>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".

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.

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.

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?

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.

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.

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."