Rationing by Inconvenience: How Insurance Denials Induce Administrative Burdens.

Abstract

How does the practice of health coverage denials keep care out of reach for American patients through the imposition of unevenly distributed administrative burdens? Despite increased discussion about wrongful coverage denials and prior authorization requirements in Medicare Advantage plans, little work has examined the impact of these denials for patients enrolled in different types of public and private insurance. I argue that the process of appealing insurers' denials imposes administrative burdens on patients in ways that are not equitable, deepening the divide between those with meaningful access to health coverage and those for whom benefits are kept out of reach. I conducted a nationwide survey of 1,340 U.S. adults on their experiences with coverage denials, supplemented with 110 semi-structured interviews with patients, physicians, and former health insurance executives. I find that those who are less affluent are significantly less likely than their wealthier counterparts to appeal denials of coverage. Patients who underestimated the rate at which patients prevail in insurance appeals are less likely to appeal their own denials. Black Medicaid patients and those who are in worse health are significantly less likely to prevail in the appeals they pursue. Many un-appealed denials are attributable to the significant administrative burdens associated with appeal, including the learning costs of navigating their insurance plan and the psychological costs of getting denials reversed amid time commitments and confusion about the denial. Administrative burdens associated with appealing denials of coverage can deepen health inequities along class and race lines, suggesting a need for policy interventions to make more accessible the navigation of the health insurance bureaucracy.