The Full Costs of Our Health Insurance Maze

The news last December that UnitedHealthcare CEO Brian Thompson had been assassinated prompted both a collective processing of the shocking event and a nationwide discourse on health insurance barriers and the frustrations and suffering they cause.

Some decried the challenges of navigating the complex American health insurance bureaucracy—a process of prohibitive paperwork that has been characterized as a “time tax.” Others focused more squarely on how delays and denials of coverage have prevented them from accessing prescribed care.

As a scholar of health insurance barriers, I had seen many of these sorts of stories already through my survey- and interview-based research—and had lived through many such challenges myself.

When I first started as a postdoctoral researcher at UCLA’s Fielding School of Public Health, I had to establish my medical care with a new team of doctors. They ordered a handful of tests and facilitated my access to a costly medication by submitting for new prior authorizations—a process of seeking approval from health insurance plans before prescribing medications or treatments.

Along with the delay of one $400 test, the migraine medication I needed was, after much delay, ultimately denied. I was forced to cycle through less expensive off-label treatments that proved ineffective, leaving me with unmanageable migraines when I was trying desperately to focus on health policy research. On days that I had set out to do data collection, I found myself sidetracked with long hold times and then conversations with my insurer, and coordination between the insurer and my physician, much of which felt fruitless.

Instead of despairing for long, I reflected on the advantages with which I was nevertheless encountering these barriers to care: I have a doctorate, I am a native English speaker from the United States, I have a high degree of health literacy, and I have the job flexibility to manage long wait times and coordination during business hours.

My experience helped me to zero in on two core themes that would form the basis of my forthcoming book, Coverage Denied: How Health Insurers Drive Inequality in the United States.

First is the phenomenon of administrative burden, which University of Michigan scholars Pamela Herd and Donald Moynihan describe as the combination of learning, compliance, and psychological costs associated with navigating government programs. I had a hunch that this framework could extend to the private health insurance setting as well. The second core theme was equity: Patients from more marginalized backgrounds are less able to manage the health literacy demands and the precarity of being unable to secure coverage for prescribed medical care.

In a sense, what my book offers is an understanding of a different dimension of underinsurance. While underinsurance is typically conceptualized as inadequate coverage due to high cost-sharing (e.g., high-deductible plans), it can also be understood as inadequate coverage due to insurers’ coverage determinations, thus still leaving the patient poorly protected from heavy financial loss. The practice of selectively approving coverage largely rose to prominence with the growth of managed care and the dual concerns of guarding against overutilization and runaway health-care costs.

While underinsurance is typically conceptualized as inadequate coverage due to high cost-sharing (e.g., high-deductible plans), it can also be understood as inadequate coverage due to insurers’ coverage determinations, thus still leaving the patient poorly protected from heavy financial loss. The practice of selectively approving coverage largely rose to prominence with the growth of managed care and the dual concerns of guarding against overutilization and runaway health-care costs.

While some scholars have investigated the scope of prior authorization, and researchers at the Kaiser Family Foundation have done superb analysis of claim denials and appeals within Affordable Care Act marketplace plans—finding that 19 percent of claims are denied, but precious few (less than 1 percent) appealed—fewer studies have explored the demographic factors associated with denials, appeals, and the subsequent health and economic destabilization experienced by impacted patient populations. Such an analysis is critical not only to understanding the ways that these health insurance practices intersect with concerns about health equity, but also to seeing a broader picture of the patient experience.

That includes the learning costs associated with understanding the reasons for the denial or delay, how to appeal the insurer decision, and even knowing the right to appeal.

It includes the compliance costs of filing appeals and coordinating with the physician’s office.

And it includes the psychological costs of managing the stress and anxiety of navigating this health insurance system, often while also managing a health concern that causes some level of impairment.

Alongside this patient experience of administrative burden is the physician administrative burden of prior authorization administration, which the American Medical Association (AMA) has studied through a survey of physicians and connected to the broader problem of physician burnout. In fact, the AMA finds that physicians complete an average of 43 prior authorizations per week, often requiring dedicated staff to support.

The real-life impacts of administrative burden

To dig deeper into this subject, I conducted a nationwide survey of 1,340 US adults, through which I found that 36 percent of respondents had experienced at least one coverage denial, typically multiple denials. While patients from marginalized backgrounds did not appear to be systematically more likely to be denied, the effects of denials appeared to weigh more heavily on these populations because of the health literacy demands of navigating complex appeal processes.

In fact, I found that not only are there significant information asymmetries, with many respondents unaware of their ability to appeal and others underestimating the value of appealing, but less affluent patients are significantly less likely than their wealthier counterparts to appeal denials, and sicker patients as well as Black and Hispanic Medicaid patients are less likely to win their appeals. What’s more, less affluent and Black and Hispanic patients appeared more likely to postpone medical care as well as other daily life expenses in response to these denials, suggesting a broader destabilizing impact of this insurance practice, which can yield not only unevenly distributed administrative burdens but worse health outcomes.

What’s more, less affluent and Black and Hispanic patients appeared more likely to postpone medical care as well as other daily life expenses in response to these denials, suggesting a broader destabilizing impact of this insurance practice, which can yield not only unevenly distributed administrative burdens but worse health outcomes.

To supplement this survey research, I analyzed publicly available data on prior authorizations as well as external appeals—independent medical reviews that patients can seek after internal appeals have concluded—and conducted 111 semi-structured interviews with patients, physicians, former health insurance executives, health insurance lawyers, and others to shed light on the stories behind the data.

One patient, Samantha, was denied coverage for a lifesaving bone marrow transplant to treat her Still’s disease. “I feel like there’s a price tag on my life and I’m not worth their bottom line,” she said. Day after day, even from her hospital bed, Samantha would make calls to her insurer, doing her best to plead with them that the prescribed treatment was medically necessary. Again and again, her insurer asserted that it was experimental for her condition, and thus would not be covered. “These denials hurt my feeling of self-worth,” Samantha said. “I’m not ready to die.” It took over a year of struggle for her to ultimately get treatment. Samantha noted that there were advantages that helped her get to that point. “How is someone’s grandmother supposed to do this? How is someone with four children supposed to navigate this?” she said. “The deck is stacked against you at every single turn.”

In light of these hurdles, it is perhaps all the more striking that one insurer-employed physician who I interviewed said, “We’re told that denying things is okay because people can appeal.” It’s true that appeal processes are in place. But at what cost are they pursued?

As the nationwide discourse about private health insurance barriers has been eclipsed by existential threats to public health and democracy, it is unlikely that policy actions will be taken in the near future to mitigate these barriers to health care. If anything, we’re likely to see these challenges worsen if Mehmet Oz and architects of Project 2025 succeed in accelerating reliance on Medicare Advantage, or privatized Medicare plans. While traditional Medicare relies sparingly on prior authorization, 99 percent of Medicare Advantage enrollees have prior authorization requirements in their plans.

There are not easy answers, but there are answers. On the narrower end, proposed reforms have included the streamlining of prior authorizations to promote efficiency and mitigate delays. More boldly, there is the possibility of replacing front-end barriers to care with a system that audits prescribing outliers, as well as passing a Patient’s Bill of Rights, an effort that was unsuccessfully pursued in the late 1990s.

In the meantime, Samantha is persistent in ensuring that she gets the care she needs. “I learned from an early age, if you want to live, you have to be able to fight these battles. You have to have a level of literacy that is a master’s degree or higher. You have to get creative and look for back doors. But they couldn’t kill me when I was that far down. I’m going to find a way forward.”