clean up that application and turn it into an enterprise system with logging, administration and redundancies in hardware. We will need funding, probably about $10 million over the first year. For comparison, United Healthcare had revenue of $371.6 billion and net earnings of $22.3 billion in 2024. With about 50% upfront savings we should service and retain 90% or more of the 330 million insured people in the US. That gives us a revenue of $36 billion.

This figure shows that this is a viable business proposition.

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.2 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of more than 75% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable.

We Already Have Nationalized Health Insurance

4/21/2025 4:03 PM