For Therapists: How Insurance Companies Undermine Mental Health Care
Insurance companies hold enormous influence over the delivery of care of psychotherapy. And their policies—created by people who are not even therapists—limit the very kind of healing they claim to support. How many clients have you turned away because you couldn’t accept their insurance, the client couldn’t afford their co-pay or co-insurance, or the insurance company gave an incorrect cost per session to the client? Have you ever suffered a clawback—returning your earning to the insurance company because they decided your client is not suffering enough, when they haven’t even spoken to the client.
Here are some of the ways this system shapes and distorts the therapeutic process:
The Hidden Cost of Coverage
Accepting insurance is anything but simple. Every session you must justify to an insurance company why the session was necessary. And this system doesn’t truly care; it’s designed to control costs. An insurance company may then deny coverage if the therapist does not demonstrate the client’s progress as being quick enough according to the insurance company’s made up timeline. And then to have sessions approved by an insurance company, the therapist must prove “medical necessity,” assign the client a mental health diagnosis and document how therapy is treating that “illness,” all starting in the first session. And once that diagnosis exists, it becomes part of the client’s permanent medical record and potentially visible to future insurers, employers, or institutions.
Being turned away because of these reasons hurts clients. Many clients simply don’t know how much insurance companies shape their care until they experience the frustration firsthand. Clients start therapy feeling hopeful, only to find out that their therapist isn’t covered by their plan, or their co-pay is much more than the estimate their insurance company provided. Some can afford self-pay, while some cannot and must stop therapy altogether or try navigating the insurance system again.
But we know that not all pain is pathological. Clients may be grieving, stuck in a pattern, exploring their identity, or processing trauma that doesn’t fit neatly into a diagnosis. Your client’s authentic transformation and deep healing is not of value to insurance companies.
The One-Size-Fits-All Model
Insurance companies prefer measurable, manualized, short-term treatment models. For certain issues, like specific phobias or behavior-based habits, these approaches can be helpful. But for many clients, healing requires longer term care.
True, deep, psychotherapy is about relationships and wellness, not just absence of symptoms. It unfolds through trust, time, and safety—concepts difficult to quantify and shouldn’t be rushed.
Yet, under insurance constraints, therapists are pressured to limit the number of sessions or length of time for sessions, focus on symptom reduction instead of root causes, and use “billable” therapy methods instead of what could be more effective.
When the structure of care is dictated by what’s reimbursable rather than what’s meaningful, therapy becomes less human and more mechanical.
The Strain on Therapists
When we work with insurance panels there’s often enormous administrative burdens: hours spent on claims, treatment reviews, managing documentation requirements, and justifying a client’s care via 20-60 minute phone calls with insurance companies. We are reimbursed at rates that undervalue our training and expertise, which have also decreased despite the cost of living increasing. But somehow we’re okay accepting an excessively low rate if the insurance company is “easy to work with.”
Some therapists leave insurance networks altogether to preserve the integrity of their work, which can make it harder for clients to find affordable care. They do so not to exclude people, but to protect the quality and integrity of their work. Therapy can be a confidential, collaborative, and a deeply human process when it’s free from outside oversight.
Others stay and struggle with burnout or ethical tension, seeing as many clients as they can to cover the cost of running a practice and basic cost of living expenses. In these circumstances, it’s difficult to provide high quality care.
When the system pressures therapists to work faster, see more clients, and then justify every session, everyone loses. The kind of therapy that changes lives cannot thrive in an environment designed for efficiency over empathy.
The Heart of the Matter
None of what true therapy is fits neatly into the checkboxes of “medical necessity.” Insurance companies didn’t set out to harm mental health care, but their systems weren’t designed for the kind of deep, relational work that true therapy requires. Recognizing that truth allows everyone to make more informed, empowered choices about their care. Because healing shouldn’t have to fit into a billing code and diagnosis.
