One in five Americans struggle with a mental health condition in a given year, yet many struggle with accessing health insurance coverage for its treatment. This chapter examines the ways that health insurance coverage denials and delays contribute to challenges with access to care. Though the Mental Health Parity and Addiction Equity Act is meant to ensure comparable treatment in physical and behavioral health care, its goals are not fully realized. Drawing on interviews with patients and mental health professionals, as well as state examinations into health insurers’ parity violations, this chapter highlights the myriad ways that this population may face particular uphill battles in securing coverage for needed treatments. What’s more, physician administrative burden may be particularly pronounced in this setting because psychiatrists are less likely to have staffing to assist with prior authorization. While the case of Wit v. United Behavioral Health highlights the large-scale nature of behavioral health denials, the time required to pursue class action litigation is often infeasible in the setting of a mental health struggle.

When Daniel spent years seeking diagnosis for his spinal cyst, he faced denial after denial and only felt compelled to fight his insurer because he had a family to support. Through survey and interview evidence, this chapter explores who is most vulnerable to being denied coverage by health insurers, and what accounts for these vulnerabilities. Highlighting the first patient-level analysis of coverage denials across public and private insurance, this chapter shows that those from marginalized groups – namely, women, LGBTQ patients, and those in worse health – are more vulnerable to experiencing coverage denials. Interestingly, though low health literacy might be expected to lead some patients to pursue care outside their insurance benefits, socioeconomic factors do not consistently correlate with greater vulnerability to coverage denial. This finding offers insights into the scope of defensive medicine amid medical malpractice concerns. Black and Hispanic patients appear to be particularly likely to experience repeated coverage denials, and, given the significant health literacy demands of appealing, patients from marginalized groups may be particularly ill-equipped to weather the storm.

Though coverage denials and delays impose on physicians and patients (especially marginalized patients) substantial administrative burden, the persistence of this practice is inevitable. Drawing on interviews with patients and former health insurance executives, this chapter reflects on harms caused by prior authorization and offers a menu of state and federal solutions to expand access to care, while also reflecting on how the 2024 election results impact their likelihood. A growing complication is major insurers’ increasing reliance on AI tools to process prior authorizations and claims in seconds. Though many states have sought to lessen prior authorization burden in targeted ways, this reach is limited because the Employee Retirement Income Security Act preempts state policies that “relate to” much of employer-sponsored health insurance. Despite some appetite for reform in Congress, legislative efforts have stalled. The 2024 election results signal a likely acceleration of America’s reliance on privatization (especially Medicare Advantage), so it is especially important to understand the impact of these managed care practices and ways to mitigate their burdens.

Health insurance barriers are a uniquely American experience arising from decades of political choices pushing the United States toward increased privatization of health insurance. Despite notably high health care spending, many Americans face coverage denials and delays, which are a little-discussed dimension of underinsurance. These coverage barriers arise out of managed care practices such as prior authorization, or required health insurer pre-approval for prescribed care. This practice proliferated as American health reform efforts accelerated reliance on privatization, in which health insurers seek to not only contain costs but maximize profits. Tracing the history of health reform and successive choices favoring managed care, this chapter shows that Americans’ everyday struggles with their health insurers are actually the product of intentional political choices that keep care out of reach. Assessment of medical necessity is likewise political and allows for insurer discretion that impedes patients’ access to care. However, rather than containing costs, prior authorization can ultimately shift costs from insurers to patients (especially marginalized patients) and their physicians.

Drawing on survey and interview evidence, this chapter explores the effect of coverage denials on patients’ health and economic security. Most Americans report an inability to pay an unexpected $1,000 bill, so, with notably expensive health care, denials can be devastating. Too often, when coverage is denied, patients abandon their treatments, a dynamic shown not only through physician surveys, but also through original survey evidence of patients, half of whom reported delaying or abandoning their prescribed care. Further, the people most likely to do so are typically Black or Hispanic or less affluent, and nearly half of patient respondents reported that their health condition declined. In fact, some patients may not survive at all. Marginalized patients are also more likely to postpone non-medical purchasing to accommodate unexpected health insurance barriers, suggesting the far-reaching consequences of prior authorization. The evidence shows not only that tools of managed care produce frequent coverage denials, but also that this practice shifts risk from insurers to patients, yielding new health and economic insecurities, especially for patients from marginalized backgrounds.

Administrative burdens from coverage delays and denials are hardly isolated to patients. In fact, physicians bear many of the costs of not only learning what is likely to be covered under their patients’ health plans, but also helping patients to appeal denials. This can elicit substantial frustrations because “peer to peer” processes are not closely regulated by states, such that cases are reviewed by physicians in inappropriate specialties. What’s more, prior authorization burdens can require substantial staffing to administer – staffing that less well-resourced practices may not be able to support. Thus, there are inequities not only in patient experiences of denials and their subsequent health care access, but also across medical practices, the effects of which can trickle down to their patients. Drawing on interviews with physicians across the country, this chapter highlights the ways that the tools of managed health care – while aiming at cost containment and guarding against overutilization – can lead to physician administrative burden, underprescribing to avoid further burden, and even contribute to the public health crisis of physician burnout.

The assassination of UnitedHealthcare CEO Brian Thompson generated nationwide discourse about delays and denials of coverage by private health insurers. Many denials are driven by managed health care practices such as prior authorization, or required insurer pre-approval for prescribed care. These denials can destabilize American patients, who are forced to endure a substantial “time tax” and administrative burdens of appealing, which some patients can more successfully navigate than can others. This book was also inspired by the author’s personal experience being denied coverage by a health insurer while conducting a postdoctoral fellowship, which highlighted that, even with academic fortune, these processes can be destabilizing to one’s financial, health, and emotional wellbeing. While scholars had examined administrative burdens and time taxes in the setting of navigation of government programs, this framework had not been extended to the setting of privatization, in which many of these barriers also can be identified and are highly consequential. This exploration of health and economic inequities driven by health insurance barriers and administrative burdens seeks to do just that.

It is difficult to know exactly how many coverage denials there are because the American health care system is notoriously fragmented. This chapter introduces a novel survey of 1,340 US adults, finding that 36 percent of respondents have been denied at least once, and typically experience multiple denials. Those in private health insurance experience denials to the greatest degree, which is consistent with private insurers’ cost containment objectives. Health care can be denied for any number of reasons, such as the lack of medical necessity, the absence of a required prior authorization, or an assessment that the care is experimental or investigational. Combining survey and interview evidence, the chapter highlights the destabilizing impact that denials – whether pre-treatment (as with prior authorization) or post-treatment (as with emergency care) can have on patients, whose trust in the health insurance system can be shaken. While prior authorization and other coverage denials can constitute important ways to guard against overtreatment in the American health care system, this chapter presents new evidence that managed care tools may overcorrect, instead denying appropriate care.

Delays and denials of health coverage are troubling in a country that underperforms across many health outcomes, but how do coverage denials impose a broader set of administrative burdens? Though KFF analyses highlight the number of denied ACA marketplace claims that are appealed, this chapter offers the first survey evidence of appeals and reversals at the patient level. Such an analysis helps to unpack not only the number of appeals, but also who appeals, and to what extent the admininistrative burdens of appealing are inequitable. Drawing on survey evidence, interviews with patients, and administrative data, this chapter shows how few patients understand they can appeal, and often they underestimate the odds of prevailing against health insurance giants. What’s more, not only are less affluent patients less likely to challenge denials, but also Black and Hispanic Medicaid patients and sicker patients are less likely to appeal successfully. That appealing – and doing so successfully – is so inequitably distributed offers new insights into the scope of this health policy problem and how it can deepen racial and socioeconomic divides in access to health benefits.

Every day, millions of Americans face barriers accessing prescription drugs because of delays and denials driven by prior authorization. Though this practice seeks to guard against runaway health care costs and unnecessary treatments, it can keep out of reach quite necessary drugs for common conditions such as diabetes and depression. Prescription drugs are a particularly important setting in which to examine this insurance practice not only because approximately two-thirds of American adults take prescription drugs, but also because this setting is astonishingly complex, placing heavy informational burdens on patients as well as on their physicians. This complexity is driven in part by each health insurer managing its own formulary, such that there is uncertainty about coverage whenever one changes insurers, with physicians often feeling as though they are prescribing in a black box. Drawing on interviews with patients and physicians, this chapter shows that discretion-laden medical necessity guidelines, coupled with formulary variation across insurers, can lead to treatment interruptions that exact a health and economic price for patients, especially those with fewer resources.

Health insurance does not work well when individuals have more information about illness than the insurer. Two problems arise as a consequence of this information gap. Moral hazard, which arises when individuals know more about their current needs than the insurer, generates an overutilization of care services. Adverse selection, caused by insureds having more information about future risk than insurers, leads high-risk individuals to buy high coverage (at a high premium) and low-risk individuals to buy lower coverage than optimal. This chapter covers these market failures and presents some evidence and thoughts about policies that have been used to reduce their negative effect, such as cost-sharing for dealing with moral hazard, and mandates and cross-subsidies for buying high coverage. I end by arguing that dealing with selection should not be a top priority.

This chapter reviews the potential use of cost-effectiveness (CE) analysis in health and health insurance management. The goal is to assure the supply of all medical services with positive benefits greater than cost and none with benefits less than cost. This method is sometimes unpopular in the US because it limits use of care with positive benefits but very high costs; however, the great majority of treatments studied are cost-effective by the usual standards for the dollar value of health improvements. It is shown than cost-sharing can make a service cost-effective. The relevance of the incremental cost-effectiveness ratio (ICER) model for the use of CE analysis by insurers is questioned.