Study Finds Insurance Denials Are Leaving Americans Sicker and Deeper in Debt

You pay your premiums every month, your doctor recommends a treatment, and then your insurance company says no. For one in five privately insured Americans, that scenario played out in the past year alone. A sweeping new Commonwealth Fund survey of nearly 4,600 adults found that coverage denials are not bureaucratic inconveniences. They are making people sicker, poorer, and less willing to seek care when they need it most.

The study drew on responses from adults aged 19 to 64 with private insurance, whether through an employer or the Affordable Care Act marketplaces. Researchers examined two distinct types of denials: prior authorization refusals that block care before it happens, and claims denials that arrive after a patient has already received treatment. Both types carried serious consequences, but in different ways, and the damage they inflict runs deeper than most Americans realize.

13% of respondents reported a prior authorization denial, while 8% faced a claims denial. 1% experienced both. Those numbers may sound modest on their own, but applied to the full privately insured population, they represent tens of millions of people who were told their doctor’s judgment was not enough. The ripple effects, across health outcomes and household finances, are what the data make impossible to ignore.

Your Doctor Said Yes. Your Insurer Said No. Then Your Health Got Worse

When a prior authorization denial hits, the most immediate consequence is waiting. 41% of people blocked from care before receiving it reported that their treatment was delayed. More alarming, 28% said their medical condition deteriorated while they waited. According to Sara Collins, a senior scholar at the Commonwealth Fund, those numbers challenge a core industry argument. “Clearly, prior authorization is hitting both high-value and low-value care,” Collins told the American Journal of Managed Care.

Collins went further, noting that the data expose a fundamental flaw in how prior authorization is applied. “If patients are telling us that their health problems are worsening, it is an indication that the care they were waiting for approval on was actually important to their health,” she said. The system, as designed, is supposed to filter out unnecessary or low-value procedures. What the survey reveals is that it is also blocking care that patients demonstrably needed, with measurable harm as the result.

63% of those who faced a prior authorization denial reported heightened worry and anxiety throughout the process. The psychological toll compounds the physical one, creating a climate of dread around a system people are paying heavily to access. Insurers have long maintained that their denial rates for properly submitted claims are low and that most refusals involve services that are medically unnecessary or outside a plan’s coverage. The patient-level data tell a different story.

The Bill Arrives After the Fact, and It Can Follow You for Years

Claims denials, which come after care has already been delivered, carry a distinct financial sting. Nearly 70% of people who experienced one said it cost their household more money than expected. 43% said the denial pushed them into medical debt. More than half reported that the original denied bill totaled $1,000 or more. These are not small rounding errors in a household budget. For many families, they are the beginning of a debt spiral.

Collins described how the financial harm compounds the psychological, creating a lasting deterrent to future care-seeking. “A lack of trust in the whole process can create a disincentive for people to actually seek health care when they need it,” she said. “That can really erode trust, make people fearful of going to get care.” That feedback loop is particularly dangerous: patients who have already been burned once by an unexpected bill may delay or skip necessary care the next time, worsening their long-term health.

An important counterweight exists, but most people never use it. Only about half of those who experienced a denial chose to appeal. Of that group, more than half ultimately received some form of coverage: 30% got approval for the originally recommended care, and 25% received coverage for an alternative. One-third of those who challenged a claims denial had their bill reduced or eliminated entirely. That success rate raises an uncomfortable question about how many valid claims are quietly abandoned every year because patients don’t know they can fight back.

A Patchwork System With No Floor and No Accountability

Part of why patients struggle to appeal is that the rules are a maze. Denial regulations for employer plans have not been updated since 2000, and the rights patients hold vary widely depending on their insurer and the market they’re in. According to the study, 43% of people who skipped an appeal doubted it would make any difference, 34% weren’t sure they had the legal right to challenge the decision, and 32% had no idea who to contact. The system’s complexity is not a side effect. For many patients, it functions as a barrier.

“The complexity of the U.S. health care system is leaving many patients and their families caught between their providers and their insurance companies,” said Sara Collins, the study’s co-author. Researchers offered a set of concrete fixes: expand the circumstances under which patients can appeal, make denials eligible for independent third-party review, standardize prior authorization requirements across health plans, and require insurers to explain coverage decisions and appeal rights in plain language rather than impenetrable policy language.

Greater transparency is also overdue on the data side. Insurers currently do not share denial rates publicly, and independent research consistently suggests those rates are higher than the industry acknowledges. Dr. Joseph Betancourt, president of the Commonwealth Fund, was direct: “When oversight overrides clinical judgment without good reason, quality of care and patient safety suffer, and that demands a policy response.” A system where patients win more than half their appeals, yet rarely appeal at all, is not functioning as designed. It is functioning as a deterrent, and the health consequences are the price being paid.