Most people over 40 remember a time when health insurance was simple. We paid our monthly premiums and received coverage for almost every doctor visit and procedure that wasn’t obviously elective.
Today, that arrangement is but a happy memory of a simpler time. The new reality is a relationship between insurer and customer that’s downright adversarial, where profit margins are prioritized over quality of life or, at worst, preventable death.
Why are denial rates climbing?
The Affordable Care Act (ACA) was designed to prevent insurers from rejecting customers with preexisting conditions. With that revenue-boosting tactic gone, insurers have compensated with a tsunami of claim rejections. This new profiteering tactic is now so unambiguously entrenched in the industry that a former Medicaid worker in California, tasked with upholding preliminary rejections from thousands of claims, was given the job title “denial nurse.”
This wasn’t supposed to happen. The Department of Health and Human Services (HHS) was ostensibly tasked with monitoring ACA and private insurers for precisely these abuses and making that data public so that anyone could check the denial rates of prospective insurers. That oversight was seemingly abandoned before it ever got started.
A revealing KFF Health News study notes that only one person submits an appeal for every 500 claims rejected by ACA plan providers. With numbers like that, insurers have little motivation to do the right thing.
Demonstrating empathy does not compute
People worried about AI turning on and exterminating humans will be alarmed to hear that the battle is underway. A ProPublica investigation into insurance mega-provider Cigna, which collects monthly premiums from 170 million people worldwide, has a system that allows medical reviewers to bulk-reject claims at a rate of 50 every ten seconds.
We’ve arrived at a frightening juncture where providers aren’t even reading claims before denying them. Claim processing algorithms have eliminated the human element, and associated salaries, in the review process, cumulatively saving insurers $11 billion a year.
We haven’t even mentioned the most absurd parts yet
The same KFF study on ACA plans found that an average of 17% of claims were denied for visits to in-network doctors and hospitals. One particularly vigorous insurer skewed the average by rejecting 80% of claims.
KFF and NPR have a joint project called “Bill of the Month,” highlighting some of the most ridiculous insurance claim denials. One letter, addressed directly to a newborn baby, explained that they would not pay for its fourth day in the neonatal ICU because it was breathing on its own and drinking milk from a bottle. The baby should have studied its policy more closely.
Claim reviews were formerly reserved for exceptionally expensive treatments. These days, thanks to insurers’ money-saving automation, patients receive rejections, accompanied by incoherent reasons, for trivial claims like asthma inhalers and heart medicine.
This insanity could end overnight if the HHS finally embraced its forgotten obligation to monitor insurers for gross breach of duty. In the meantime, we should all keep one unblinking eye on our insurance statements for rejections and mystifying justifications.