by The US has made great progress in insuring more people since the Affordable Care Act was passed in 2014. The share of uninsured Americans ages 18 to 64 fell from 18% before the ACA to 9.5% in 2022. And pre-existing conditions no longer prevent coverage or lead to a premium increase.
But even for people with health insurance, coverage does not guarantee access to care, let alone high-quality and affordable care. Research shows that 1 in 3 Americans seeking care report delaying or foregoing treatment due to the “administrative burden” associated with health insurance and the health care system, creating additional barriers beyond cost.
Some of these are basic tasks, such as scheduling appointments. But others involve strategies that health insurers use to shape the care their patients can receive — tactics that are often unpopular with doctors and patients alike.
In addition, more than 40% of Americans under age 65 have high-deductible plans, meaning patients incur significant upfront costs for accessing care. As a result, almost a quarter cannot afford healthcare, despite being insured.
As scholars of health care quality and policy, we study how the affordability and design of health insurance policies affect people’s health as well as their out-of-pocket costs.
We’d like to highlight five of the most common strategies used by health insurers to ensure care is medically necessary, cost-effective, or both.
At best, these practices ensure that appropriate care is provided at the lowest possible cost. At worst, these practices are too burdensome and can be counterproductive, depriving insured patients of the care they need.
Claim Denials
The claim denial strategy has received a lot of attention in the wake of the murder of UnitedHealthcare CEO Brian Thompson, in part because the insurer has higher denial rates than its peers. Overall, nearly 20% of Americans with coverage through health insurance marketplaces created by the ACA had claims denied in 2021.
While denials may be justified in some cases, such as if a particular service is not covered by that plan (representing 14% of denials within the network), more than three-quarters of denials in 2021 did not provide a specific reason. This happens after the service has already taken place, meaning patients will be billed for the full amount if claims are denied.
Although the ACA required standardized processes for filing claims, patients often do not understand or feel comfortable navigating an appeal. Even if you understand the process, navigating all the paperwork and logistics of an appeal is time-consuming. Income and racial disparities in pursuing and winning professions only increase mistrust among those already struggling to get adequate care and make ends meet.
Prior consent
Prior authorization requires healthcare providers to obtain prior approval from the insurer before dispensing a procedure or medication – under the guise of “medical necessity” and to improve the efficiency and quality of care.
While judicious use of expensive procedures and medications makes intuitive sense, in practice these policies can lead to delays in care or even death.
Additionally, the increasing use of artificial intelligence to streamline prior consent has come under scrutiny in recent years. This includes a 2023 class action lawsuit filed against UnitedHealthcare over algorithmic denials of rehabilitation care, prompting the federal government to issue new guidelines.
The American Medical Association found that 95% of physicians report that dealing with prior authorization “somewhat” or “significantly” increases physician burnout, and more than 90% believe the requirement has a negative impact on patients . Physicians surveyed by the association also reported that more than 75% of patients “often” or “sometimes” failed to follow recommended care due to prior authorization issues.
Physicians and their staff can handle an average of dozens of prior authorization requests per week, taking time and attention away from patient care. For example, in 2022, there were nearly two prior authorization requests per Medicare Advantage enrollee, or more than 46 million total.
Smaller networks
Health insurers contract with doctors and hospitals to form their networks, with the ACA requiring them to “provide adequate choice of providers.”
If a plan has too small a network, patients may have a hard time finding a doctor who will take over their insurance, or they may have to wait longer for an appointment.
Despite state supervision and regulation, the scope of the planning networks has shrunk significantly over time. Nearly 15% of HealthCare.gov plans had no in-network physicians for at least one of the nine major specialties, and more than 15% of physicians listed in the Medicaid managed care provider directories did not see any Medicaid patients . Inaccurate provider directories compound the problem because patients may choose a plan based on poor information and then have difficulty finding care.
Surprise billing
The No Surprises Act went into effect in 2022 to protect consumers from unexpected bills for care received out of network. These accounts usually have higher deductibles and deductibles that are typically twice as high as in-network care, as well as higher coinsurance rates.
Before that law, 18% of emergency room visits and 16% of in-network hospital stays resulted in at least one surprise bill.
While the No Surprises Act has helped address a number of issues, a notable gap is that it does not apply to ambulance services. Nearly 30% of emergency transports and 26% of non-urgent transports may have resulted in a surprise bill between 2014 and 2017.
Pharmacy benefits managers
The largest health insurers all have their own pharmacy benefit managers.
Three of those – Aetna’s CVS Caremark, Cigna’s Express Scripts and UnitedHealthcare’s Optum Rx – filled nearly 80% of the total prescriptions dispensed by U.S. pharmacies in 2023.
In addition to how market concentration affects competition and prices, pharmacy benefit managers are exploiting a loophole in the amount insurers must spend on patient care.
The ACA requires insurers to maintain a medical claims ratio of 80% to 85%, meaning they must spend 80 to 85 cents of every dollar in premiums on medical care. Drugs account for an increasing share of health care spending, and plans can keep that money within the parent company through the pharmacy benefit managers they own.
Additionally, pharmacy benefit managers inflate drug costs to overpay their own vertically integrated pharmacies, which in turn means higher out-of-pocket costs based on the inflated prices. Most pharmacy benefit managers also prevent drug manufacturers’ co-pay programs from counting toward patient cost sharing, such as deductibles, which extends the time patients pay out of pocket.
Policy objectives versus reality
Despite how far the U.S. has come in ensuring that most Americans have access to affordable health insurance, being insured is increasingly not enough to guarantee access to the care and medications they need.
The industry reports that profit margins are only 3% to 6%, yet the billions of dollars in profits they make each year can feel to many like a direct result of the daily struggle patients face to get the care they need to have.
These insurer tactics can negatively impact patients’ health and their trust in the healthcare system, placing patients in unthinkably difficult circumstances. It also undermines the government’s goal of providing affordable healthcare for all.
This article is republished from The Conversation, an independent nonprofit organization providing facts and trusted analysis to help you understand our complex world. It was written by: Monica S. Aswani, University of Alabama at Birmingham and Paul Shafer, Boston University
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Monica S. Aswani has received funding for the past three years from the National Institute of Allergy and Infectious Diseases and the Childhood Arthritis and Rheumatology Research Alliance. The views expressed in this article are those of the authors and do not necessarily reflect those of any funding agencies.
Paul Shafer receives research funding from the National Institutes of Health, Agency for Healthcare Research and Quality, Department of Veterans Affairs, and Office of Personnel Management. The views expressed in this article are those of the authors and do not necessarily reflect the positions or policies of these agencies or the United States Government.
