The 8 Unbreakable Rules of American Healthcare (And Why They Make Us So Angry)

Have you ever been at a cocktail party, a professional dinner, or sitting with a new contact for coffee and wondered what on earth do I have in common with these people? Ask your fellow humans how they feel about the U.S. healthcare system. You’ll find an immediate kinship you never could have expected.

Everybody is angry about it. Nobody knows what to do about it. But we are all resigned to submit ourselves to it.

It’s a frustration that unites us across political and demographic lines. We perceive we are paying more into a system and receiving less value, and we are right. The system itself is an amalgamation of broken processes propped up by outdated workflows and misaligned incentives. And in a world where technology has streamlined nearly every other industry, a natural question arises: where are the innovators?

Faced with this massive, multi-trillion-dollar dysfunction, the tech world’s response is predictable: a cavalry of brilliant founders armed with disruptive solutions, convinced they can fix it. And almost all of them will fail. They will fail for a simple reason. Most tech founders believe the American healthcare crisis is a problem with the healthcare system.

But that’s the rub: it’s actually a customer problem, and solving it requires changing customer expectations first and navigating a broken system second.

This is the single most expensive, company-destroying mistake a founder makes when entering a regulated market: they become so obsessed with their solution that they fail to conduct the unbiased customer discovery required to understand the real problem. They fail to assess the landscape and accurately identify their stakeholders. This failure is then fatally compounded by a dangerous disregard for the regulatory environment. They believe the government is an obstacle to be circumvented, rather than a system to be understood and navigated.

If you want to see the wreckage, look at Papa, the eldercare startup. They correctly identified a real customer problem—loneliness in seniors—but in their pursuit of hockey-stick growth, they were blind to the systems problem. They scaled recklessly, hiring contractors to enter seniors' homes without proper training or background checks, creating a platform that allegedly exposed vulnerable people to abuse and neglect. Since many health insurance plans covered this service, which is in turn regulated by both state and federal jurisdictions, they invited a firestorm of government scrutiny and destroyed the trust of their partners. The guys at Papa aren’t bad people: they sought to solve a real social problem. But in doing so, they lost sight of the first principles in building with vulnerable populations: do no harm.

I regularly meet with innovative, technically minded founders and find that this attitude is prevalent across various industries, including housing, education, and finance. Industries that sell on the framework the Government built, owns, and regulates. Instead of thinking customer AND system, they default to sales and scale: “Why do I need to think about government?” or “We’re so small. This doesn’t matter,” or the cringe-inducing - “Yeah, sure we’d love to sell to the Government. Can you help us get a contract?”. In healthcare, the Government may not be your paying customer, but it is always part of your customer mix.

This is the fate that awaits innovators who view the world in terms of product and market fit, but who fail to consider the regulator on their roadmap or public law as a key constraint to be built into the product requirements doc.

Part 1: The Unbreakable Rules of the Game

To avoid becoming another cautionary tale like Papa, you must build your business with a clear understanding of the immutable laws of the American healthcare system. These are not assumptions; they are the rules of the game.

1. Most Americans get their health insurance through their job in what's known as an employer-sponsored model. Building for a single-payer model, or universal healthcare, is not where you should spend your time. Approximately 54% of Americans receive their healthcare through their employers, who are eligible for substantial tax credits for providing this benefit. In every major reform attempt, a primary concern among voters was losing the care that they already had and liked.
2. We will not move to a single-payer healthcare system model. Like it or not, this is a political reality. Building a business that requires a complete legislative overhaul of the system is not a venture; it's a fantasy.
3. Americans are getting older, sicker, and need more expensive care. By 2050, the number of Americans 65 and older will grow to 82 million, and nearly 95% have at least one chronic condition. This is the demographic wave the country is facing, and a significant part of why calls to rein in federal spending are growing louder. Simply put, the government cannot afford the cost of care at its current level for a growing population with fewer taxpayers to shoulder the burden. 
4. Americans do not have cash on hand to pay for their care out-of-pocket. A 2024 survey found that 37% of respondents cannot cover a $400 emergency expense. With the average cost of a self-pay Emergency Room visit hovering around $2,000, it’s no wonder 58% of Americans worry a medical event will lead to debt. If your innovation requires out-of-pocket spending, you are building for a market that doesn't exist for the vast majority of people.
5. Health insurance premiums will continue to rise.  According to the Kaiser Family Foundation, average family premiums have increased 22% over the last five years, consistently outpacing inflation and wage growth. This is a direct consequence of the rules below. Your business model cannot rely on premiums decreasing, and increasingly, consumers are seeing the consequences of this increase, with employers passing along the cost. 
6. Health insurance will continue to restrict the types of care it covers. As Americans age and become sicker, insurers face a fundamental choice: lower costs or increase revenue. This means they will constantly seek to renegotiate rates or find ways to reduce the cost of care, such as lowering the services covered. Your solution must align with their need to reduce costs, not add to them.
7. The cost of care will continue to rise. This is driven by labor shortages, new technologies, and a system that incentivizes volume over value. A solution that adds another layer of cost, no matter how innovative, is doomed from the start.
8. Americans do not comparison shop for their care. Data consistently shows that patients do not comparison shop, with a 2023 KFF poll finding that the vast majority of Americans are unaware of the cost of services before receiving them. The system is too complex and opaque. Founders who believe they can win solely based on price transparency, without addressing customers’ avoidance of the system due to its overwhelming cost and complexity, will fail. 

Part 2: The Grand Unifying Theory: Why Everyone Is So Angry

These rules don't exist in a vacuum. They combine to create the core paradox of the entire system—the grand unifying theory of why we are all so angry.

The American healthcare system is built on a fundamental paradox: we expect it to deliver a right, but it is structured to sell a commodity.

On one hand, Americans overwhelmingly believe that access to care is a fundamental right. We expect the system to be there for us in our most vulnerable moments, regardless of our ability to pay. On the other hand, the system itself—the hospitals, the insurers, the drug companies—is a for-profit marketplace. Every procedure has a price, every decision is shaped by incentives, and every interaction is a transaction.

This is where the tension is rooted. This conflict between our social expectation of a right and the market reality of a commodity is the broken value exchange fueling anger at a social level. It explains why we feel we are paying more into a system but receiving less value in return. Clinicians are trained to treat illness—to stop the bleed, stabilize the patient, and prescribe care. However, the system they operate in is not designed to produce "health"; it's intended to transact "healthcare." This is the intellectual puzzle we must solve.

Part 3: The Customer's Reality: How the System Shapes Behavior

This core paradox forces consumers into specific, often irrational, behaviors. Understanding these behaviors is the key to building a solution that actually works.

Responsibility has been dangerously outsourced. Insurance is a form of protection, not a substitute for basic health maintenance. However, people often do not view it as their responsibility to understand and manage their own health. The system encourages us to outsource our health, but not the consequences.

Expectations are completely misaligned. A friend of mine, a nurse at a teaching hospital, once recounted a story about an elderly diabetic patient who presented to the ER with severely overgrown toenails. The patient couldn't care for them, her family was unable or unwilling, and the situation required a podiatry specialist. When the ER staff explained they weren't equipped for this, the family became incensed, threatening to sue because the doctors couldn’t ‘just cut her toenails’. The patient left without the treatment they expected; their health was no better, and a toxic interaction exhausted the clinical staff. This is the system in miniature: a clash between patient expectation and the reality of specialized, emergency-focused care.

There is a fundamental payment disconnect. People do not view "healthcare" as something they should pay for out of pocket, but they do view being "healthy" as an optional, out-of-pocket expense. The analogy of health insurance being akin to homeowner's insurance illustrates this. Homeowner's insurance covers floods and fires, but what about when your light bulb goes out? Would you call your insurance or just buy a new bulb? What about if your dishwasher needs a new filter? This is why Americans will pay for a gym membership but balk at a co-pay.

Comparison shopping is a myth. Because the system is too complex and emotionally charged, people don’t know where to start understanding or comparing their options. I recently put this to the test myself when my doctor ordered an MRI. I reached out to every imaging center covered by my insurance, about four different companies. It was a mixed bag in terms of who was upfront about pricing, who required me to reach out to their ‘billing team’, and who just never got back to me. No prices were listed online, and not every office answered the phone or had staff available to provide a quote for billing. Some even threatened that by asking for the price, I was delaying treatment and asked, ‘Did I really want to do that?’.

The quotes I got for the same procedure were wildly variable:

• Hospital: $1400 out of pocket
• Outpatient Clinic 1: $855 self-pay
• Outpatient Clinic 2: $342 insurance co-pay
• Outpatient Clinic 3: $525 self-pay
• Radiology Clinic Broker: $471 self-pay

This isn't a market; it's a maze. And it will continue in perpetuity without intervention.

Part 4: The Founder's Opening: Where to Intervene

The gaps created by this systemic dysfunction are not just problems; they are opportunities for market entry. The most urgent gap—and the biggest opportunity—is the lack of care coordination. 

Primary care physicians do not offer care coordination unless it is part of a premium package that customers pay for, such as concierge care. The average person is left to navigate this hopelessly complex system on their own.

I learned this firsthand. For nine months, I lived with nonstop menstrual bleeding, debilitating cramps, and the constant fear of not being able to finish a lap swim, a long run, or even a coffee meeting. My primary care physician told me to find a specialist. Of the specialists I called from my insurance network’s list of providers, it was a 50/50 chance whether they were accepting new patients or still covered by my insurance. Hours of research ensued. I told myself it was perimenopause, a hand-wavy marketing buzzword used to describe anything going 'wrong' with women over 35. I knew women’s pain was notoriously hard to diagnose, so why bother?

I was fortunate to eventually find a doctor who demanded I expect more. She was the one who told me, "You don’t have to live like this". She took my pain more seriously than I ever did and became my navigator. She quarterbacked the diagnostic tests; her staff helped me navigate in-network and self-pay options, as well as the notorious maze of insurance prior authorization. With her team coordinating my care, I went from assessment to diagnosis to surgery in six weeks flat.

That experience—the difference between nine months of suffering and six weeks of focused action—is the value of care coordination. It is a multi-billion-dollar opportunity hiding in plain sight.

This is my focus. While my goal is to develop novel business models across various markets, including housing and care, healthcare is the epicenter of the financial volatility plaguing American families. As I’ve written before, unexpected costs in these core areas create the economic instability that pushes families to the brink. It is my mission to find founders who see that a better life for Americans lies in leveraging technology to mitigate this volatility. It’s about fixing the broken markets that are eroding Americans’ ability to achieve financial stability. With medical debt cited as a leading contributor to bankruptcy, the dream of homeownership, savings, and security is becoming impossible for millions.

The framework I've laid out isn't for everyone. Many founders, driven by the hype cycle of growth at all costs, will view this systemic complexity as a distraction from building their product. They will continue to believe government is an obstacle to be circumvented, rather than a system to be understood. They are the ones destined to repeat the mistakes of companies like Papa.

But a select few will recognize this perspective as the foundation they've been missing. These are the mission-driven founders with the product sense to create real value for society and the capitalist bent to build something that scales. They understand that in a regulated market, the government is always part of your customer mix, even when it's not your paying customer. My work is to partner with these founders—to apply this systemic understanding and build the novel business models that win. If you are building a company designed to solve the real customer problem, not just the obvious one, then we should talk.