A woman with a leg cast holding a medical bill and looking very concerned.
Image credit: AntonioGuillem on istock.com

Despite hundreds of state laws meant to protect health insurance consumers—patients, in other words—from denials of legitimate claims for coverage, health insurers are routinely flouting these laws and illegally denying coverage in even life-threatening situations.

Such are the findings of a recent series by the investigative nonprofit journalism outlet ProPublica.

Health insurers are routinely flouting these laws and illegally denying coverage.The findings point not just to bad behavior on the part of health insurance companies but also to a failure of the state regulatory apparatuses that oversee health insurance coverage to enforce laws already on the books: 

State insurance departments are responsible for enforcing these laws, but many are ill-equipped to do so, researchers, consumer advocates and even some regulators say. These agencies oversee all types of insurance, including plans covering cars, homes and people’s health. Yet they employed less people last year than they did a decade ago. Their first priority is making sure plans remain solvent; protecting consumers from unlawful denials often takes a backseat.

In many cases, writes ProPublica, state enforcement agencies only take action when a policyholder complains, putting the onus of navigating the murky waters of health insurance policy on individuals.

The scope of this problem is large. In its investigation, ProPublica identified only 45 enforcement actions across the United States since 2008 that involved denials of health coverage that violated state laws.

As the authors point out, the lack of such enforcement actions does not imply that unlawful insurance denials are rare; on the contrary, there is ample evidence that individual cases, far from being one-off examples, usually represent some larger trend involving many individuals who’ve been denied health coverage: “When regulators have decided to dig deeper, they’ve found that a single complaint is emblematic of a systemic issue impacting thousands of people,” the authors note. 

Exacerbating the plight of people trying to navigate their claims is what might be characterized as poor outreach and education by the government agencies responsible for protecting healthcare consumers. The authors write:

Patients often don’t know what care they’re entitled to under state mandates. And one survey found that 86% of people with health insurance don’t know which government agency to call for help. Knowing how to navigate the system can make all the difference to patients socked with giant medical bills.

State enforcement agencies only take action when a policyholder complains.

From Emergency to Fertility, Denied

The unlawful denials of coverage aren’t limited to rare or obscure claims. They also include regular denials for emergency care, ProPublica reports, citing the example of a Texas woman forced to undergo an emergency appendectomy for which her insurer refused to pay—despite a Texas law requiring insurers to pay for treatment needed in emergencies. It wasn’t until the woman filed a complaint with the Texas Department of Insurance that, five days later, the insurer promptly apologized and agreed to pay. 

According to ProPublica, lawmakers in more than a dozen states have written bills requiring insurers to cover emergency services.

Denials of coverage include fertility treatments as well. ProPublica cites the example of California, where lawmakers have passed two separate bills attempting to force insurers to pay for coverage. Even so, lawmakers are considering yet another bill to prevent insurers from denying coverage for a multitude of fertility-related costs. 

Those fighting for their own coverage are forced to navigate a “mind-boggling labyrinth.”

Further complicating the picture, many private employer-provided health plans are exempt from state laws bolstering requirements for coverage. Some 65 percent of employees, ProPublica reports, get their healthcare through “self-funded” plans, in which the employer pays directly for health claims and hires insurers just to process the claims. In those cases, the plans are regulated by federal laws but not state laws that are often more robust.

A Mind-Boggling Labyrinth 

If explicit laws on the books, spelling out mandatory coverage requirements, aren’t enough to prevent insurers from denying coverage, how are ordinary people to push back?

The answer, ProPublica’s Cheryl Clark found, is that those fighting for their own coverage are forced to navigate a “mind-boggling labyrinth” of bureaucracies set up by insurers and often barely regulated. 

Clark, initially tasked with creating an online application to help healthcare consumers navigate these mazes, found herself confronting an almost impossible task. 

As Clark writes: 

There are many kinds of insurance in the U.S., and they have different processes for appealing a denial. And no lawmakers or regulators in state and federal governments have forced all insurers to follow one simple standard.…With each day of reporting, with each expert interviewed, it got more and more confusing.

Nor are these hurdles unique to private health insurance. Clark found that government-provided insurers, like Medicare and Medicaid, preside over their own, often seemingly impenetrable bureaucracies for appeals—a point ostensibly acknowledged by federal health officials. A spokesperson for Medicare told Clark the agency “has been actively engaged in identifying ways to simplify and streamline the appeals process and has worked with stakeholders and focus groups to identify ways to better communicate information related to the appeals process with the beneficiaries we serve.”

ProPublica’s reporting did identify one beneficiary of these bureaucratic monstrosities: insurance companies, many of which have posted record profits in recent years.