There is a number hiding in your monthly health insurance premium that you have never seen, never agreed to, and most likely never heard of. It is not a line item. It does not appear on any statement you receive. But according to a growing body of health economics research, it is there embedded in what you pay, year after year, whether you have ever received a surprise medical bill or not.
The story behind this hidden cost begins not in a hospital room, but in the offices of policy researchers trying to understand why American health care costs so much. In October 2020, three health economists at the USC-Brookings Schaeffer Initiative for Health Policy published a study that reframed one of the most frustrating experiences a patient can have: opening an envelope or logging into a portal to find a bill from a doctor they never chose, at a rate their insurance refused to cover. The conventional wisdom held that surprise billing was a problem for the unlucky few. The researchers suspected it was something larger.
The Patient Who Never Got to Choose
To understand the research, it helps to understand the experience it describes. Imagine you have done everything right. You have chosen an in-network hospital. You have confirmed that your primary surgeon is in-network. You have studied your insurance plan, asked questions, and made informed decisions about where and by whom you would be treated. Then, after the procedure, a bill arrives from an anesthesiologist or a radiologist or an assistant surgeon who was not in your network. The amount is significant. Your insurance covers only a fraction of it. You are left to pay the rest.
This scenario plays out more often than most people realize. According to the Brookings Institution's analysis of surprise billing, about one in five commercially insured patients treated at an in-network emergency room is seen by an out-of-network physician. In about one in 10 elective procedures at an in-network hospital with an in-network surgeon, the anesthesiologist, assistant surgeon, or similar physician is out-of-network.
The common thread is choice or rather, the absence of it. Patients can typically choose their doctors before they get treated. They might select a primary care physician or decide between hospitals based on reputation and whether those providers are in their insurance network. When the system works as intended, a patient ends up with a provider they like at a price negotiated by their insurer. But patients do not always have this opportunity.
In an emergency, a patient accepts the ambulance that arrives on the scene and the physicians who treat them in the emergency room. For elective procedures, even though the patient chooses the hospital and lead surgeon, they do not choose the radiologists, pathologists, and anesthesiologists who are integral to their care. These providers are assigned, often invisibly, as part of the institutional machinery of the hospital.
"Too often after a hospital procedure or visit to an emergency room patients get hit with unexpected bills from out-of-network doctors they had no role in choosing. These include assistant surgeons, emergency room doctors and anesthesiologists."
The researchers noted that most research and media coverage at the time focused on how burdensome these bills were for the patients who received them. But as health economists and policy analysts, they believed there was a broader impact that deserved to share the spotlight.
What the Numbers Revealed
The study, conducted by Erin Duffy, Erin Trish, and Loren Adler at the USC Schaeffer Center for Health Policy and Economics, examined the financial architecture behind surprise billing. Their finding was striking: approximately 12% of insurers' spending on in- and out-of-network medical care goes to six types of providers that commonly submit surprise bills.
Those six categories are: anesthesiologists, radiologists, pathologists, emergency medicine physicians, emergency facilities, and emergency ground ambulance services. Together, these provider types represent a substantial share of overall medical spending enough, the researchers argued, to matter significantly to the broader insurance market.
The researchers described how these providers operate differently from most other medical specialists. At its core, they wrote, market failure arises because this system allows the subset of hospital-based physicians whom patients do not choose to negotiate with insurance companies independent of the hospital at which they practice. Ambulance companies, emergency facilities, and hospital-based physicians can still receive a substantial volume of patients whether they are in-network or out-of-network. They are assured a steady stream of patients, in part, by the nature of their work. They do not need to join networks to get patients.
And, as out-of-network providers, they can set their own prices.
The Leverage Problem
The mechanism behind surprise billing is essentially a leverage problem. With the option to submit surprise bills, these unique providers have a valuable alternative to joining insurance networks. This gives them bargaining power when they negotiate with insurers, allowing them to negotiate higher prices than they otherwise could have achieved.
As the researchers explained it, physician specialists whom patients do not choose can leverage the fact that they can remain out-of-network to receive much higher prices than their peers. In turn, less insurer spending flows to these providers, and prices across the system are affected.
The result is a self-reinforcing cycle. Because these providers can threaten to go out-of-network and bill surprise charges, they have less incentive to join networks at reasonable rates. Their out-of-network status becomes a negotiating tool. And because they represent such a significant share of overall medical spending, their higher prices ripple outward into the broader insurance market.
This might not be so important if these unique providers accounted for only a very small share of health care spending. But the researchers found that is not the case. Their analysis showed that the providers who commonly issue surprise bills account for roughly 12% of insurers' medical care spending a figure large enough to meaningfully affect premium calculations across the entire commercially insured population.
The Premium Connection
Here is where the story becomes relevant to anyone who pays for health insurance, whether they have ever received a surprise bill or not. Insurance premiums are calculated based on expected costs. When providers charge more whether through surprise bills, higher in-network rates, or other mechanisms those costs are distributed across the entire risk pool. Every policyholder effectively subsidizes the higher prices charged by providers who can leverage surprise billing to extract more from the system.
Evidence from the study suggested that everyone with commercial health insurance was paying higher premiums because lawmakers allowed the practice of surprise billing to persist. The researchers wrote that fixing surprise billing would not just help the patients being billed; it offered the potential to lower health insurance premiums for everyone.
"Evidence from our recent study suggests that everyone with commercial health insurance is paying higher premiums today because lawmakers allow the practice of surprise billing to persist. Fixing surprise billing won't just help the patients being billed; it offers the potential to lower health insurance premiums for everyone."
This framing shifted the debate. Surprise billing was no longer just a patient protection issue. It was an economic policy issue with system-wide implications for the cost of care.
Why the Market Cannot Fix It Alone
One might expect that a functioning market would eventually correct this problem. In most industries, when a provider charges prices that customers consider unreasonable, those customers take their business elsewhere. Competition drives prices down. Quality improves. The market self-regulates.
But health care, and emergency care in particular, does not operate by these rules. The researchers noted that this is not the way a market typically works. In a functioning market, consumers can choose service providers based on quality and price. In emergency medicine, that choice is simply not available. A patient who has been in a car accident cannot comparison-shop emergency rooms. A patient experiencing a heart attack cannot wait while their insurance company verifies network status.
This structural reality means that the providers who serve these situations emergency physicians, ambulance services, anesthesiologists, radiologists operate outside the normal competitive pressures that constrain other businesses. They have a guaranteed patient volume regardless of their network status. And they have learned to use that guaranteed volume as leverage in price negotiations with insurers.
The Brookings Institution's explainer on surprise billing described this dynamic in plain terms: some providers use the threat of sending surprise bills to extract high prices from insurers, which leads to higher premiums for all health care consumers.
Eliminating the ability to submit surprise bills for these unique providers would reduce their ability to collect large out-of-network payments. This would bring their leverage in price negotiations with insurers in line with those of other specialties in which patients are able to choose their providers. In turn, less insurer spending would flow to these providers, and the savings could be distributed across the system.
What This Means for GuildInk Readers
For writers and creative professionals who purchase their own health insurance whether through individual marketplaces, freelance unions, or professional associations this research carries a practical message. The premiums you pay are not simply a function of your age, health status, or coverage level. They are also shaped by systemic pricing dynamics that you have no control over, including the leverage exercised by providers who can bill surprise charges.
Understanding this connection does not solve the problem. But it does illuminate why health care costs feel so resistant to individual optimization. Even the most careful consumer, the most diligent insurance shopper, the most proactive patient, cannot avoid the hidden costs embedded in the system. Those costs are distributed across everyone who carries commercial insurance.
This matters for anyone who budgets for health care as part of their freelance or creative business planning. When you estimate your annual health expenses, you are estimating based on visible costs premiums, deductibles, copays. The research suggests there is an invisible surcharge, baked into your premium, that reflects the market power of providers who can leverage surprise billing. Until that leverage is constrained by policy, it will continue to affect what you pay.
The Policy Landscape
By the time the study was published in October 2020, public opinion on surprise billing had crystallized. Polls suggested that three quarters of Americans favored policies that would protect consumers from surprise bills. President Trump had expressed support for such protections. Both major political parties had introduced legislation addressing the issue.
The researchers' contribution was to expand the argument beyond patient protection. If surprise billing was raising costs for everyone with commercial insurance not just the roughly one in five emergency room patients who encountered it then addressing it was not just a fairness issue. It was an economic efficiency issue. It was a premium containment issue. It was a market reform issue.
The study provided a framework for thinking about surprise billing as a systemic problem requiring a systemic solution. The providers who commonly issue surprise bills are not acting illegally. They are exploiting a structural gap in how the market works. Closing that gap would require either restricting their ability to bill surprise charges or changing the incentive structure that makes out-of-network billing so lucrative.
The Road Ahead
The researchers were careful to frame their findings as evidence, not prescription. They documented the mechanism. They quantified the scale. They connected surprise billing to premium costs across the commercially insured population. What they did not do was dictate the policy response.
That response would depend on lawmakers, regulators, insurers, and providers a complex ecosystem of interests and incentives that the study described but could not resolve. What the research did was establish the stakes. Surprise billing was not a niche problem affecting a small number of unlucky patients. It was a structural feature of the health care market with system-wide financial consequences.
For patients, the immediate advice remained the same as it had always been: ask questions, verify network status, request cost estimates when possible. But the deeper lesson was about the limits of individual action. The prices embedded in the system reflected bargaining power that individual patients could not influence. Reforming those prices would require collective action through legislation, regulation, or market redesign.
Until such reform arrived, the hidden cost would remain in the premium. Not visible. Not avoidable. Just there, quietly, for everyone who paid.
Where to Read Further
The full analysis by Erin Duffy, Erin Trish, and Loren Adler is available through the Brookings Institution's health policy research portal, where the authors detail the study methodology and findings. The USC Schaeffer Center for Health Policy and Economics hosts a companion version of the research with additional context on the policy implications. For a foundational explainer on how surprise billing works and why it persists, the Brookings Institution's explainer on what surprise billing is for medical care provides essential background on the provider types, market dynamics, and public opinion data that frame the issue.
Key Provider Types That Commonly Issue Surprise Bills
| Provider Category | Patient Choice Factor | Billing Leverage |
|---|---|---|
| Anesthesiologists | Assigned during procedures; rarely chosen by patient | High can threaten out-of-network billing |
| Radiologists | Assigned based on hospital staffing; rarely chosen by patient | High can threaten out-of-network billing |
| Pathologists | Assigned based on hospital staffing; rarely chosen by patient | High can threaten out-of-network billing |
| Emergency Medicine Physicians | No choice emergency situations preclude selection | High guaranteed patient volume regardless of network status |
| Emergency Facilities | No choice in emergencies; limited choice in non-emergencies | High can leverage surprise billing in negotiations |
| Emergency Ground Ambulance Services | No choice ambulance dispatched based on 911 response | High guaranteed patient volume regardless of network status |
These six provider categories account for approximately 12% of insurers' total spending on medical care, making their pricing behavior a significant driver of premium costs across the commercially insured population.