Imagine a product where the price doubles every decade, the network of vendors who’ll accept it shrinks, the fine print can override the headline coverage, claims get denied at rates that would be a scandal in any other category, and changing providers requires you to also change your doctors and pharmacy. That’s US health insurance. We re-enroll every year because the alternative — uninsured exposure to American medical pricing — is worse. That’s not a market endorsement. It’s hostage logic.
The system underperforms in ways that would sink any consumer product subject to normal market accountability.
The numbers are bad and getting worse
Average employer family premiums crossed $25,000 per year in 2024, with employees paying roughly a third out of pocket on top of deductibles that have risen faster than wages for two decades. Individual marketplace plans have similar trajectories with subsidies softening the visible cost. Networks have narrowed: HMO and EPO designs that limit out-of-network coverage now dominate in many markets, and “narrow network” plans deliberately exclude major hospital systems to negotiate lower rates that don’t fully reach members. Claim denial rates published by various analyses suggest in-network denial rates around 15-20% on average, with substantial variation by insurer. About half of insured adults report having delayed or skipped care due to cost, which is the metric that captures how much insurance is actually delivering at the point of need.
The denial machinery is industrial
The pattern is consistent across insurers: a meaningful share of legitimately covered claims get denied initially, often through automated review or coding mismatches that providers and patients have to appeal manually. Most denials are never appealed because patients don’t know they can or don’t have the energy. Of the appeals that do get filed, a significant share succeed, which tells you something about the initial decisions. Prior authorization requirements — which require pre-approval for procedures, medications, and imaging — have expanded into ordinary care and add days to weeks of delay even when ultimately granted. Studies of physician time use find prior authorization absorbing hours per week per clinician, costs that get passed back into the system. None of this is illegal. It’s the operating model.
Why the market doesn’t fix it
Functioning markets discipline bad products through competition. Health insurance has weak competition for several reasons. Most working-age adults get coverage through employers, who choose the plan, which means the end user can’t switch providers without switching jobs. Provider networks lock in patients via established care relationships that are costly to rebuild. Subsidy structures on the individual market reward staying within the same metal tier rather than shopping aggressively. Insurance companies have consolidated into a small number of regional dominant players. Regulation is split across federal and state levels in ways that benefit incumbents who can navigate complexity. The result is a product that gets worse without losing customers, which is the textbook signature of a captured market.
The takeaway
You almost certainly should still carry health insurance — the catastrophic-cost protection is real and the alternative is genuinely worse. But the product is bad, the denials are not your fault, and noticing both is the first step toward demanding something better.
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