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Critics Say Insurance Companies Deny Medical Claims to Make Billions in Profit

Sen. Bernie Sanders, patients and advocates are calling out insurers as analysts forecast premiums to spike.

Nearly one in five claims under Affordable Care Act marketplace plans were denied by private insurers such as Elevance Health in 2020.

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In what advocates call a “grotesque display of corporate profiteering,” the health insurance giant formerly known as Anthem reported making $2.3 billion in net profit off its policyholders over the past three months as analysts predict a dramatic spike in the cost of health insurance premiums in 2023.

Elevance Health, the largest for-profit company within the Blue Cross Blue Shield Association, surpassed Wall Street expectations on Wednesday and reported nearly $40 billion in revenue during the third quarter of 2022. Returns to shareholders increased by 7 percent, generating $1.6 billion in profits for investors. Elevance provides health coverage for 118 million people across multiple states.

Elevance claims its profits are the result of offering more service to more customers. However, health care activists who help patients fight for coverage from their insurance providers say a chunk of this profit undoubtably comes from denying insurance claims from sick people who cannot afford proper care otherwise. Denying claims, they say, is a “regular business practice” for squeezing out extra profits. Insurers know the vast majority of patients do not exercise their right to appeal when claims are denied and are often unsure how to do so.

“Part of this money is made denying claims,” said Aija Nemer-Aanerud, Health Care For All campaign director at People’s Action, in an interview. “How many surgeries, medications and doctor visits would $2.3 billion amount to if we didn’t live under a for-profit system set up to advance the interests of greedy corporations instead of actually care for people?”

A spokesperson for Elevance did not respond to an email requesting internal data that would show whether the company is turning profits by denying health insurance claims, but organizers have gathered horror stories from patients across the country. The six largest private health care insurers enjoyed a combined $41 billion in profits in 2021, and in 2020, private insurers denied more than 42 million in-network claims from patients covered by Affordable Care Act (ACA) marketplace plans, according to People’s Action and the Kaiser Family Foundation.

Thanks to federal transparency requirements tied to ACA subsidies, we know that means nearly one in five claims under ACA marketplace plans were denied by private insurers in 2020. This figure only includes federally subsidized ACA plans, not the private plans provided by employers that many people have. Eleana Molise, a neighborhood organizer with ONE Northside in Chicago, said one in seven of all medical claims are estimated to be denied nationally.

“This especially affects Black and Brown people who are sold the worst insurance, and people in rural America, where you get fewer or no health care providers, or they are ‘out-of-network,’ meaning you get stuck with the bill,” Molise said on Tuesday during a livestream conversation with health care advocates, impacted patients and Sen. Bernie Sanders (I-Vermont).

“A rational health care system is a system that guarantees health care for all as a human right, and it is a system that is cost effective, a system that is comprehensive … it is not a system designed to make private health insurance companies huge profits,” Sanders said, repeating his call for universal public health insurance known as Medicare for All.

Private health insurers will often refuse to pay for medical care under the rules baked into insurance plans — deductibles must be met, doctors must be within the insurer’s network, and any drugs prescribed must be on the insurer’s approved list of medications.

However, advocates report that people are often stuck with massive bills for medical care that is rightfully covered under their plans, forcing them to pay out-of-pocket or challenge the insurer under complicated and frustrating appeals processes handled by the company itself.

“The wolf is guarding the henhouse,” said Ken Whittaker, executive director of the social justice group Michigan United. “They know most people don’t know you can appeal your claim, and less than 1 percent appeal claims when they are denied … and that’s more money for CEOs and Wall Street investors.”

While it’s unclear just how much profit is raised by denying insurance claims, advocates say the industry’s behavior leaves little doubt that private insurers are gouging patients and public health care programs. For example, an Elevance CEO took home $17 million in salary and bonuses in 2020, the same year Elevance and other Blue Cross Blue Shield companies agreed to pay a $2.67 billion settlement in a major antitrust case filed on behalf of policyholders.

A recent New York Times investigation found that private insurance companies exploited Medicare Advantage, which provides private health coverage for people 65 and older but is paid for by the federal government, to rake in billions of dollars from taxpayers. The majority of large insurers sent the government inflated bills, and Elevance and other companies face federal lawsuits for elaborate schemes to inflate profits. As The Times notes:

Anthem, a large insurer now called Elevance Health, paid more to doctors who said their patients were sicker. And executives at UnitedHealth Group, the country’s largest insurer, told their workers to mine old medical records for more illnesses — and when they couldn’t find enough, sent them back to try again.

Each of the strategies — which were described by the Justice Department in lawsuits against the companies — led to diagnoses of serious diseases that might have never existed. But the diagnoses had a lucrative side effect: They let the insurers collect more money from the federal government’s Medicare Advantage program.

Medical bills that the insurance company refuses to pay after an emergency room visit or a major illness are a common form of claim denial, Nemer-Aanerud said, but millions of uninsured and underinsured people are unable to afford basic preventative care that would help them stay healthy long-term — and keep costs down for everyone else. Coverage of lifesaving treatments and prescriptions are also denied by insurers, often the result of secret kick-back agreements made with pharmaceutical companies that drive up drug prices and determine which medications are covered for patients.

Callie Gibson, whose husband Mark Hall was denied access to proper medication for a chronic digestive disease, said the issue is affecting her family right now, but health coverage denial can happen to any of us. Hall said he was on medication that worked for years, but at some point his insurer, Cigna health, stopped covering that specific drug. Hall was forced to switch to a biosimilar despite an appeal from his doctor. Even after taking higher doses, the new drug does not adequately control digestive bleeding and other painful symptoms, preventing Hall from living his daily life.

“Because ultimately, the insurance companies don’t care about you as an individual,” Gibson said during the livestream with Sanders, reflecting on the couple’s experience with Cigna. “They care about their shareholders, the people who are making money off this company, and they are not going to take action as long as they continue to make money, and until we hold them accountable for what they are doing.”

The Health Care For All campaign is helping people fight for their claims through the appeals process. Anyone who has been denied health coverage is encouraged to contact the campaign.