It's incredibly costly, and I think it's also incredibly costly in difficult to measure ways. The main method that the average American (read as: not incredibly wealthy person who has lawyers retained) uses to deal with the early stages of this pipeline is engaging in interminably long phone calls, going back and forth between multiple stakeholders, and trying to negotiate as to what actually needs to be paid or done individually. The incentives are aligned for various members of this process to make it a complicated and frustrating experience for customers, because they often benefit from increasing friction for the insured party. I think if you measured working hours lost or impacted by this it would be startlingly high.