America’s Annoyance Economy Is Growing
On a Wednesday evening in mid-June, Ralph Coolman, a small-business owner and accomplished athlete, set out to run a 5K in Ventura, California. He quit after a mile, and spent the next few days afflicted by nausea, indigestion, and exhaustion. His wife, Erika, a nurse and an athlete herself, figured he had the flu. But on Saturday morning, Ralph began breathing rapidly. She rushed him to an urgent-care center, where a doctor put him on oxygen and sent him to the emergency room. Four or five hours after he arrived, Ralph was dead of a heart attack at the age of 62. Shortly after, Community Memorial Hospital told Erika his care would cost roughly $270,000.
“We always had insurance—always,” Erika told me. But when Ralph got sick, she was in the process of changing jobs. Erika initially did not opt to cover Ralph on the COBRA plan she was using as a stopgap, because he was going to purchase individual coverage. She later changed her mind and sent a check in to cover his premium. The insurer “ended up adding two months on for me” instead of adding her husband, she told me. “I didn’t find out until it was too late.” Ralph was uninsured when he died, thanks to the complexity of the American insurance system. That left his family on the hook for an enormous bill they couldn’t begin to understand, thanks to the complexity of the American health-care system.
While grieving, Erika had to put together her husband’s memorial service, try to keep his business afloat, and handle the mundane bureaucracy of death: legal certificates, beneficiaries, account issues, estate management. “Ralph thought he was invincible,” Erika told me. “He didn’t make any preparations.” Matt Rosenberg, Erika’s brother-in-law, added, “It’s really hard to see paperwork through tears.”
After Erika tried and failed to appeal the COBRA issue, she was inclined to pay the hospital what she could “and be done with it,” Rosenberg told me. “I was like, no, no, no. That’s what they count on—people making big decisions in confusing moments. Send me everything. I will deal with it. We’re not going to be those people. I’m not scared of a fight.”
The Coolman family had experienced a sudden trauma and ended up enmeshed in what Chad Maisel of Groundwork Collaborative, a progressive think tank, and Neale Mahoney, an economist at Stanford, call “the annoyance economy” in a new study: “the steady grind of small hassles that eat away at our time, patience, and wallets,” turning simple interactions into “fraught ordeals, leaving people feeling overwhelmed, ignored, or jerked around.”
To be sure, consumers have never had an easier time spending their money. You can choose from among millions of films on your iPhone in an instant, buy a plane ticket to Bali in minutes, get a restaurant meal delivered in an hour, and have a full house’s worth of furniture placed in your home in a few days. Yet businesses have also embedded countless frictions into the consumer experience. You might expect such hassles in health care, but they’re everywhere. We live in a world of “total bureaucracy,” as the anthropologist David Graeber put it. Our grandparents bought goods and services outright, but we purchase subscriptions and rentals and insurance coverage and contracts, handling rebates and intermediaries and applications and enrollment periods. As of 2018, the country had 826,537,000 consumer-arbitration agreements in force, one study found. And that’s an undercount.
“Companies have worked really hard to make it easy for you” to spend, Lindsay Owens, the executive director of Groundwork, told me. “Of course, when it comes to trying to get out of a purchase or out of a subscription, the same design choices are flipped and reversed.” She likened digital consumer platforms to Las Vegas casinos. Designers create colorful playgrounds with flashing lights and free drinks and chandeliers and mirrors and water features, where gamblers never know what time it is and never see a path to the exit.
The American government doesn’t help the situation. Washington wraps essential programs in red tape, forcing millions of people who have lost a job, lost their insurance coverage, developed a disability, given birth to a child, gotten divorced, or slid into poverty to pay a tithe in paperwork before accessing aid. The government shuns universal, direct services and opts for subsidies, grants, credits, and loan guarantees. It works through nonprofits and contractors and subgovernments, so people rarely know what is on offer and who is actually providing it. Washington underinvests in agile digital systems. (Why on earth does part of the Social Security website have business hours?) It declines to provide the automatic services many other wealthy countries do, such as free tax preparation. It shifts the work of public administration onto the public, creating “time taxes,” as I call them, everywhere.
Moreover, the government allows or even encourages private businesses to entrap customers in bureaucratic mazes. As Graeber argued, Washington “provides the legal framework” and “the elaborate mechanisms of enforcement.” The American government lets insurers deny necessary medical procedures, just as it lets hospitals make up prices and hide them from patients. It lets employers foist extortionate contract terms on workers. It lets airlines and gyms and multilevel marketing companies and landlords and time-share businesses and auto companies and banks and telecoms swindle their customers with fine print.
Maisel and Mahoney decided to try to count the hours lost to this “total bureaucracy” and tally up the annual cost to the public: $8 billion for robocalls, $25 billion for phone scams, $22 billion for phone calls (just phone calls!) with insurance administrators, $90 billion for junk fees, $19 billion for medical waiting times, $2 billion for governmental wait times. The annoyance economy saps American families of $165 billion a year, they estimated. And that’s an undercount.
Rosenberg, who works in marketing consulting, was determined to get his sister-in-law’s bill down. He was willing to spend his time negotiating. He asked the hospital for an itemized bill. The hospital offered the Coolmans a discount, knocking the total down to a little less than $200,000. Rosenberg asked for the itemized bill again. The hospital sent him a document with proprietary procedure codes, “meaning I couldn’t look them up anywhere. They only existed inside the hospital’s computer.”
The family kept trying to speak with a human being in the billing office. “The person we were supposed to be talking to kept ignoring us,” Erika said. “At one point, she admitted that she wasn’t taking care of us, and blamed it on the fact that they had gotten new computers five months before.” Eventually, Community Memorial provided Rosenberg with a “complicated form filled with boxes for codes and procedures and costs and patient information and hospital information and all kinds of things that no human being can understand.”
Rosenberg fed the document into Claude, an AI system, and asked it to figure out what Medicare would have paid for his brother-in-law’s care, while also flagging any confusing or questionable codes. After some back-and-forth with the chatbot, Rosenberg realized that the hospital might have over- and double-billed the family. Medicare likely would have reimbursed the hospital $28,675 for the services Ralph actually received. Claude helped Rosenberg write a stern letter, calling Community Memorial’s pricing practices “unconscionable” and noting that it had marked up certain tests by 2,300 percent. In the end, Erika Coolman and Community Memorial agreed on a total of $32,000. (The hospital declined to comment.)
The AI system equalized the asymmetries between institution and individual, Rosenberg told me. “Claude could search the Medicare rules and regulations in a way that I could have, I guess, but it would have been time-consuming, tedious, and I probably would have given up.” Others have used Claude and ChatGPT to help them negotiate with their internet providers, write letters to airlines, understand employment contracts, and slash through the fine print on retail deals.
Yet powerful institutions are adopting AI too, pushing those asymmetries right back up again and creating new ways for companies to screw over the public. Consumers are shuffled to chatbots instead of human agents. AI algorithms track customers and present them with different prices and contract terms. “Algorithms could make life easier,” Owens said. “But it is dizzying to think about the additional shifts coming.”
The only solution is for the government to do its job. It should require companies to act transparently. And it should protect consumers from extractive administrative practices. Granted, voters rarely make it to the polls or switch their political affiliation to support click-to-cancel rules and arcane insurance regulations. But restrictions on robocalls and hidden fees are among the most popular policy proposals out there, on a bipartisan basis; two-thirds of Americans think that Congress should address these time-wasting, income-sapping frustrations.
This winter, Erika started getting a new round of bills from providers involved in Ralph’s care. “That wasn’t good,” she said. Now the family is just refusing to pay.