Health insurance claim denial rates range from 13% to 35% by insurer

https://www.randalolson.com/2026/06/16/aca-insurer-claim-denial-rates/

by brandonb • 1 month ago

71 71 1 month ago

vkou2• 1 month ago

Good thing the moral hazard of getting unnecessary healthcare that your doctor ordered for you is controlled for.

Perhaps someone should also control the moral hazard of the people owning and running this racket getting unnecessary amounts of money, or an unnecessary seat at the table.

fnordpiglet2• 1 month ago

The moral hazard is making a product with nearly totally inelastic demand a multi layered adversarial free market with structural price opacity. Thanks Reagan!

thomasdziedzic• 1 month ago

Reagan hasn't been president for close to 40 years and died more than 20 years ago. At what point do we accept responsibility for this instead of blaming dead presidents?

IncreasePosts• 1 month ago

Everyone is in on the grift in the industry. Obama wanted to go single payer but realized 10% of america would be out of a job if we streamlined the bureaucracy

vkou2• 1 month ago

Nah, the problem was that the blue dog democrat congresscritters (holding usually red districts) would have been out of a job.

So instead of single payer, everyone got the ACA, and then the blue dog dems lost their jobs anyways.

dghlsakjg2• 1 month ago

Obama proposed and pushed for single payer and it was voted down in the senate. Specifically, if you want to blame someone, it was Joe Lieberman who would have been the deciding vote, and he killed it.

Joe Lieberman realized that he was from a state with massive moneymaking insurance operations. Had nothing to do with Obama streamlining bureaucracy.

aetch• 1 month ago

Had me in the first half there

xnx2• 1 month ago

I like the US healthcare system as much as anyone, but this analysis seems to border on useless. Even examining by the type of claim does not control for validity of those claims.

bluefirebrand• 1 month ago

I like the US healthcare system as much as anyone

I can't tell if you're being serious. I'm not American but all of my American friends tell me the US healthcare system is an absolute nightmare

Insanity• 1 month ago

It’s definitely a sarcastic comment lol.

room271• 1 month ago

'as much as anyone' = they don't like it

xnx2• 1 month ago

That phrasing may not translate well. "as much as anyone" means "Most people don't like it, and I don't like it either.".

My criticism of the analysis is not a defense of US healthcare.

strictnein• 1 month ago

People like to complain about things and have very unrealistic perceptions of what other systems are like. It's also really unpopular online to say good things about the US healthcare system. It definitely has some issues, but it also does some things really, really well.

These are, of course, anecdotes, but here some things from my life:

- Next day MRI for my wife after she injured her back at the gym. Had it been more serious she would have been seen the same day.

- Friend's kid was diagnosed with leukemia. They were admitted to the cancer ward the next day, where they stayed for months. The room was large, with a pull out double bed for my friend and his wife to sleep on. The same thing happened with my cousin when she was diagnosed with a brain tumor.

- Our kids were both born at one of the "poor" hospitals in the largest city in our state. We were the only ones on the floor who shared the same last name, and most patients did not speak English. It was excellent. We had our own room (with bathroom, shower, small bed for me to sleep on), great staff, etc.

- Urgent care available 7 days a week at numerous locations within a 5-10 minute drive from my home. Typically a 15-20 minute wait for things like stitches, burns, dislocated fingers, etc.

- Nice pharmacies all over the place, which also provide things like vaccinations. Lots of our medications are now just shipped to our house directly

- The small surgeries I've needed have been done within 2-3 weeks of meeting with my primary care doctor. If they would have been more serious, the timeline would have been significantly shorter, within a day or two. Things like colonoscopies are also available within a number of weeks.

- The hospital system we use has done a really good job embracing technology. The app/website they offer can be used to view all of your test results, message the doctors or nurses, schedule appointments, etc

s0ibeanz• 1 month ago

What we have today isn't insurance in any meaningful sense. Traditional insurance is about pricing risk: healthier people pay less, higher-risk people pay more, and the pool works because premiums reflect actuarial reality.

The Affordable Care Act largely banned that. Insurers can no longer use health status or pre-existing conditions to set rates (via "community rating" and guaranteed issue rules). The result is that everyone effectively pays into a giant, heavily regulated pool. There's a finite amount of money in that pool, so someone has to ration care. That job now falls to the insurance companies, who deny or delay procedures, medications, and treatments.

Health insurers aren't saints — but the core problem is structural. When you remove risk pricing while mandating coverage, adverse selection and cost shifting are inevitable. The ACA patched one serious issue (pre-existing conditions) by breaking the fundamental mechanism that makes insurance sustainable.

We need to be honest about the tradeoffs instead of pretending this is still "insurance."

amanaplanacanal• 1 month ago

It makes sense. People don't want insurance, they want health care.

jemmyw• 1 month ago

Basically you have a tax by another name.

That's not necessarily a problem in and of itself, there's plenty of areas in life where we have essentially a tax by another name or system. The problem I see, looking from the outside from a country with a "universal" health system, is that the American way of doing it is extremely complex, which pushes up the price of everything. It's not that there are profits involved, it's that there are so many incentives, and then patches to prevent them, generating more in other places.

lp4v4n• 1 month ago

The popular image of a denial is an insurer overruling a doctor on whether a treatment is needed. That is the exception. Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.

When an insurance company denies a health claim overruling a doctor, it can be necessarily concluded that either:

1. somehow the company knows more about the patient's condition and the doctor is wrong

2. the doctor is defrauding the system and the insurance company caught the doctor cheating

3. the company is defrauding its clients.

There is no middle ground honestly, and yet "5% of denied in-network claims were turned down because the care was deemed not medically necessary".

This is absolutely crazy and evil. I would expect a few thousand cases annually and probably for million of cases you get denied what you pay for because "we detected your doctor is wrong and we're not paying".

In fact the single largest category, 36% of denials, was an unexplained "other." A system that rejects tens of millions of claims a year and files more than 1/3 of those rejections under no stated reason is hard for an outsider, or a member, to audit.

I can't even imagine getting lifesaving care denied because of "other". I didn't know things were so grim in the USA and honestly now I'm kinda surprised that more people are not getting "Luigi'd".

bonsai_spool8• 1 month ago

5% of denied in-network claims were turned down because the care was deemed not medically necessary".

I think the truth is murkier than what you're providing. With the caveat that I am presenting a strong case here that likely isn't what occurs most of the time, consider this:

A person may require long-term therapy after an illness. There are data suggesting that beginning this therapy works better once you attain a certain level of clinical recovery in the hospital. There are also data suggesting that it's better to begin the long-term therapy as early as possible.

Both sets of data are, on their face, credible. There is no obvious reason to always believe one set of data over another. Reasonable people can make reasonable arguments to reasonable listeners for either case. Note that this does not mean that there is not a 'correct' interpretation for any given person's clinical situation!

So what does your insurance company favor? Obviously it will always favor the less expensive option, and there will be no way for them to be convinced otherwise because the underlying question is just not well-determined.

rainsford• 1 month ago

But in a case where either treatment choice could be reasonable, doesn't it seem like a better answer for the insurance company to defer to your doctor rather than their own assessment? Whoever is making that determination at the insurance company doesn't know you, hasn't treated you, may or may not have more expertise on the specific illness than your doctor, and as you pointed out the insurance company doctor is ultimately motivated by keeping costs low more than they are motivated by keeping you healthy.

Obviously I can see why the insurance company would prefer to be making decisions about your treatment, but it's not obvious why any of the rest of us should view that as an optimal or even acceptable way of running healthcare. It's essentially the car insurance model but with vastly higher consequences, and it's not great even when it comes to car insurance.

tbrownaw• 1 month ago

4. It's something that might help a bit, but the patient would still be fine without. Ie, a disagreement over what "necessary" means.

tfrancisl• 1 month ago

... which many would argue is between a patient and their doctor. We dont pay premiums for no reason, and the insurance company isnt really allowed to determine what "necessary" means.

BrenBarn• 1 month ago

That is still the insurer saying they know more about the medical situation than the doctor. The doctor is the one who is equipped to decide what is necessary.

colonCapitalDee• 1 month ago

There is absolutely a middle ground? The healthcare system, like any system, has an incentive structure. Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice. Doctors are not angels sent from heaven, they're people like you and me, and they respond to incentives like you and me. It's also well known that people strongly prefer receiving treatment over not receiving treatment, even when the cost to their health of receiving that treatment outweighs the expected benefit! Given that people push their doctors into prescribing treatments, and doctors are incentivized to go along with it... you would obviously expect some proportion of prescribed treatments to not be medically necessary. 5% sounds about right. And the kicker is that denying these treatments improves health outcomes for the general population, because those medical resources can get routed to the people who actually need them. Every successful public health system has an opposing force built in to it to limit the spurious consumption of scare medical resources, because without such a force costs balloon and the system becomes unsustainable. Not to defend the US healthcare system of course, our cost problem is worse than anywhere else...

bonsai_spool8• 1 month ago

Doctors are incentivized to prescribe treatments, because that's how they make money for themselves and their practice.

This is literally illegal! Physicians cannot refer patients to entities they own or have an interest in.

What is perverse is that, while we have the Stark Law to constrain physician behavior, we've decided that it's okay if a diffuse group like a non-physician-owned hospital chain enforces rules to this effect.

cucumber3732842• 1 month ago

You ever been to an obstinate DMV? Dealt with an obstinate permitting office? They all act like this. They unilaterally concoct rules that make it hard for honest people doing honest things to get the outcomes they ought to.

Healthcare ain't no different. Bureaucracy gonna bureaucracy.

umpalumpaaa• 1 month ago

It should be noted that they use the term “medically necessary” which is a very low standard.

There is also “medically reasonable”.

For example getting your teeth cleaned professionally is not medically necessary. But it’s medically reasonable.

I don’t want a health insurance that only does “Medically necessary” things.

codeddesign• 1 month ago

Dental is completely different than medical in the U.S. and a different insurer/carrier. Sorry, but comparing apples to oranges here.

FireBeyond5• 1 month ago

Having worked at companies that built software for health insurers, I have seen the "evil" you describe. From "hey, can we mine the claims database for suspected/confirmed familial relationships and look at possible diagnoses to assign risk profiles?" No, you can't. "Why not? It's in the database." Because it's federally illegal. "Oh. So you won't expose that data?" We won't.

In this case, two things:

The system decides on the initial denial at most insurers. And when a claims adjuster reviews, the system is presumed to be accurate, and the adjuster has to provide reasoning to overturn the system's denial (this is before the denial has been returned to the provider). It's not "assume the provider was correct", but "we've decided to deny it, give the system reasons why we shouldn't". And that person reviewing it is often an LPN (no shade thrown at LPNs, but they shouldn't be overriding physician decisions, doubly so given an absent history).

How this has affected me personally: I had, for most of my life, a severely deviated septum. I spent most of my life mouth breathing because I could barely pull enough air through my nostrils to make breathing that way not an active effort. I finally went to an ENT who confirmed, sure enough, an approximately ninety per cent deviation. "Great, so lets schedule surgery". ENT: "Slow down. First I have to prescribe you these two nasal sprays so that when you come back in four weeks and report no change, because to both our disappointment, the sprays didn't realign and open up the cartilage in your nose, then I can submit the pre-auth to your insurer and they won't immediately reject it." What a fucking joke.

"we detected your doctor is wrong"

It's not even that your doctor is wrong, it's "our nurses/expert systems disagree with your doctor so we're not paying".

beej715• 1 month ago

When I went to an in-network ENT (that I found on my insurer's website) they were billed $850 for my 10-minute exam. The insurance said they'd pay $550. So I got to pay the rest. And this is gold coverage with an already-met deductible. You just never know what the roulette wheel is going to hand out.

Makes me think of that study a few years ago that found most Americans couldn't afford an unexpected $400 medical bill.

EtienneDeLyon• 1 month ago

Did you try looking for a less-expensive ENT?

beej715• 1 month ago

I did not, but in my experience it's difficult to pry prices out of medical providers in advance.

memcg• 1 month ago

What insurance company do you use? I thought that in-network means the provider has agreed to accept the insurers usual and customary rate and that you are not liable for the difference.

beej715• 1 month ago

This was Providence in Oregon. I thought that's what it meant, too. But in this case there's a contracted "allowed amount" that is all the insurance will pay the doctor. If the doctor chooses to charge more, you get to pay that.

Which really freaks me out. If you're insured at a contract rate of $5000 and they bill $30,000...?

naturalmovement2• 1 month ago

You may have had 10 minutes face-time with your doctor, but he spent time before your exam reviewing your case, and time afterwards dictating the notes. So likely 30-40 minutes was spent on you and this does not include the nurses and front desk support staff, the janitor cleaning the toilets, all who need a living wage, rent and/or property tax for the facility, facilities maintenance and upkeep.

Not to mention the $$$ paid to greedy software engineers for all the mandatory e-health software systems which are all recurring-payment SaaS now raking in crazy amounts of cash.

Do you think your doctor is pocketing all that money? The average do-nothing schlub working in tech is making more than his doctor.

beej715• 1 month ago

I didn't assert the doctor was pocketing it all out that there weren't other expenses. But if it costs $850, I'd like insurance to pay $850.

claw-el3• 1 month ago

If patients and doctors start using LLMs to strategize how to maximize claim approval rate, I wonder how would the insurance companies react to it. Would it start getting more strict and start requesting for more evidence?

eightysixfour2• 1 month ago

Hospitals and some doctors already do - it isn’t a one-sided problem with insurance as the only group optimizing for their desired outcome.

claw-el3• 1 month ago

I would watch out for insurance as an industry having to increase rates because successful claims rate are increasing much faster than the industry can handle.

Not supporting nor opposing the insurance industry, just something I think the public should watch out for and understand.

lebovic• 1 month ago

This is already a thing! For example, Neon Health does this for providers. I haven't heard of any changes to the process yet, but I imagine insurers move slower than startups.

fny• 1 month ago

Before everyone wants to throw a rock at another CEO...

Only about 5% of denied in-network claims were turned down because the care was deemed not medically necessary. The rest were administrative, for an excluded service, for a missing referral or prior authorization, or for a reason the insurer never specified.

I worked in health tech for a while, and I can tell you the muck around a lot with ICD/CPT codes to maximize billing along with other shenanigans. There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. The same kind of thing is often done by physicians who want to juice insurance.

Be mad--very mad--at hospitals and drug cos. As providers, they present themselves as patient advocates, but they're responsible for the outrageous healthcare costs. The dollar amount paid out by US insurance companies is maybe 2x that of other OECD countries, but the healthcare we get back from providers is trash (and extortive) by comparison.

bonsai_spool8• 1 month ago

There was actually a project at an innovation center at a well-known medical center which leveraged ML to maximize the amount of codes they could bill for without being rejected. T

I think this perspective makes sense from someone who works on the insurance side of things.

On the other side, there is no way for the insurance company to acknowledge the clinical severity of a patient except via abstruse ICD code choices that only billing clerks know. So this is a perfect case for an LLM - map normal human words onto ICD claim codes to accurately convey patient severity.

DougN7• 1 month ago

I was on one of the insurers that denied the fewest claims. However, they also had the fewest doctors. I live in a good sized metro area, but the only podiatrist was 50 miles away in a tiny town. I imagine that had the same ultimate result of denying claims.

recursivecaveat• 1 month ago

It seems kind of silly to tout the 5% "not medically necessary" line when 7 times as many were denied for "a reason the insurer never specified". I wouldn't really describe claim denials for reasons like administrative or missing referrals as value neutral either. These are roadblocks controlled by insurers that waste patient and provider time, and reduce access to care.

burnt-resistor• 1 month ago

URL now points to Teaching an AI Agent to Make Beautiful Charts

https://www.randalolson.com/beautiful-charts-with-ai/

I'm guessing one of the referenced insurance companies threatened to sue.

Archive link: https://web.archive.org/web/20260621173215/https://www.randa...

Health insurance claim denial rates range from 13% to 35% by insurer

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