If an insurer wanted to lower the cost of care, the most economically literate move would be to invest in growing the supply of providers who can do the work. More providers, more competition, lower prices. Cheaper claims for everyone — in-network and out, this year and every year after.
That is not what insurers do. They spend the same money on something else: fighting an individual member's claim while the underlying specialty stays small, the prices stay high, and every future member who needs the same care hits the same wall.
That gap — between what would actually reduce cost and what insurers actually fund — is not an oversight. It is a predictable result of the time horizon the incentive points at.
Two clocks, one budget
A health insurer's cost discipline is measured at quarterly intervals against a medical loss ratio. The job is to keep this quarter's claims expense, this quarter's denied appeals, and this quarter's reserve adjustments inside a target band. Whatever moves spend out of this quarter — denying a claim, narrowing a network, shifting a service to prior authorization — counts as a win on the clock the insurer is being measured against.
The economics of a specialty's supply side run on a different clock. A new fellowship-trained subspecialist takes roughly a decade to produce: four years of medical school, three to seven of residency, one to three of fellowship. A telehealth-licensure expansion across state lines takes months to obtain and years to operationalize at scale. Contract incentives that pull more clinicians into a specialty propagate over enrollment cycles and credentialing windows that do not fit inside a fiscal quarter.
An insurer can act on either clock. The capital that funds a denial-and-appeals operation is the same kind of capital that could fund a supply-development operation. Only one of them moves the loss ratio this quarter.
Why specialty-shortage cases are structurally clean
Conditions like hypermobile Ehlers-Danlos Syndrome, POTS, MCAS, and other under-diagnosed multisystem disorders illustrate the dynamic with unusual clarity. The specialist pool that actually understands these conditions is small enough that two or three additional fellowship-trained providers in a state would measurably increase access and shift contract-negotiation leverage. It is also fragmented enough across payers that no individual insurer treats growing the pool as their problem to solve.
The result is a classic externality. The cost of training and contracting more providers falls on whichever payer fronts the investment. The benefit — lower prices for the specialty's services across the market — accrues to every payer in that market, including the ones that did not pay. Standard free-rider economics. Standard outcome: nobody invests, the shortage persists, and the price of every claim that touches the specialty stays high indefinitely.
Each individual member with one of these conditions pays for the persistence of that shortage in a different currency: denied out-of-network claims, ghost-network referrals to providers who do not actually furnish the service, and appeals that move no provider any closer to existing.
The moves an insurer could actually fund
None of the supply-development levers are mysterious. Insurers know exactly what they are. A short list, in increasing order of fiscal-year visibility:
Anchor contracting. Offer above-market reimbursement to the first one or two providers in a region who train in an underserved specialty, with the rate phasing back to market over five years as more clinicians enter the pool. This is the standard playbook for accelerating a fragile labor market and it is well within the operational repertoire of a mid-size payer.
Fellowship co-funding. Underwrite a portion of a fellowship slot at an academic medical center the payer already contracts with, in exchange for a multi-year commitment from the trainee to practice in-network in the payer's footprint after graduation. The cost is a rounding error against the appeals operation. The capacity it adds is permanent.
Cross-state telehealth scaffolding. Cover the licensing fees, malpractice riders, and credentialing time for in-network specialists to extend telehealth coverage into adjacent states where the payer also operates. This converts existing supply into more accessible supply without producing a single new clinician.
Patient-registry contribution. Fund the disease-specific registries that produce the diagnostic guidelines and the treatment evidence base. Better evidence shortens the diagnostic odyssey, which lowers downstream cost on every patient who would otherwise spend years cycling through the wrong specialists. This one is so cheap it is almost embarrassing that no payer of meaningful size leads on it for the conditions where it would matter most.
Every item on that list reduces multi-year cost. None of them reduce this quarter's loss ratio.
The incentive only sees one clock
The reason insurers do not run any of those plays is not that they cannot see them. It is that the person inside the insurer who would have to fund them is being compensated, evaluated, and promoted on the quarterly clock — and the savings, if they materialize, will materialize after that person is in a different role at a different company. The decision-maker pays the cost. Future enrollees and a future executive collect the benefit. Predictable.
The same logic explains why the appeals operation is well-funded and the supply-development operation does not exist. Denying one claim today shows up on this quarter's report. Funding a fellowship slot whose graduate enters the network in 2032 does not.
This is not a moral failure of any individual underwriter or medical director. It is the structural shape of how the incentive is set. An insurer that broke from it would, in the short term, look more expensive than its peers. In a market where members shop on premium and where employer plan sponsors shop on the next year's renewal rate, looking more expensive in the short term is how you lose enrollment. The first insurer to invest in supply pays twice — once for the investment, and once in lost market share to the competitors who did not.
What it adds up to
The result is a system that fights one member's claim today and prices the same care higher for every member tomorrow. The denial budget and the supply-development budget compete for the same capital, and the incentive structure picks the denial budget every time.
Insurers are optimizing for not paying today. They should be optimizing for the care costing less tomorrow. Until something changes the clock the decision-maker is being measured against, both halves of that sentence will keep being true.