Health Insurance Coverage Denials: A Threat to Consumer Choice

Health insurance companies are facing justified criticism for denying claims more often and becoming increasingly unlikely to cover vital, sometimes life-saving, treatments. These denials go beyond complex medical procedures or expensive experimental drugs – they are now affecting even basic preventative care, which consumers expect as baseline components of their health insurance plans. Unfortunately, this reveals another layer of a growing trend wherein insurance companies put profits above patients. To help patients stop health issues before they start, we need to make changes that hold health insurance companies accountable while still allowing patients the choices in healthcare they deserve. 

Need for Data & Transparency on Coverage Denials

Throughout the country, health insurance companies are denying more and more claims for necessary medical care. In 2022, an estimated 15 percent of all claims submitted to private payers faced denial, including treatments and services that had received pre-authorization. 

This number could be much higher, as current reporting requirements for health insurance companies don’t require full disclosure of their denials. The Affordable Care Act granted federal regulators the ability to collect information from health insurance companies on their coverage denials, however only a fraction of the information has been collected thus far. What little information and data was released has been deemed by experts as so crude and inconsistent that it is essentially meaningless.

This lack of transparency leaves patients blindly entering into health insurance plan contracts without knowing fully what they will and will not cover – and if they face a coverage denial, then the choice is often to let their health deteriorate or pay the exorbitant out-of-pocket costs. 

Real Life Consequences of Coverage Denials

When you acquire health insurance, the hope is that you won’t need to use it, but it’s there to help in case you do. Unfortunately, even while paying all of your premiums and deductibles, a claim for coverage can still be denied.

One egregious example of coverage denial is what was experienced by Sayeh Peterson, who never smoked cigarettes and still learned that she had stage 4 lung cancer at age 57. Her doctors suggested genetic testing to help investigate the cause. The genetic tests showed that a rare genetic mutation had caused her illness, which then helped her medical team to create an effective treatment plan to aggressively attack the cancer. While preventative tools like genetic testing are required by law to be covered by health insurance companies in her state, her health insurance company had denied the coverage, leaving Sayeh with over $12,000 in medical bills to pay on her own. 

Another example is that of U.S. Customs & Border Protection (CBP) agents in Arizona being denied coverage by Blue Cross Blue Shield of Arizona (BCBS) for necessary preventative hearing protection. These agents are plagued with loud noises that can cause significant hearing damage from things like trucks, helicopters, and other gear needed to do their job. To prevent hearing damage and additional healthcare costs from dogging the agents, CBP wants FDA-approved Phantom hearing protection as it guards the user’s hearing while letting you stay alert and in communication with others. Despite BCBS plans covering preventative care, they have refused coverage of Phantom hearing protection to CBP agents, stating it is not a “medical necessity”.

What health insurance companies are failing to understand is that by prioritizing preventative and effective care early on, they save vast sums of money in the long run as morbidities are addressed earlier. This prevents conditions from spiraling out of control to the detriment of both the patient’s and insurance company’s bottom line. 

Time For Reform

The health insurance industry must prioritize patient care over cost-saving measures. 

One easy solution is to require health insurance companies to be more transparent in their coverage decisions. Providers must be open with consumers about denial rates and the standards they use to determine what is and what is not a medical necessity. 

Making this information public will spark competition, push insurers to improve approval processes, and aid consumers in evaluating their coverage options. It’s important we have accountability mechanisms built in where there is easy recourse for patients to rectify a wrongful coverage denial.

Another common sense solution is to encourage preventative care – whether that be genetic testing, hearing protection, or whatever else – so as to alleviate consumer costs in the long term. The faster we can address a medical issue, the less patients’ health and wallets will suffer.