Health insurance companies in the United States are very profitable. In 2021, the top five health insurance companies in the United States (UnitedHealth Group, Anthem, Aetna, Humana, and Cigna) made a combined profit of $60.6 billion. This represents an increase of 16% from their earnings in 2020. So why do they deny so many claims?
In short, denying claims is a handy way for insurers to keep revenue high — and just the sort of thing that provisions of the Affordable Care Act were meant to prevent. Because the law prohibited insurers from deploying previously profit-protecting measures, such as refusing to cover patients with preexisting conditions, the authors worried that insurers would compensate by increasing the number of denials.
A recent KFF study of ACA plans found that even when patients received care from in-network physicians — doctors and hospitals approved by these same insurers — the companies in 2021 nonetheless denied, on average, 17% of claims. One insurer denied 49% of claims in 2021; another’s turndowns hit an astonishing 80% in 2020. Despite the potentially dire impact that denials have on patients’ health or finances, data shows that people appeal only once in every 500 cases.
ProPublica’s investigation, published in March, found that an automated system, called PXDX, allowed Cigna medical reviewers to sign off on 50 charts in 10 seconds, presumably without examining the patients’ records.
Several factors contribute to the profitability of health insurance companies. One factor is the high cost of healthcare in the United States. Health insurance companies can charge high premiums because they know people will need to pay for medical care at some point. Another factor is that health insurance companies can deny coverage to people with pre-existing conditions. This allows them to keep their costs down by only ensuring healthy people.
The profitability of health insurance companies has been a source of controversy in recent years. Some people argue that health insurance companies are making too much money and that they are not doing enough to control healthcare costs. Others argue that health insurance companies are essential to the healthcare system and that they need to be profitable in order to stay in business.
The debate over the profitability of health insurance companies is likely to continue for many years to come. However, one thing is clear: health insurance companies are very profitable.
The other thing to remember is that employee health insurance premiums are rising. According to a report by the Kaiser Family Foundation, the average annual premium for employer-sponsored health insurance for family coverage was $22,463 in 2022. This represents an increase of 1% from the previous year. The report also found that the average employee contribution to the cost of family coverage was $6,106 in 2022. This represents an increase of 2% from the previous year.
Several factors are contributing to the rise in employee health insurance premiums. These factors include:
- The rising cost of healthcare services.
- The increasing number of people with chronic health conditions.
- The aging population.
- The decreasing number of people with employer-sponsored health insurance.
The rise in employee health insurance premiums is putting a strain on employers and employees. Employers face increasing costs, leading to job losses or wage stagnation. Employees are facing higher out-of-pocket costs, which can make it difficult to afford healthcare.
Several things can be done to address the rising cost of employee health insurance premiums. These include:
- Reforming the healthcare system to make it more efficient and effective.
- Expanding access to preventive care to help people stay healthy and avoid costly medical treatments.
- Providing tax credits to help people afford health insurance.
The rising cost of employee health insurance premiums is a complex issue with no easy solutions. However, it is an issue that must be addressed to ensure everyone has access to affordable healthcare.