Quantifying Patient Burden Due to Insurance Complexity

December 3, 2021

Summary: We know that US health insurance causes huge administrative overhead at providers and private insurers. Now, two studies document the burden for patients. One estimates that administrative hurdles cause delayed or foregone care for 1 in 4 insured individuals. The other reports on worker insurance hassles, quantifying lost time, added stress, and foregone productivity – reaching >$100 billion.

Patient administrative burden in the US health care system
Health Services Research
September 8, 2021
By Michael Anne Kyle and Austin B. Frakt

From Abstract (key passages)
We … administered survey questions to a nationally representative sample of insured, nonelderly adults (n = 4155).

Findings
24.4% of respondents … reported delayed or foregone care due to an administrative task. Disability status had the strongest association with administrative tasks (adjusted odds ratio [OR] 2.91) and burden (adjusted OR 1.66). … Higher income was associated with fewer subsequent burdens (adjusted OR 0.55).

Conclusions
The prevalence of delayed/foregone care due to administrative tasks is comparable to similar estimates of cost-related barriers to care. Demographic disparities in burden warrant further attention.

Magnitude and Effects of “Sludge” in Benefits Administration: How Health Insurance Hassles Burden Workers and Cost Employers
October 29, 2020
Academy of Management Discoveries
By Jeffrey Pfeffer et al.

Using a nationally representative sample, we found that the direct cost of the time spent by employees dealing with health insurance administration was approximately $21.57 billion, with 53 percent of that time spent ($11.4 billion) at work. The time spent on administrative burdens can also have spillover effects on employee attitudes. Specifically, we found that, controlling for self-reported health and various demographics, people who spent more time on the phone with their health insurer were less satisfied with their current workplace, less engaged, more likely to report significant stress, more likely to have missed a day or more of work, and more likely to feel burned out at work. The estimated cost of additional absence was $26.4 billion, and the productivity cost of reduced satisfaction was approximately $95.6 billion.

Comment by: Adam Gaffney

The enormous administrative waste of American healthcare is widely recognized. About one third of total healthcare spending in the US goes towards administration, about twice the proportion as in Canada. We spend more than $80,000 per physician in the US to cover the cost of their interactions with insurance companies, four-fold higher than Canada. However, while the system-wide costs, including for providers, are well known, less research has focused on the burden placed on patients.

Two recent studies change that. The first found that about 1 in 4 insured non-elderly adults went without, or delayed, needed healthcare due to administrative burdens, including for such onerous insurance-related tasks like dealing with billing issues and working through prior authorizations. Such administrative hurdles further compound the financial barriers that deter large numbers of Americans from needed care — with deadly results.

A second study quantified the amount of time US workers spend on the phone with insurance companies each year. With some extrapolations based on the authors’ assumptions, we learn from this study that full-time US workers collectively expend around half a billion hours per year on this psychologically draining, time-sapping task.

 “Man Dying from Cancer Spends Last Good Day on Phone with Insurance Company,” reads one dark humored headline from the satirical publication The Onion. Sadly, in the US, it rings true.