A pair of new stories investigating the increasingly prevalent practice of insurance companies refusing to cover certain medical treatments has sparked outrage among patient advocates and proponents of Medicare for all. The reports shed light on the detrimental effects of for-profit healthcare.
ProPublica InvestigatesInsurance Company Denials, Causing Patient’s Financial Burdens
ProPublica conducted an investigation focused on the secrecy surrounding insurance companies’ denial of claims, a practice that often leaves patients burdened with substantial medical bills and little understanding of why their claims were rejected.
The extent of insurance companies’ denial rates is shrouded in secrecy. As Robin Fields of ProPublica revealed, “There’s nowhere that a consumer or an employer can go to look up all insurers’ denial rates—let alone whether a particular company is likely to decline to pay for procedures or drugs that its plans appear to cover.”
Despite provisions in the Affordable Care Act that granted federal regulators authority to demand insurers provide information on denials, transparency for consumers remains elusive. Over a decade later, the federal government has collected only a fraction of the required data, which experts claim is inadequate, inconsistent, and confusing.
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Kaiser Family Foundation Study Shows 17% of In-network Claims Denied in 2021
Available data indicate an upward trend in claim denials. According to a study by the Kaiser Family Foundation (KFF), nearly 17% of in-network claims were denied in 2021 for Affordable Care Act plans.
In a column for KFF Health News, Elisabeth Rosenthal highlighted how denying payment for treatments benefits insurers by keeping their revenue high. Many Americans have encountered the frustrating experience of having healthcare claims denied, often seemingly arbitrarily and without a compelling explanation. Insurers increasingly rely on computer algorithms or inexperienced personnel to issue rapid-fire denials, sometimes without reviewing the patient’s medical records. Job titles such as “denial nurse” have emerged within some companies.
Advocates argue that insurers have incentives to avoid transparency. Former Cigna executive turned Medicare for All supporter, Wendell Potter, revealed that denying payment for medical care and drugs has become a key part of insurers’ business models, knowing that customers appeal less than 1% of denials. This translates into profits for insurers.
CEOs of the top seven private health insurance giants in the US collectively earned $335 million in compensation last year, as their companies continue to thrive financially.
Medicare Advantage providers, private insurers paid by the federal government to cover patient care, have gained notoriety for denying claims for medically necessary treatments, while enrollment in the program keeps surging. The actions of these insurers undermine the fundamental principle of Medicare—that individuals should receive the care recommended by their doctors.
An investigation by the Department of Health and Human Services inspector general found that in 2019, Medicare Advantage plans denied approximately 13% of prior authorization requests that would have been covered under traditional Medicare. This resulted in an estimated 85,000 additional care denials. Medicare Advantage plans also wrongly denied 18% of payment claims, affecting around 1.5 million claims. Such denials create a disincentive for doctors to recommend costlier yet potentially more effective care, out of fear of non-payment.
Progressive advocacy group Social Security Works, a proponent of Medicare for All, emphasized the profit-driven nature of private insurance companies, including Medicare Advantage plans. They argued that these companies generate profit by taking money from individuals and then denying them necessary care.
The personal story of Jenn Coffey, a former Republican state representative in New Hampshire, underscores the flaws in the current system. Despite her initial belief in the ability of private insurers to address healthcare issues, Coffey experienced constant rejection and second-guessing of her doctors’ recommended care options by her highly profitable Medicare Advantage provider, UnitedHealth. These denials impacted her cancer recovery and treatment for a rare and painful secondary disease.
Coffey now recognizes that the system cannot be fixed or repaired. Insurance companies serve as roadblocks rather than offering solutions. She, like many others, sees Medicare for All as the only way forward.
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