Research Seminar with Riley League, PhD
Fragmented Insurance and Billing Frictions: Understanding Denied Health Insurance Claims
Open to Penn Affiliates
Billing and insurance-related activities are a dominant driver of the high administrative costs of the US health care system. However, the economics claim denials—the most visible manifestation of billing frictions—remains poorly understood. We explain why the prevalence of claim denials is an economic puzzle and investigate why denials persist in equilibrium. Using data from the Massachusetts All-Payer Claims Database, we document that denials are prevalent even for private insurers and show that these denials are largely for low-cost, routine services. We then present evidence that insurance fragmentation is a key driver of claim denials: the rate of denials spikes when enrollees change insurers, and different insurers have very different equilibrium denial rates for the same service, suggesting providers do not narrowly tailor their billing across insurers. Together, these findings highlight how fragmented insurance structures and heterogeneous coverage rules can contribute to inefficiency and waste in the U.S. health care system.
Co-sponsored with the Department of Medical Ethics and Health Policy (MEHP).
Please note: Registration for this event is required. In-person attendance is strongly encouraged, although virtual access will be provided for all registrants.
Speaker
Riley League, PhD
Assistant Professor, Finance, University of Illinois Urbana-Champaign Gies College of Business
Riley League, PhD, is an Assistant Professor of Finance at the University of Illinois Urbana-Champaign Gies College of Business. He is interested in health economics and industrial organization. His research focuses on the role of administrative burdens in shaping the delivery, cost, and outcomes of health care in the U.S. He is also interested in the dialysis industry, in which he and his coauthors highlight the consequential role of financial, regulatory, and legal incentives.
League also has a courtesy appointment to the University of Illinois Department of Economics and am a Faculty Research Fellow at the National Bureau of Economic Research (NBER). Previously, he was a Postdoctoral Fellow in Health and Aging Research at the NBER after earning his PhD in Economics from Duke University in May 2023.