Insurance Claim Denials Hit Low-Income Patients Hardest

Low-income patients face a devastating double burden when health insurance companies deny their claims: they’re not only more likely to receive denials in the first place, but they’re also least likely to successfully challenge those denials.

University of Massachusetts Amherst research reveals that patients earning under $50,000 annually struggle most with the complex, time-consuming process of contesting insurance denials—even for supposedly “free” preventive care like cancer screenings and wellness visits.

Published in Health Affairs, the study analyzed over 51,000 denied claims from 2017-2019, exposing systemic inequities that leave society’s most vulnerable patients paying unexpected bills while wealthier patients successfully overturn similar denials.

The Inequality of Insurance Appeals

“People with higher income are more likely to have a denied claim reversed and consequently their cost sharing reduced,” explains Michal Horný, assistant professor of health policy and management at UMass Amherst who led the research.

The findings reveal a troubling pattern: while about two in five claim denials result from simple billing errors or processing mistakes that should be easily corrected, low-income patients lack the resources to navigate the appeals process effectively. Meanwhile, patients with household incomes above $50,000 consistently achieve better outcomes when challenging denials.

This compounds earlier research by Horný’s team showing that low-income patients were already 43% more likely than high-income patients to have preventive care claims denied initially. Historically marginalized racial and ethnic groups faced roughly double the denial rates of non-Hispanic whites.

Barriers Beyond Income

The research uncovered complex dynamics around who contests denials and why. While racial minority patients were generally less likely to challenge denials initially, when they did contest them, they achieved higher reversal rates than non-Hispanic whites. However, their average cost-sharing reductions remained lower.

Key disparities identified in the study include:

• Low-income patients least likely to contest denied claims despite facing the highest denial rates
• Successful challenges more common among higher-income patients, creating compounding advantages
• Racial minorities facing structural barriers to initiating appeals but achieving better outcomes when they do
• Education level showing no correlation with appeal success, suggesting systemic rather than knowledge-based barriers

The Hidden Role of Healthcare Providers

The research revealed an important dynamic often overlooked in discussions of claim denials: healthcare providers frequently initiate appeals on behalf of patients. “When we launched this research, our mindset was that this is driven by the patient,” Horný notes. “But we realized that it actually can be driven by healthcare providers as well, because for healthcare providers it’s much easier to get money from a big company than from chasing many small amounts from many patients.”

This finding suggests that under-resourced healthcare providers—often those serving low-income and minority communities—may lack the administrative capacity to effectively contest denials, further disadvantaging their patients.

The study also found that education level had no association with successfully challenging denials, indicating that the barriers go beyond individual knowledge or capability. Instead, structural factors like job flexibility and access to time appear crucial.

Solutions for Systemic Problems

Horný hypothesizes that low-income people simply don’t have the job flexibility to spend hours on the phone contesting denials. His recommendations focus on systemic changes rather than individual solutions.

“We need regulators to demand health insurance companies be more user-friendly and allow people to contest a claim by filling out an online form 24/7, whenever they have the time to do it,” he emphasizes.

The research team also advocates for universal billing codes among all insurance payers to simplify the claims process and reduce errors by both healthcare providers and insurers. Such standardization could particularly benefit under-resourced healthcare providers serving vulnerable populations.

As the study notes, these “considerable administrative burden even for common, high-value health services” create unexpected bills that disproportionately affect marginalized groups—undermining the very healthcare access that insurance is supposed to provide.