The administrations new ACA rules encourage health insurers to offer loans for medical bills instead of addressing the soaring out-of-pocket costs driving Americans into debt.
Most Americans are familiar with UnitedHealth, the largest private health insurer in America – if not because the corporate giant provides their medical coverage, then because of the massive publicity when the CEO of its key subsidiary was assassinated on a Manhattan street in December 2024.
The shooting of Brian Thompson also sparked a nationwide debate over Big Insurance practices, after many came forward with horror stories about their denied claims for urgent medical care or other bad health insurance experiences. Yet there is one thing most Americans do not know about UnitedHealth: It also has a bank.
But a number of physicians did know about Optum Financial by the spring of 2025, and they were not happy. Some doctors said their practices had been forced to borrow money from Optum to deal with a crippling cyberattack on the medical payments system, and Optum then pressured them to quickly repay the money. One New Jersey specialist in pediatric neurology and neurosurgery told The New York Times: “Optum, in my opinion, is acting like a loan shark trying to rapidly collect.”
Now, financially pressed U.S. families might learn what it’s like to owe money to Optum, under a new plan from the Trump administration.
With out-of-pocket medical costs for Americans skyrocketing, new guidelines for the Affordable Care Act marketplace suggest that insurers begin offering loans to patients with sky-high deductibles and unexpected large medical bills, a loan that presumably would be repaid with interest.
“We note that multiyear and 1-year catastrophic plans may be able to offer relief from the high deductible and maximum annual limitation on cost sharing through other mechanisms,” reads the final rule. “For example, issuers of catastrophic plans could consider financing the deductible by providing enrollees a loan.”
Experts say the ACA rules for 2027 and 2028 from the Centers for Medicare & Medicaid Services reveal the administration’s focus on expanding consumer choice and reducing federal outlays while ignoring the core issue: higher out-of-pocket costs.
“They’re putting a lot of stock into the idea that people really want these extremely, extremely high deductibles and out-of-pocket costs,” said Katie Keith, director of the Center for Health Policy and the Law at the Georgetown University Law Center. “And so they’re coming up with all these attempts at workarounds, including things like making your insurance company your bank.”
The New York Times noted that UnitedHealth, with its Optum financial unit, is the one large insurer that’s already equipped to offer loan packages to patients who can’t afford their bills. In addition to its controversial program of loans to physician practices, Optum’s bank currently offers government-approved Health Savings Accounts, or HSAs, which allow patients to set aside pre-tax earnings for future medical bills. A UnitedHealth spokesperson wouldn’t comment to the Times on the new ACA rules.
It’s understandable why the Big Insurance icon wouldn’t be eager to weigh in on a concept that will only fuel consumer anger over the increasing unaffordability of health care. U.S. Rep. Shontel Brown, an Ohio Democrat, weighed in on the Trump administration scheme on the social media platform X by noting this would “supercharge medical debt.” She added: “This could ruin people’s finances, while creating a financial incentive for insurers to deny coverage.”
Indeed, a 2025 report from the health-policy organization KFF found that UnitedHealth had – along with two Blue Cross Blue Shield affiliates – one of the nation’s three highest rates of claims denials for its ACA Marketplace policies. Its reported denial rate of 33% was nearly double the overall national rate of 19%. Now UnitedHealth – which posted more than $12 billion in profits in 2025, the highest of the nation’s insurers – could make even more money from denying claims or raising deductibles and offering loans.
The crisis of high out-of-pocket medical costs in America has been spiraling rapidly since the Trump administration and the Republican-controlled Congress rejected extending enhanced federal subsidies that had made coverage under the ACA, or Obamacare, reasonably affordable.
For millions of Americans, the end of those subsidies – with some consumers getting 2026 monthly premium bills that have more than doubled – has meant shifting to the lowest level of Bronze ACA plans, which come with high annual deductibles. This will mean thousands of dollars in bills for an unexpected major illness.
The soaring premiums have also seen many families joining the growing ranks of the uninsured. One early analysis from KFF predicted that as many as 5.5 million Americans – or about 25% of the peak enrollment – will have dropped their ACA insurance by the end of 2026, The new negative aura around health insurance – higher premiums, higher-out-of-pocket costs for those choosing inferior plans, or those without any coverage at all – is behind a recent report that about one-third of all Americans are cutting routine expenditures or even skipping meals to deal with their rising doctor bills and drug costs.
Instead of continuing the subsidies that had brought a steep rise in ACA enrollment earlier in the decade, the Republican-led government insists it is addressing the growing affordability crisis with new options that dangle lower premiums with the much greater risk of painful out-of-pocket costs in an emergency.
The government’s new ACA rules for 2027 increase the number of people who’d be eligible to buy so-called catastrophic plans that might defray costs for an extreme medical emergency but put consumers on the hook for the costs of most doctor visits or prescriptions. This is on top of new rules that will allow insurers to raise deductibles for the third-tier Bronze plans to $15,600 for individual coverage or $31,200 per family.
The Trump administration hoped to boost catastrophic plans to spike their enrollment as high as 3 million Americans, but Louise Norris, the longtime expert who writes for Healthinsurance.org, noted that a variety of factors have prevented any surge in customers for these high-deductible plans. In some states, she noted, premiums are actually lower for the Bronze plans, and this year, only about 67,000 people have signed up for the catastrophic plans.
Norris said the Trump administration’s idea for insurance-company loans is “that you can pay back that deductible over time, [but] I’m not sure that would really offset those other factors in terms of making those plans appealing.” She added that, “if you don’t qualify for subsidies, and you’re looking for the cheapest plan you can get in a lot of areas, that’s actually going to be a Bronze plan.”
So the government seems determined to make catastrophic insurance popular when American consumers don’t really want it.
Instead, the various schemes in the new ACA rules for 2027 and beyond – pitched with a notion of offering consumers more choices instead of the cost relief that Americans need – are projected to cost a whopping $1.3 billion annually, while it’s projected that two million more people will likely drop their ACA coverage because of the expense.
While the Trump administration and its GOP allies on Capitol Hill own this current crisis, Democrats need to acknowledge their own complicity in the situation.
Democrats in the past have bent to insurers’ demands to make sure all the health plans offered in the ACA marketplace have cost-sharing requirements of some amount and also to allow the out-of-pocket maximum to be unaffordably high for most Americans – especially for people with chronic conditions and those with low incomes.
This year’s midterm election is an opportunity for candidates to promise that health care affordability will be a priority. The centerpiece of such an agenda should be lowering the outrageous out–of-pocket maximums. The Lower Out of Pockets NOW coalition, which I founded, supports a bill sponsored by Massachusetts Democratic U.S. Rep. Jake Auchincloss to extend the Biden-era Medicare prescription drug yearly out-of-pocket maximum of $2,000 (rising to $2,100 this year) to people enrolled in ACA marketplace plans.
Some states already offer innovative cost-control plans. For example, Massachusetts now requires issuers of individual coverage and fully insured group coverage to limit increases in the enrollees’ out-of-pocket costs to the Consumer Price Index inflation rate for the Boston area. For 2027, the cap will be 3.6%. The covered expenses include plan deductibles, copayments and coinsurance bills.
When the idea of loans from insurers like UnitedHealth was reported in The New York Times, an attorney commented on social media that “it’s hard to top this level of dystopia.” This is a wake-up call to focus on the real pathways to affordable health care.
A federal watchdog is renewing the debate over whether private insurers are overutilizing prior authorization to delay patient careNew polling shows how the Trump administration’s approach to health policy could impact the midterm electionsDrugmakers are tweaking GLP-1 formulations, showing that industry still views the drug category as a revenue winner It’s a sweltering day in Washington, and yet Health Brief persists.
Medicare Advantage, operated by private insurance plans, has come under scrutiny. (Jenny Kane/AP)
The Lead Brief:
A new report from a federal watchdog found that three of the nation’s largest Medicare Advantage insurers routinely denied requests for post-acute care services, which could intensify scrutiny of prior authorization practices in the rapidly growing program.The Office of Inspector General for the Department of Health and Human Servicesexamined more than 2,000 prior authorization decisions made in June 2024 by Aetna, UnitedHealthcare and Humana.→ That’s the subject of the latest report from The Post’s Christopher Rowland.The OIG focused on services often needed after a hospital stay, including long-term acute care hospitals and inpatient rehabilitation facilities. Delays or denials can leave patients stuck in hospitals longer than necessary or without access to specialized recovery services.The report found denial rates for long-term acute care hospitals ranged from 70 percent to 80 percent, while denials for inpatient rehabilitation services exceeded 50 percent across all three insurers.
Why it matters:
More than half of Medicare beneficiaries — roughly 35 million people — are now enrolled in Medicare Advantage plans, giving a handful of insurers enormous influence over access to care.“As enrollment in Medicare Advantage continues to grow, so does the urgency and importance of ensuring that [insurance companies] are delivering on the value that the federal government pays them to provide,” the OIG report said.Complaints about Medicare Advantage coverage denials are nothing new, but the report underscores the potential impact they can have.The Centers for Medicare and Medicaid Services, which oversees the Medicare Advantage program,has been working with insurers over the last year to scale back their use of prior authorization.
What to watch:
The report could add fuel to several legislative proposals on Capitol Hill that would require insurers to submit more information about claim denial rates and, for Medicare Advantage plans specifically, additional encounter data related to patient care. The OIG report found for-profit Medicare Advantage organizations denied coverage more frequently than nonprofit plans, a pattern investigators said suggests financial incentives may play a role in utilization management decisions.→ But the report’s data predates pledges that private insurers have made to decrease use of the practice for all consumers. Companies have reported early progress in reducing prior authorization for many services.“This report reflects data from 2024. Since then, health plans have voluntarily eliminated roughly 6.5 million prior authorizations across markets — including more than 15 percent in Medicare Advantage,” said Mary Beth Donahue, president and CEO of the Better Medicare Alliance.Insurers also pointed to previous findings, including ones from the HHS watchdog in 2018, that raised concerns about whether many inpatient rehab facilities met Medicare’s standards or were providing unnecessary care that ultimately harmed patients.“The reports ignore serious, well-documented concerns about wide variations in the cost and quality of post-acute care and skilled nursing facilities,” said Chris Bond, a spokesperson for insurance industry group AHIP.BUT WAIT, THERE’S MORE→
A companion report issued by the OIG also renews scrutiny of insurers’ use of contractors to conduct prior authorization reviews. Investigators found a UnitedHealth Group subsidiary, formerly known as NaviHealth, denied nursing home care more frequently than insurers themselves or other vendors. The subsidiary, which rebranded to Home & Community Care in 2024, has allegedly used an algorithm to determine care needs. The OIG report doesn’t mention the reported algorithm usage. UnitedHealth Group has maintained that coverage decisions are always made by a human, thereby rejecting claims that the algorithms led to improperly denied care. However, the claims are at the center of an ongoing lawsuit filed by the families of deceased Medicare Advantage patients. The inspector general is urging CMS to take action to ensure plans are not improperly denying care. CMS officials told Christopher the agency is examining insurance denials by collecting data through a pilot program and conducting audits. The agency added that it “will continue using its full range of oversight and enforcement tools to identify potential issues, hold plans accountable and strengthen program integrity while protecting beneficiary access to care.
In today’s issue:Hospitals are facing simultaneous payment cuts, new oversight and transparency proposals as policymakers look to rein in health care spendingDemocrats are making the GOP’s tax-and-spending law a centerpiece of their midterm messaging as Republicans pivot to selling its tax cutsA federal judge temporarily blocked Colorado’s first-in-the-nation prescription drug payment cap, handing Amgen an early win… and more.Happy Monday, and welcome back to Health Brief. Hope everyone had a relaxing holiday! Congress isn’t here this week, but the health policy world is showing no signs of slowing down. So let’s get into it. What do you have on your radar?
Speaking of the $900 billion in impending cuts to Medicaid: The One Big Beautiful Bill Act was supposed to be a crowning legislative achievement for Republicans to tout while campaigning in the midterm elections. Among other things: It prevented massive tax increases for most Americans and established a program that allows parents to open investment accounts for children born during President Donald Trump’s second term and receive $1,000 from the government. But the legislation has emerged as a central talking point for the Democratic Party, with congressional Democrats mentioning the law twice as often as Republicans, report Matthew Choi and Clara Ence Morse in The Washington Post newsroom. Democratic candidates are deriding it as the “Big Ugly Bill” and linking the changes it brought to Medicaid and food assistance programs to voters’ anxieties about the cost of living. Republicans, meanwhile, have largely retreated from talking about the law by name, instead opting to emphasize the tax savings and other proposals. Democrats assert that the shift is a sign of the Republican Party’s acknowledgment of the law’s low overall approval. “I don’t care what you call it. It’s what delivers for America,” House Republican Conference Chair Lisa McClain (Michigan) told my colleagues.
Read the full story: “Democrats invoke ‘big, beautiful bill’ far more than Republicans as midterms near. ”INDUSTRY RXA federal judge temporarily blocked Colorado from enforcing a state-set payment cap on a pricey medication for autoimmune disorders called Enbrel, siding with Amgen, the company that makes it, while the lawsuit moves forward. The case centers on whether Colorado’s Prescription Drug Affordability Review Board has the authority to limit what can be reimbursed for a patented drug. The board had determined that Enbrel was unaffordable and set a maximum payment level at roughly 70 percent below Amgen’s wholesale price. The judge found that Amgen is likely to win because an earlier federal appeals court ruling says states cannot impose price caps on patented drugs if doing so conflicts with federal patent law. The court said Congress — not individual states — gets to decide how to balance affordable drug prices with the financial incentives that patents provide for developing new medicines. The judge also agreed that Amgen could suffer “significant harm” if the cap took effect, including weaker negotiating power with wholesalers and contracts that would be difficult to undo later. It rejected the state’s claims that any harm was balanced by carveouts in the law, such as the payment limit applying to employer-based plans. “This is an argument about the scope of damages, not their existence,” the judge wrote.
Why it matters: States across the country have been setting up their own Prescription Drug Affordability Boards (PDABs) in an effort to try and rein in drug costs. Some act as advisory panels that develop policy, while others — including Colorado — are able to set upper payment limits. Enbrel’s price cap became the first in the nation, proving to be a test for other PDABs nationwide.The boards’ overall effectiveness and ability to lower medication prices in the states in which they’ve been established has come into question and became one of the reasons Democratic Gov. Abigail Spanberger (Virginia) vetoed bipartisan legislation to set up a PDAB in the state.“Drug manufacturers took a huge sigh of relief from this decision,” Andrew Twinamatsiko, a director of the Center for Health Policy and the Law at Georgetown Law, tells me.For now, Colorado cannot enforce the payment limit for Enbrel while the lawsuit continues. The ruling does not decide the entire case, but it pauses the state’s price cap until the court reaches a final decision.
What’s next: The court leans on a federal ruling that struck down a pharmaceutical price gouging law in Washington D.C., but Twinamatsiko said that structure of the law — which utilized international reference pricing — is different from how Colorado’s PDAB operates and “there are creative ways” the state could differentiate the two legally.
This week we’re highlighting a trio of stories that shed new light on issues An Arm and a Leg has been tracking closely:
A sharp investigation from our partners KFF Health News on who’s actually filing medical debt lawsuits.
How one state is cracking down on aggressive medical credit card marketing.
Some new, encouraging data suggesting more seniors can afford their medications.
Let’s go!
In at least one state, doctors are now suing patients more than hospitals are
One of the most perplexing realities we’ve come across while reporting on the U.S. health care system (and there are MANY) is this: Hospitals routinely sue their patients over medical debt, yet recoup very little money in the process. So why do they bother?
In fall 2023, we published a two–part investigation with Scripps News and The Baltimore Banner digging into that question.
Since then, we’ve been tracking efforts by advocates, lawmakers, and federal agencies to rein in the most aggressive medical debt collection practices — like destroying a patient’s credit, garnishing their wages, or foreclosing on homes.
And now, in at least one state — Connecticut — KFF Health News and the CT Mirror found that public pressure persuaded many hospitals to stop suing patients over medical debt altogether. Cool!
And recent legislation targeting aggressive medical debt collection practices doesn’t cover non-hospital health care providers. Neither do medical debt protection laws in most other states.
As one Connecticut state senator put it, lawmakers will need to to “go bigger if that’s where the heart of the matter is.”
On a brighter note, Connecticut has passed another law looking out for people facing medical debt…
New rules around CareCredit and other “medical” credit cards
Last week, Governor Ned Lamont signed a bill limiting the aggressive and confusing marketing of medical credit cards inside doctors’ offices and veterinary offices.
Connecticut joins California, Illinois, and New York in passing laws to protect patients from these financial traps.
Health care providers are increasingly pushing medical credit cards as an alternative to in-house payment plans. CareCredit, the biggest player in the field, says these cards are accepted at more than 285,000 locations, including many hospitals.
The appeal for providers is pretty straightforward: Outsourcing billing to a third party reduces administrative burden.
According to Patricia Kelmar, senior director of health campaigns with PIRG, patients frequently don’t understand what they’re agreeing to — whether they’re handed a form at the front desk or an iPad in the exam room.
“It’s just not the place to be looking at terms and conditions,” she says.
As we covered in a previous First Aid Kit, those terms and conditions usually include something scary: deferred interest. In most states, medical debt tied to medical credit cards also isn’t protected by the same consumer laws that cover regular medical debt — New York being the notable exception.
Connecticut’s new law adds meaningful friction that could make it harder for patients to sign up for something they don’t understand:
Health care providers can no longer submit or help fill out applications on a patient’s behalf.
Provider logos are banned from credit card marketing materials, making it clearer the card isn’t affiliated with the doctor or hospital.
Providers can’t charge these cards for services covered by Medicaid.
Kelmar, who’s collecting stories from patients, says it’s a step forward — and a pretty unlikely one, given that Synchrony Financial, which operates CareCredit, is based in Stamford, CT.
Apizza, anyone?
A law from 2022 is making a real difference for seniors
A new study in JAMA finds that legislation capping out-of-pocket prescription costs for seniors has helped many stay on top of their medications.
And, as Undark explains, those good results may be only the beginning. The law was only beginning to phase in during 2024; the full out-of-pocket cap took effect in 2025, and the study’s authors expect even stronger results to follow.
The Trump administration has announced that it will significantly expand access to so-called catastrophic health insurance plans, which are policies with comparatively low monthly premiums but deductibles so high they often leave families effectively uninsured until a medical crisis strikes. CMS described the move as giving Americans “flexibility” and improving access to “affordable healthcare coverage.” But what I call them are “junk plans”.
Back in October, I warned that these plans (often called short-term, limited-duration insurance plans, or STLDIs) were poised for a comeback as enhanced Affordable Care Act subsidies expired and millions of Americans faced sharp premium increases. Well, now these plans are, in fact, a reality.
The Affordable Care Act outlawed most of these junk-style plans because the law requires insurers to cover health care services people need, including prescription drugs, hospitalization, mental health care and maternity care. The ACA also forced insurers to spend most premium dollars on medical care instead of executive compensation, advertising and shareholder returns.
But the ACA never fully solved the deeper affordability crisis in American health care. Premiums have steadily become much too high. Deductibles and other out-of-pocket requirements have put care out of reach for millions as insurers have continued to shift more costs onto patients while simultaneously becoming larger, more powerful and more profitable. The shortcomings of the ACA and the decisions by the President and congressional Republicans have created the perfect opening for catastrophic plans to return.
Affordability’s all the buzz, but Trump’s sweeping payment rule emphasizes consumer choice over cost control.
When families are staring at monthly premiums they can no longer afford, a cheaper option — even one loaded with massive deductibles and coverage gaps — starts looking attractive. That is exactly what insurers are counting on.
In my old job at Cigna, I helped market plans like these. In my book Deadly Spin, I called them what they often really are: “the illusion of coverage.” These policies were designed to look like insurance while minimizing the likelihood insurers would actually have to pay significant claims. Companies like UnitedHealth Group and other insurance and health care conglomerates make enormous profits on catastrophic-style plans because the deductibles are so high and the restrictions so extensive that relatively few claims ever get paid.
Supporters of these plans frame them as “consumer choice.” But choice is a misleading word when many Americans are being financially cornered into skimpier coverage because comprehensive insurance has become unaffordable. People do not think they will get cancer before it happens. No one expects a devasting car crash or for their kid to come down with a confusing illness. The danger with junk plans is that people undoubtedly only discover how weak their coverage is after their lives have already been turned upside down.
And so, both parties in Washington deserve criticism. Republicans are now openly expanding access to catastrophic-style plans. But Democrats also bear responsibility for defending a post-ACA system that still leaves millions of Americans underinsured and financially exposed. Expanding coverage was enormously important. But coverage alone is not enough if using that coverage can still bankrupt you. We need a comprehensive update to the consumer protections in the ACA – expanding junk insurance is not that – and Republicans know better.
The real danger now is that America slowly normalizes a health care system where people are expected to carry insurance cards that offer little meaningful protection until disaster strikes. Once that becomes acceptable, legitimate insurance and junk insurance become indistinguishable.
There are a lot of eye-popping statistics that capture the burden high health care costs put on so many Americans. Nearly three in 10 adults say they have problems paying medical bills. More than 40% say they skip medications because of the cost.
The stat that always stops me in my tracks is the fact that Americans have nearly $200 billion in unpaid medical bills in collections,according to one recent estimate. The average consumer facing collections in 2020 had more medical debt than all other sources of debt — credit cards, phone, utilities — combined.
“If a debt collector is calling you up or is knocking on your door, more than half of the time, it’s for medical debt,” said Neale Mahoney, a Stanford University economist and one of the nation’s leading scholars on medical debt.
Mahoney has spent two decades studying the scale of the country’s medical debt problem, as well as the effectiveness of policies intended to relieve people’s medical debt. From 2022-2023, he worked in the Biden administration on regulations to remove unpaid medical bills from people’s credit reports.
We talked with Mahoney about the fate of those regulations under the Trump administration, and what we’ve learned about the best way to protect people from getting medical debt in the first place.
Here are a few of the takeaways:
The Trump administration is rolling back Biden’s regulation of medical debt. Credit agencies sued to prevent the federal government from banning overdue medical bills from credit reports, and the White House declined to defend it. New guidance under Trump also challenged state protections for medical debt.
Nonprofits — and some local governments — have paid off medical debt for millions of Americans, in hopes of easing stress and improving people’s health. Mahoney’s research points to bigger improvements in health outcomes for patients who got debt relief sooner rather than later. One recent study showed patients who got their bills cleared within a few weeks of getting care were more likely to get diagnosed and treated for heart disease and diabetes than those who didn’t get help. However, an analysis of people who had their debts wiped after carrying them for years found no improvements to self-reported physical or mental health.
Mahoney believes helping patients avoid medical debt through health insurance or hospital financial assistance, which wipes out some or all of a patient’s bill, is the most effective approach. Many people, however, struggle to take advantage of either due to obstacles like restrictions from insurers and extensive applications to get help from hospitals. Patients caught up in what Mahoney has dubbed “the annoyance economy” often end up in money-losing fights. “For too many of us, navigating the U.S. health care system can feel like a second job,” Mahoney said, “at the precise moment when we don’t have the time and energy to take on a second job.”
One promising option to prevent people from falling into medical debt, Mahoney said, is for hospitals to auto-enroll eligible patients for financial assistance — a process known as “presumptive eligibility.” California, Illinois, Oregon and North Carolina have adopted auto-enrollment requirements for hospitals, and more states are considering it. “I would be eager to see hospitals working on this and sharing best practices,” Mahoney said, “so that we can provide relief to people who need it while still recovering payments from people who can afford it.”
One of those reasons is the growing number of states looking to require hospitals to auto-enroll patients in financial assistance programs. I’ve been reporting on this idea of presumptive eligibility for years, and for the last few months, I’ve been working on a special series diving deep into the pros and cons of forcing hospitals to provide more charity care. Those stories will drop this fall.
Findings from the Commonwealth Fund 2025 Affordability Survey and Focus Groups.
U.S. adults with private insurance are anxious and frustrated about getting and paying for the care they need through their health plan. One of patients’ main concerns is uncertainty about whether their insurer will cover a health procedure or prescription drug that their doctor says they need, particularly for a serious medical condition.
Insurers can deny coverage for a variety of reasons. For example, they might deem a treatment or procedure to be medically unnecessary. Payment can also be denied for care delivered by an out-of-network provider, or for services the plan simply doesn’t cover. Administrative or billing errors can also trigger a denial.1
In this brief, we report findings from the Commonwealth Fund 2025 Affordability Survey on patients’ and families’ experiences with insurance coverage denials. We pair these findings with those from focus groups on the same topic. We examine experiences with two types of denials: those that occur before care is received, which we refer to as prior authorization denials, and those that occur after care has been provided, which we refer to as claim denials.
SSRS interviewed a nationally representative sample of 6,353 adults ages 19 to 64 from July 22 to October 27, 2025. Our analysis focused on 4,589 respondents with private insurance, either through an employer or the Affordable Care Act (ACA) marketplaces and individual insurance market. To gain a deeper understanding of people who experienced coverage denials, SSRS also conducted eight online focus groups with a total of 45 privately insured adults across the United States. To learn more about the survey and the focus groups, see “How We Conducted This Survey.”
Highlights
Experience with denials: One in five (21%) U.S. working-age adults with private insurance reported that they or a family member had experienced an insurance company denial of coverage for medical care recommended by a doctor in the past year, either before or after the care was provided.
Treatment delays: Forty-one percent of people who experienced a prior authorization denial said it led to a delay in medical care, and more than a quarter (28%) said a health problem got worse because of it. More than 60 percent said the denial caused worry and anxiety.
Out-of-pocket costs and medical debt: Among people who experienced a claim denial, nearly 70 percent said it cost them or their household more money. More than two in five (43%) adults who experienced a claim denial reported that the denial led to medical debt that they are still paying off.
Appeals: Only about half of those who experienced a denial appealed the decision, citing uncertainty over their right to do so and whether it would make a difference if they did, as well as confusion about who to contact.
We asked U.S. working-age adults with private insurance coverage if their insurance, or the insurance of a household member, denied coverage for recommended medical care. One in five (21%) working-age adults reported a coverage denial in the past year for a health care service recommended by a provider, either their own or that of a family member. Thirteen percent reported a prior authorization denial, 8 percent reported a claim denial, and 1 percent experienced both a prior authorization denial and a claim denial.
In focus groups with people who reported having a prior authorization or claim denial, participants reported that coverage denials, and the process of challenging them, often had significant consequences for their finances, health, and well-being.
Denied: John’s Story
John, who is in his early 60s, had surgery on both rotator cuffs. His provider recommended physical therapy (PT) as part of his recovery. For the first surgery, his PT was fully covered. After the second surgery one year later, his insurance company denied coverage for PT.
He plans to appeal the denial through his PT provider. “I’m going back to the physical therapist to ask them to resubmit my application, see if they can reword it and make a better case for me.”
Coverage denials can harm peoples’ health and financial well-being. Over half (63%) of working-age adults with private insurance who experienced a prior authorization denial of coverage for medical care said it caused them or their households worry or anxiety. About 40 percent said that a prior authorization denial delayed medical care, and more than a quarter (28%) said that their health problem worsened as a result. Three in 10 said they spent more money because of the prior authorization denial. That’s because when coverage is denied, some patients may elect to pay for their care out of pocket.
Denied: Sally’s Story
Sally, who is in her 40s, was due for a routine mammogram. Her gynecologist recommended that she also get an ultrasound, because she has dense breasts. Sally was told the ultrasound would be covered when she called prior to her appointment, but after she had the procedure, her insurance company refused to pay for it.
Sally says she’s still fighting the claim denial, but she’s feeling discouraged. She feels her insurance provider “will try to wiggle out of anything they can.”
Having a claim denied after receiving care leaves patients and their families on the hook for medical bills they didn’t expect. Nearly 70 percent of people who experienced a claim denial said that the denial cost them or their household more money. Thirty percent reported the denial had led to a delay in their health care, possibly because they were reluctant or financially unable to seek additional care. One in five people said their health problem worsened as a result.
For focus group participants, coverage denials were often a source of financial stress. Some patients who appealed their insurer’s denial said their health care provider had threatened to send their overdue bills to collections while they awaited their insurance company’s decision. They feared that their credit score would suffer if they continued waiting for an insurer’s decision.
I’m very busy right now. I haven’t pursued any avenue. I just paid for [the test]. I didn’t want to; I was afraid, and I haven’t learned much about credit, how it affects me, or whether it affects me. . . . I decided not to proceed with any legal means. I just paid it.
Oscar, a man in his 30s who had a claim denial for lab tests
Coverage denials also affected peoples’ subsequent medical care decisions. Some focus group participants said they were avoiding getting needed medical care because of their coverage denial. Following a coverage denial, one participant stopped seeking care for her ongoing health issue, which remains unresolved. Others are postponing future checkups or procedures because of how uncertain insurance coverage can be. Even just the anticipation of coverage denials and unexpected bills led some participants to avoid seeking care.
I feel like I’ve been unable to address the initial issue. . . . I don’t want to go back [to the doctor] with the very high chance [care] gets denied again.
Mary, a woman in her 20s who had a claim denial for lab tests
Coverage denials can have serious financial consequences. More than two in five (43%) adults who had a claim denial said the denial caused them or their household to incur medical debt that they are still paying off. More than half of the adults said that their original bill was $1,000 or more.
For many focus group participants, the accumulation of medical debt because of a coverage denial had made them hesitant to get health care again. Worry about financial consequences of additional care further exacerbated the anxiety and stress they experienced.
Denied: Jaime’s Story
Jaime was at dinner with his wife when he lost consciousness. She called an ambulance from the restaurant, and Jaime was taken to the hospital. Arriving barely conscious, he was told the hospital was out of his plan’s network.
“Because of the type of insurance I have, they just said they couldn’t accept me due to the coverage. . . . I had to wait hours for them to call back and forth between the hospital and the insurance company before they finally allowed the hospital to provide coverage for me.”
Jaime’s insurance covered some of his tests at the hospital but not all of them — for example, they covered a magnetic resonance imaging scan but not an electrocardiogram. He said he was convinced that “anything they could find not to pay, basically, they didn’t.” A few months later, Jaime’s insurance notified him that they also would not cover the $3,000 ambulance bill.
Jaime was left with significant medical debt. He makes monthly payments, so the debt doesn’t affect his credit. He worries, however, about future medical bills.
Even though patients have a right to appeal an insurer’s decision to deny coverage for a health care service, only about half appealed. When asked why they didn’t appeal a coverage denial, many people believed it would not make a difference. Many also doubted they had a right to appeal a decision or expressed confusion about who they were supposed to contact.
Patients in focus groups described a time-intensive, confusing, and highly frustrating process to appeal coverage denials. They often weren’t sure if they should contest the denial with their provider or insurance company, or even why they should have to appeal at all, since the denial was for care their doctor recommended.
[I] gave it my all in appealing the whole situation. . . . I got the run around like, ‘Oh, you need to speak to this person.’ Then they transferred me back to that person and the phone would ring and ring, and I’d give a voicemail and they wouldn’t call me back for two or three days. I’m still fighting with them.
Sally, a woman in her 40s with a claim denial for ultrasound
Several focus group participants felt that appealing a coverage denial would be futile. One thought that insurance companies take advantage of patients’ lack of knowledge about the health system. Many expressed frustration with the lack of transparency from insurers, saying patients “have no clue what’s going to be covered” when a doctor recommends health care. Over time, this pattern eroded participants’ trust in both their health care providers and insurance plans.
I hate the way it felt like I got conned. . . . I think [the insurance companies] know that the average person is not going to ask the right questions or know the right information. They take advantage of that, which I think is terrible, especially . . . those who are elderly or anything like that who don’t have the help or the resources.
About half of people challenged their coverage denials, but they were not always successful. Among those who challenged prior authorization denials, 30 percent said that their insurer approved the recommended medical care, and a quarter received approval for a different type of care. But in one-third of appealed cases, the insurer continued to deny the care. Nearly 80 percent of people who challenged their prior authorization denial and had received a decision on their appeal at the time of the survey said they waited two weeks or more for their insurance company’s decision.
Among patients and their families who challenged a claim denial, only one-third (33%) said their insurer reduced or eliminated the amount of money they owed. Thirty-six percent said their insurer denied their appeal, similar to the share of people who were unable to reverse their prior authorization denials. More than 60 percent of those who challenged their claim denial and had received a decision on their appeal at the time of the survey said that their insurer took one month or more to reach a decision.
Some focus group participants described a time-consuming and stressful process to appeal coverage denials. They often felt “caught in the middle” between their provider and insurance company as they tried to navigate a system that seemed designed to work against them.
[The insurance company] said, ‘You’ve had enough [physical therapy appointments].’ My physical therapist [says I need more], he’s still arguing for me, but they said no. . . . It’s almost like they will always give you an initial denial and see whether or not you’ll actually fight them on it.
John, who had a prior authorization denial for physical therapy following shoulder surgery
When asked who they held responsible for their coverage denial, nearly nine in 10 people blamed their insurance company. And many also blamed the health care system in general. Others viewed their providers as responsible for the denial, and more than one in five blamed the government for their experience.
In focus groups, some participants described how their ordeal with a coverage denial caused them to “totally lose trust” in their health care provider or insurance company, particularly when they had been explicitly told by at least one party that their care would be covered. Participants’ frustration with the health care system was palpable, and many remarked that insurance companies or the health system needed to change.
Denied: Nathan’s Story
Nathan didn’t anticipate a months-long fight with his insurance carrier while his wife battled cancer. Early in her treatment, the oncologist ordered genetic testing to look for mutations that would influence her response to therapies. Nathan and his wife were initially told that diagnostic genetic testing would be covered by their insurance, at least partially. But after the testing was completed, they were shocked to learn their insurance would not cover it.
Nathan began the frustrating process of contesting the denial. “You get in this loop of, holy cow, you ask eight people the same question. You get eight completely different answers.”
The couple eventually appealed to the oncologist, who submitted additional information to justify the necessity of the testing. While the insurance company elected to cover part of the testing, Nathan still couldn’t get a clear answer on his final bill amount.
What Can Government Do to Help Consumers?
Prior authorization can be a useful tool for protecting patients from low-value care that provides little benefit or might actually harm them. However, the processes insurers currently use lack clear rationales that patients and their providers can understand. Most troubling is that prior authorization is preventing patients from getting the care they need while placing additional burdens on physicians and their staff.
When asked what policymakers might do to help consumers, focus group participants said there should be greater transparency in insurer decision-making with “no ambiguity” in which procedures are covered. Some participants thought there should be external oversight by “another entity outside the insurers themselves” and said there must be clear reasons “why an insurance company is rejecting coverage, particularly when the test or procedure is ordered or recommended by a doctor.” There was also a desire for transparency to see where their premium dollars were going. Said one participant, “They are not using the money to pay for my care, and that is what frustrates me a lot.”
A Patchwork of Inadequate Laws and Regulations
The United States has a dated and patchwork system of regulations governing coverage denials and patients’ right to appeal them. Denial rules for employer plans have not been updated since 2000.2 In 2010, the ACA extended those rules to apply to all nongrandfathered individual and marketplace plans.3 While the Biden administration issued a new set of regulations on denials in 2024, these apply only to plans that fall under the jurisdiction of the Centers for Medicare and Medicaid Services (CMS), including marketplace plans in the 30 states that use the federal HealthCare.gov platform. They do not apply to employer plans or marketplace plans in states that run their own marketplaces.
Several states have passed laws that go further than federal requirements. States, however, lack jurisdiction over large, self-insured employers, which employ the majority of Americans.
In 2025, the largest U.S. health insurers announced a voluntary commitment to streamline prior authorization processes, including reducing the number of services subject to prior authorization and honoring preapprovals for a set period when people switch health plans.4
Clearly, there is a need to bring order to the fragmented set of laws governing coverage denials. Congress can accomplish this through standardization across all types of insurance and through the expansion and strengthening of rules regarding transparency in coverage decisions, oversight of insurers, and patients’ rights to appeal decisions. Options include:
Expanding the right to appeal. Consumers in nongrandfathered health plans, including employer plans, have the right to appeal coverage denials, and insurers are required to review and reconsider their decisions. If an insurer still denies coverage, patients have the right to an independent third-party review, and the insurer must accept the outcome of that review.
However, federal regulations restrict third-party appeals to denials based on medical necessity, which one study found made up just 5 percent of all denials.5 The majority of denials are for unspecified reasons, administrative issues, excluded services, and lack of referral or prior authorization.6 Consumers would be better served if all denials were eligible for external review.
Standardizing and streamlining prior authorization procedures in all health plans. The Biden administration issued a rule in 2024 seeking to increase transparency and standardization of prior authorization procedures for insurers selling plans in the 30 marketplaces that use HealthCare.gov, as well as those in other public programs.7 Beginning in January 2027, these payers must maintain a secure electronic portal with their list of covered items and services, documentation requirements for prior authorization, and a record of prior authorization requests and responses. CMS recently introduced a new proposed rule that would extend these requirements to prior authorization of prescription drugs.8
The federal government could expand both rules to cover all marketplace and employer plans. It also could require much greater transparency about insurer criteria for selecting services that need prior authorization.9
Learning from states’ approaches to prior authorization. At least 10 states have implemented a “gold card” approach for providers that reach a threshold level of prior authorization approvals. This enables providers to deliver certain services or prescribe drugs without seeking prior authorization.10 Several other states have shortened timelines for insurers to respond to prior authorization requests, required reviewers to meet clinical qualifications, or exempted or limited some services from prior authorization review, such as mental health care or care for chronic conditions. Although these state actions do not affect people in self-insured employer plans, they can inform federal policy.
Funding consumer assistance programs. The ACA authorized Consumer Assistance Program (CAP) grants to help states establish or strengthen services for patients to inform them of their rights and help them resolve health plan disputes. In the first year, CAP grants allowed states to recover more than $18 million for patients.11
Although federal funding for CAP grants has ended, the programs still exist in 31 states and the District of Columbia and continue to save consumers money (for example, Connecticut recovered $4.3 million for patients in 2021).12 Reinstating federal funding could help establish CAPs in the 20 states that currently don’t have them.
Reporting health care claim denials and appeals. The ACA requires all nongrandfathered health plans, including all employer plans, to report data on claim denials, the reasons for the denial, and the total number of denied and appealed claims.13 However, the federal government has limited enforcement to just marketplace plans sold through 30 marketplaces operated by the federal government. The Biden administration’s 2024 rule increases data reporting requirements for these plans, but patients may not be aware that this information is available on an insurer’s website.14 Expanding public reporting of these decisions to include all marketplace plans and employer plans — and making the data accessible and understandable to consumers on publicly accessible websites — would further the public’s understanding of insurer practices.
HOW WE CONDUCTED THIS SURVEY
The Commonwealth Fund 2025 Affordability Survey was administered by SSRS from July 22 to October 27, 2025. The survey consisted of telephone and online interviews in English and in Spanish and was conducted among a random, nationally representative sample of 6,353 adults ages 19 to 64 years living in the United States. The survey interviews were completed via a multiframe approach, which included address-based samples (ABS), prepaid cell phone samples, and the SSRS Opinion Panel. Interviews were conducted online or on the phone via ABS (n=1,794), via prepaid cell phones (n=328), and online via the SSRS Opinion Panel (n=4,231).
The sample was designed to exclude anyone age 65 and older, while also allowing for a sufficient sample of those anticipated to experience more health care affordability challenges (such as coverage denials, billing errors, or medical debt). Statistical results were weighted in stages to compensate for sample designs and patterns of nonresponse that might bias results. In the first stage of weighting, base weights were applied to account for sampling probabilities and were computed separately for each of the three sample frames. The base-weighted samples were combined using a compositing adjustment. Finally, the combined sample was calibrated to match target population benchmarks.
The resulting weighted sample is representative of the approximately 196 million U.S. adults ages 19 to 64. The survey’s margin of sampling error is +/– 1.5 percentage points at the 95 percent confidence level. The ABS portion of the survey achieved a 14.4 percent response rate, the prepaid cell portion achieved a 1.5 percent response rate, and the SSRS Opinion panel portion achieved a 2.5 percent response rate.
This brief focuses on 4,589 adults in the survey with private insurance. The resulting weighted sample is representative of approximately 130.6 million adults ages 19 to 64 with private insurance. The margin of sampling error for the subgroup of those with private insurance is +/– 1.7 percentage points at the 95 percent confidence level.
SSRS conducted eight online focus groups in April 2025, prior to fielding the survey. Six focus groups were in English, and two were in Spanish, with a total number of 45 participants. The focus groups informed the development of survey questions designed to capture people’s experience with coverage denials, billing errors, and medical debt. This brief highlights the experiences of the 27 participants who experienced coverage denials.
The loss of millions of ACA marketplace enrollees will likely force hospitals to confront a growing share of uncompensated care and rising bad debt.
KEY TAKEAWAYS
ACA marketplace enrollment is projected to fall by 21.5% this year after enhanced premium tax credits expired, with more consumers choosing lower-premium, higher-deductible plans.
Hospitals could face growing financial strain from underinsured patients who carry coverage but delay care or struggle to pay large out-of-pocket costs.
The coverage shifts may disrupt payer mix forecasting, value-based care strategies, and revenue cycle performance at a time when hospitals are already navigating elevated costs.
The expiration of enhanced Affordable Care Act (ACA) subsidies is expected to significantly impact the healthcare coverage landscape, and hospital leaders could feel the downstream effects soon.
Analysis from KFF projects ACA marketplace enrollment could fall by 21.5%, or nearly five million people this year, dropping from 22.3 million to about 17.5 million covered lives. At the same time, consumers who remain insured are opting for higher-deductible bronze plans as premiums climb.
For providers, the shift threatens to create more patients who carry insurance, but with deductibles so high that care is often delayed and collections become more difficult.
According to KFF, the average ACA marketplace deductible jumped 37% year-over-year, increasing from $2,759 in 2025 to $3,786 in 2026, marking the largest increase in marketplace history. Bronze plan enrollment climbed from 30% to 40% of all marketplace selections, while silver plan enrollment dropped from 57% to a record-low 43%.
The enrollment decline largely stems from the expiration of enhanced premium tax credits that had expanded affordability and helped drive marketplace enrollment to record highs over the last several years. KFF estimated that average monthly premium payments rose 58% from $113 to $178 after the subsidies expired.
That fluctuation in affordability could meaningfully change hospital utilization patterns.
Patients facing higher out-of-pocket exposure often postpone elective procedures or avoid preventive services altogether until their conditions worsen. For hospitals already contending with thin margins and persistent costs, a growing population of underinsured patients could create additional pressure on revenue cycles and charity care programs.
The impact could particularly be felt for hospitals serving middle-income populations that previously benefited from expanded subsidies. KFF found that individuals above 400% of the federal poverty level, or the “subsidy cliff” population, accounted for nearly half (48%) of the decline in marketplace plan selections despite representing just 7% of 2025 enrollment.
Hospitals in states that experienced rapid ACA marketplace growth during the enhanced-subsidy era may see the biggest disruption. KFF identified 41 states with enrollment drops, with the largest seen in North Carolina (22%), Ohio (20%), West Virginia (17%), and Indiana, Delaware, and Arizona (all 16%).
The trend could also affect strategic priorities for health system executives, particularly around population health management and value-based care models that depend on stable insurance coverage and consistent patient engagement.
If marketplace depletion continues through the rest of the year, especially as consumers fail to keep up with higher premium payments, hospitals may need to revisit forecasting models tied to payer mix, utilization, and uncompensated care.
KFF noted that effectuated enrollment, which measures consumers who pay their premiums and maintain coverage, could decline between 17% and 26% this year due to midyear attrition and unpaid premiums, based on estimates from Wakely Consulting Group.
As a result, hospitals may invest more in front-end financial screening or Medicaid enrollment assistance and community outreach efforts aimed at preserving coverage continuity.
The concern for hospital leaders is that the coverage shifts come at a time when many organizations are already operating with limited financial flexibility. While hospitals have shown signs of improved operational discipline, many organizations continue to struggle with elevated expenses. Kaufman Hall’s latest National Hospital Flash Report for March found that bad debt and charity per calendar day was up 18% year-over-year, partly offsetting financial progress.
At a House Ways and Means Committee hearing, lawmakers targeted pricing and market power while executives pointed to cost pressures and reimbursement gaps.
KEY TAKEAWAYS
House Ways and Means Committee members cast hospitals as central figures contributing to increased costs for patients.
CEOs from major health systems highlighted labor costs, Medicare Advantage delays, and uneven reimbursement.
Ongoing disconnect between lawmakers and hospital leaders continues to affect affordability policy and provider strategy.
A hearing before the House Ways and Means Committee brought hospital finances into focus as lawmakers questioned the drivers of healthcare spending and health system CEOs described the reality facing providers.
The discussion centered on pricing, profit margins, and consolidation, with members of Congress pressing for accountability, while CEOs of HCA Healthcare, CommonSpirit Health, New York-Presbyterian, and ECU Health pointed to cost pressures and reimbursement challenges impacting business decisions.
Though both sides agreed that rising costs remain a significant issue, the hearing illustrated a divide in how those costs are understood. That tension continues to influence both policy proposals and provider strategy as the debate over affordability moves forward.
Committee chairman Jason Smith, R-Mo., opened the hearing by comparing hospital profitability with major corporations and tying that performance to what patients pay for care.
“Hospitals with more than 100 beds have a higher profit margin than Delta Air Lines, Target, or Disney,” Smith said. “Turns out charging an arm and a leg for health care is more lucrative than the Happiest Place on Earth.”
Smith placed responsibility on the entire healthcare system and highlighted insurers, which also faced the committee in January, but stressed that hospitals must answer for their role.
“This committee isn’t interested in hearing about how the high prices your businesses charge are someone else’s fault,” Smith said. “The blame game didn’t work with insurers, and it won’t work today. Simply put, hospitals are charging an insane amount for care. Hospital prices have skyrocketed 300 percent in just over two decades – more than any other sector of our economy.”
That line of questioning reflects a growing focus in Washington on hospital pricing as a central factor in affordability, and a push to rein in price increases through policymaking.
During the hearing, lawmakers raised concerns about the impact of consolidation on negotiated rates, the role of large systems in shaping local markets, and the degree to which higher commercial prices ripple through employers and households.
Executives described a more complex financial picture that extends beyond headline margins.
Sam Hazen, CEO of HCA, acknowledged elements of the committee’s concerns while emphasizing that hospital reimbursement varies widely based on factors like patient mix and acuity.
“There are certain aspects of your discussion here that have merit,” Hazen said. “I think there’s also merit to the hospitals receiving a premium in certain circumstances, so we would be more than willing to work with you on that.”
Payment friction emerged as a recurring theme, particularly in relation to Medicare Advantage. Wright Lassiter III, CEO of CommonSpirit, pointed to delays and denials as a source of strain for large nonprofit systems.
“Medicare Advantage plans are the most challenging today,” he said. “We have $4.3 billion in unpaid Medicare Advantage claims, with nearly $1 billion of that being more than 150 days past due for care that CommonSpirit has delivered to patients and communities that you represent.”
The conversation also turned to consolidation and access in regional markets. Michael Waldrum, CEO of ECU Health, described consolidation as a response to shifting market dynamics rather than a strategy aimed at expanding pricing leverage.
“Consolidation in our market is not driven by preference, it is how we survive,” he said. “As some exit and others enter with profit-driven agendas, systems like ECU Health are left to serve as a safety-net. The result is reduced access, worsening outcomes and increasing costs.”
A statement submitted by the AHA for the hearing reiterated the current pressures facing hospitals, but noted an effort to reduce the cost of care by “improving efficiency, embracing innovative technologies and redesigning how services are delivered.”
The AHA called on insurers, purchasers, drug and supply manufacturers, and policymakers to work together with hospitals on four key areas of the healthcare system: improving the health of individuals and communities, advancing value through care transformation, reducing regulatory and administrative waste, and innovating to improve care quality and outcomes.
However, the gap between how lawmakers view hospital pricing and how health system leaders contend with rising costs and uneven reimbursement continues to limit alignment on policies aimed at improving affordability.
In part two of our conversation below, we discuss potential reforms and policy solutions and how to achieve them.
Miranda is a health policy professor at the University of Pittsburgh and was the Roosevelt Institute’s 2025 author-in-residence.
Stephen Nuñez: You wrote the book before HR1 (the “One Big Beautiful Bill Act,” or OBBBA) was passed. There are myriad ways this bill will make health care worse for people. Is there anything that you’re particularly focused on, given your research into the causes and consequences of this (quasi-)managed-care system we seem to have backed ourselves into?
Miranda Yaver: In addition to the broad coverage losses and increases in administrative burdens associated with enrolling and staying enrolled in health insurance, a couple of things happened. First, with the expiration of the enhanced premium tax credits, those with Affordable Care Act (ACA) marketplace insurance saw their premiums jump up dramatically. That means denials of coverage that do arise may be more harmful because people have less financial wiggle room with which to get creative with stopgap measures.
With both premium increases and new administrative complexity around eligibility verification, there’s also greater potential for patient churn among health insurers, which creates a setting that can lead to myopic coverage decisions from insurers who feel they can pass the buck rather than make up-front investments in patient health. For example, an insurer might deny coverage for a diabetic’s continuous glucose monitor with the expectation that by the time the patient faces costly complications from poorly managed glucose, they’ll be with another insurer.
I think whenever we’re introducing new fiscal pressures in the insurance market, we need to worry about private insurers turning to prior authorization as one way to make up some of that financial deficit.
Stephen: I was joking on social media the other day that if you ask an ordinary person about the American Medical Association (AMA), you’re likely to get positive comments (“doctors are the good guys!”), but if you ask a social scientist you might get a tirade or perhaps a hissing sound. The AMA has since the time of President Franklin D. Roosevelt worked to prevent the expansion of “socialized medicine” and has been a large lobbying barrier to several attempts over the decades to expand public insurance and push industry reform. And yet pre-authorization (and post-procedure coverage denial) undermines doctors’ autonomy and bandwidth in ways that seem to really irk them. Politics can make strange bedfellows, so I’m wondering if you see any fruitful avenues for collaboration with the AMA on this issue?
Miranda:I think that’s absolutely right, and in Coverage Denied, I certainly highlight both perspectives: In chapter one, I walk through the political origins of prior authorization and its entrenchment. It’s hard to talk about the origins of this managed-care tool without reflecting on the yearslong outcry over socialized medicine, but I also highlight the AMA’s more contemporary work around prior authorization and physician burden reduction, as well as broader issues of professional autonomy. The AMA’s physician surveys call attention to the sweeping impact (or at least, perceived impact) of prior authorization—from time and staffing demands to adverse effects on patients. The organization has also led the charge in advocacy and model legislation to do things like regulate the qualifications of reviewing physicians, promote transparency concerning prior authorization requirements, require more timely processing, and reduce the volume of prior authorizations. None of those issues address the broader philosophical objections to prior authorization—that is, that health coverage decisions are being made by companies with fiduciary responsibilities to shareholders rather than by treating physicians—but they do reduce the extent to which patients and their physicians are dealing with the constant headaches of these processes.
The AMA rightly frames these prior authorization headaches as sources of physician burden and burnout. Even if physicians might prefer to do away with prior authorization, and even though promoting transparency and timeliness won’t necessarily result in fewer denials, these reforms could take the guesswork, “black-box” feeling out of prescribing. In turn, physicians could more easily assess whether and when to move on to a plan B rather than endure the protracted delays common under the current system. Regulation of the qualifications of reviewing physicians could (at least on the margins) reduce the odds of erroneous denials that reflect lack of familiarity with more recent treatment protocols outside a doctor’s field of specialty, and which necessitate burdensome appeals to rectify. And even in this highly polarized and gridlocked political climate, some of these measures are passing at the state level with unanimous or near-unanimous support.
But this does not disrupt the reliance on prior authorization or confront the philosophical objections. A larger-scale intervention into this facet of the US health-care system would require more sweeping health reform from Congress than is feasible in the foreseeable future given *gesticulates wildly at the world.* Although the AMA continues to oppose single-payer, over the decades they have become more conciliatory toward issues of health coverage expansion and now support a public option. A public option would certainly move our health insurance system forward because private health insurers (which have been heavily reliant on prior authorization, delays, and denials) would have to compete with a government plan. Still, my money is very much on single-payer—which would extract the profit focus—for delivering the most relief for those in need of health care. But politics is complex and often much more a dynamic of incrementalism than waving a magic wand, and I’m a big believer in moving the needle where we can and when we can, even if the bigger philosophical issues of health insurance delivery will have to wait a few years.
My money is very much on single-payer—which would extract the profit focus—for delivering the most relief for those in need of health care.
Stephen: So we have path dependence, we have a health-care system that is for-profit and generates poor outcomes (for hospitals, doctors, patients, even insurance companies alike), we have a host of actors, and we have the complexities of federalism on top of that. Things feel pretty dire! What are some things we could do at the state and/or federal level to solve or at least mitigate the problems you detail in the book?
Miranda: One area where states have begun to take action is the role of AI, which health insurers are increasingly using to bulk-process claims and prior authorizations. California’s SB 1120, which went into effect this year, stipulates that when insurers’ AI programs recommend denials, they must be reviewed by physicians in the appropriate specialty. These technologies are advancing faster than regulatory oversight tools can keep up with, and unlike the relatively low-stakes penalty assessed when, say, a student uses AI for a paper and hallucinates a citation, when AI programs get health coverage decisions wrong, the consequences can be dire. And especially amid the ongoing litigation against Medicare Advantage plans’ use of AI to deny (with reversal rates of 80–90 percent), this could be a valuable shift.
When AI programs get health coverage decisions wrong, the consequences can be dire.
Some states are doing things that I’m not as fond of: Gold card laws, under which physicians who secure around 92 percent or more approval for their prior authorizations become exempt from these processes. It sounds good at face value, but it’s really replacing one form of physician burden with another because it’s assessed at the plan-service level, such that one might have a wallet full of gold cards to keep track of—a gold card for head CT scans with Aetna and abdominal CTs with Cigna, and so on. Texas’s law was so restrictive that just 3 percent of physicians qualified as “high performing” under its terms, so its impact has proven quite limited.
There are other options worth thinking about that are highly feasible and don’t require revisiting big philosophical questions about the US health care system. For example, plain-language rules in health insurance communication could help prevent patients from falling through the cracks due to complex and technical explanations of denials and appeal processes. The average American adult reads at around the 8th grade level, but most health insurance materials are written in at least the 10th grade level. Lower-income and lower-educational attainment patients and non-native English speakers are especially vulnerable in this system. This would also be relatively simple to administer and enforce. The Washington State Office of the Insurance Commissioner is a great model of guiding patients through appeal processes—from an accessible YouTube video to template appeal letters for different types of denials. Of course, this doesn’t address the propensity to deny in the first place, but it can mitigate the ensuing patient burden.
It would also be relatively feasible for states to limit prior authorization’s application to only domains of health care where there are at least relatively recent evidence bases of abuse or overprescribing. All too often, prior authorization is applied to areas of medicine where this overuse is not a documented concern. Lower lumbar spine MRIs are a commonly cited example of overprescribing, such that health insurers will often require a few weeks of physical therapy before being able to proceed with the scheduling of the MRI. That might not necessarily be an inappropriate use of prior authorization, whereas applying this process to a drug like PReP is far less logical, since it is life-saving and there is no evidence of abuse. States could, at the least, require insurers to justify the use of prior authorization for these types of procedures with data and evidence.
At the federal level, the House of Representatives approved by a voice vote the Improving Seniors’ Timely Access to Care Act in 2022, but despite bipartisan support, the legislation died in the Senate. This bill was centrally aimed at streamlining existing prior authorization requirements. It would require Medicare Advantage plans to deliver timelier decisions through electronic processes. This wouldn’t increase the odds of approval, but it would mitigate delays before either initiating appeal or moving on to a plan B.
In the background of all of these state efforts is the reality that state reforms cannot touch the majority of employer-sponsored health insurance plans. This quirk, which deviates from the federalism embedded into so many other areas of health policymaking and beyond, is due to the constraints of the Employee Retirement Income Security Act (ERISA). ERISA preempts state laws that “relate to” self-insured health plans, which cover most workers in employer-sponsored insurance. Because of the limits of what states can do to move the needle on equitable coverage, comprehensive health insurance reform really needs to happen at the federal level, which presents obvious challenges in the current political environment.
Because of the limits of what states can do to move the needle on equitable coverage, comprehensive health insurance reform really needs to happen at the federal level.
Stephen: Cost control/overutilization is a fundamental problem, even if the way the US “solves” for it is particularly awful. I can think of a variety of ways single-payer public health insurance helps: no insurance churn so no short-termism; deductibles, copays, and coverage are subject to a democratic process; and the government has monopsony power to negotiate down provider rates. And yet the fee-for-service conundrum and responses to it still exist in other countries with models closer to single-payer.
Are there any models or policies from the international context that you find promising, even if not politically feasible in the US right now? I’m thinking of things like New Zealand’s no-fault compensation system for medical injury, which means doctors don’t have to run tests simply to avoid lawsuits, or Pay-for-Performance/Value-Based Care models that could base payment on health-care outcomes and not just volume of services.
Miranda: My work is very US-centric, but I’ve grown increasingly interested in Switzerland.Even though traditional Medicare is immensely efficient, spending vastly less on overhead than do private insurers, Americans largely maintain the perception that the private sector is comparatively more efficient in policy delivery. That constrains our political choices (though this preference is becoming weaker over time, as more Americans are open to a government-run system). Given this underlying preference, are there ways that we can make private health insurance work? I think Switzerland shows that the answer is “yes, but.”
Even though traditional Medicare is immensely efficient, spending vastly less on overhead than do private insurers, Americans largely maintain the perception that the private sector is comparatively more efficient in policy delivery.
The Swiss health insurance system is actually more privatized than ours, and like our system, there’s a great deal of decentralization across localities. Where it diverges is its coupling of privatization with significant regulation as opposed to a broader embrace of free-market principles. The Swiss are legally required to be insured (though they have many options from which to choose), and on top of the standard but comprehensive insurance package, people can purchase supplemental private insurance to fill in any gaps or gain access to better hospital accommodations (e.g., a private room) or to see additional health-care providers. Consequently, nearly everyone in Switzerland is insured. In contrast with the relatively consolidated insurance market we have—with UnitedHealthcare, Cigna, CVS Health/Aetna, Elevance, Centene, Humana, and Kaiser Permanente dominating the markets, especially in certain regions—the Swiss have 56 insurers from which to choose. But the Swiss government exerts considerable regulatory oversight over both quality and prices.
So, you’ve got nearly universal coverage, market competition, regulation of pricing so as to mitigate exploitative charges to patients and the system writ large, and privatization. But all of these elements are in combination with enough regulation that you’d be unlikely to run into the insurance barriers that are such a dominant American experience and that make up the focus of my book.
The challenge, of course, is that to get this better coverage (which unsurprisingly produces better health outcomes), the Swiss both accept a higher tax rate than US politics tends to find palatable, and they accept the insurance mandate (whereas there was public consternation, driven by conservative political leaders, over the ACA’s individual mandate). To be sure, Americans’ attitudes could shift: We’ve certainly seen significant growth in support for the ACA, and the share of Americans who see it as the federal government’s responsibility to ensure health-care access has increased significantly over recent years. To the extent that these trends continue, that could facilitate a broader menu of health reform options.
But there are also some questions about scalability given that Switzerland has roughly the same population as New Jersey, is quite homogeneous, and invests more broadly into addressing social determinants of health. All too often in the US, we ignore those social determinants, which are truly in the driver’s seat of our health, while pouring money at health-care delivery. This leaves us with high health spending but a suboptimal return on investment. Switzerland can serve as some inspiration to right-size US reliance on private industry, though the extension may be difficult amid political preference for lower tax rates and deregulation.
Stephen: Is there anything else we haven’t discussed that you’d like to highlight?
Miranda:One elephant in the room amid discussions of health insurance barriers—their proliferation and their persistence—is why health insurers have been able to remain so largely unaccountable. At least part of this answer comes back to ERISA. To begin with, it preempts states’ efforts at comprehensive coverage reforms. This means that when political conditions aren’t well-suited to federal reforms, while we can often turn to the states to advance progress where they can, ERISA prevents comprehensive prior authorization reforms or the broader reduction of administrative burden in insurance. Further, it denies meaningful legal recourse to patients enrolled in self-insured health plans, which is about two-thirds of covered workers. Under ERISA, denied patients cannot obtain monetary damages (e.g., punitive damages, or damages for pain and suffering) and attorney’s fee recovery is left to the discretion of the judge. All that patients are entitled to receive is the benefit owed, which may be cold comfort to someone whose condition has worsened. And needless to say, less affluent patients will be risk-averse in taking legal action with this vulnerability to being left to cover their own legal costs.
The lack of meaningful remedies is where it becomes really clear that health care was an afterthought in ERISA, which was motivated by pension concerns. If your employer tries to screw you out of your pension, you can sue and get your pension back, but health conditions can change and make this enforcement apparatus ill-suited. Further, lawyers will likely be reluctant to take on cases that lack a monetary value. And if insurers know that patients are especially unlikely to sue insurers under these conditions, effective control over these entities can be harder to come by because wrongful denials are virtually costless. So, ERISA’s denial of meaningful remedies for wrongful coverage denials can not only be harmful to the patients when such denials arise, but insurers may have less incentive to exercise caution when deciding whether to cover costly care because they won’t face a meaningful penalty. In the worst case scenario for them, they eventually cover the treatment if the patient challenges the denial, which they rarely do. This design can thus increase the probability that insurance barriers arise in the first place. Congress tried to fix this problem in the late 1990s with the Patients’ Bill of Rights, but it didn’t come close to enactment. That bill is a critical issue for legislators to revisit. I’m currently writing another book that looks squarely at what accounts for the entrenchment of this feature of our health insurance system and the ways it disrupts equitable access to health care.
HENRY KOTULA 