By Brad Bartlett

The Hidden Truth Behind Insurance Denials

Learn why 1 in 5 health insurance claims are denied – and how to find the coverage you need to thrive.

All of us have health needs that require specialist care and treatment. But what happens when you find a solution that your insurance determines to be "not medically necessary"? Or "experimental"? Or simply "not covered"?

Sarah from Denver discovered the answer the hard way. After months of debilitating back pain that interfered with her work and quality of life, her doctor recommended a specific treatment that had shown promising results.

Sarah checked her insurance policy to confirm the specialist was in-network. She proceeded with the treatment, which turned out to be life-changing.

That was, until another life-changing moment. Months later, her bill arrived stamped with the devastating news: "CLAIM DENIED."

Unfortunately, Sarah's story isn't unique or even that uncommon. Recent data reveals a shocking truth: nearly 1 in 5 health insurance claims are denied across marketplace plans.

For some insurers, the denial rate climbs as high as 33%. That means one in three patients are left fighting for coverage for operations or treatments that are absolutely necessary to thrive.

Insurance denials aren't random occurrences or unfortunate mistakes. They're a systematic feature of a profit-driven healthcare system – one that places shareholder value above patient care.

But there is a different model emerging, one where claim denials aren't built into the business plan.

A Look at Recent Denial Statistics

To get a better idea of the scope of the denial problem facing many Americans, let’s look at the data.

Throughout 2023-2024, Healthcare.gov marketplace insurers denied 19% of in-network claims.

Let that sink in. Almost one-fifth of all claims submitted by healthcare providers who are believed to be "approved" by the
insurance company are rejected.

But averages only one part of the overall story. The reality is that your likelihood of having a claim denied varies (quite dramatically) depending on which insurance card you carry with you:

●              UnitedHealthcare and AvMed: 33% denial rate

●              Molina Healthcare: 26% denial rate

●              Anthem: 23% denial rate

●              Kaiser Permanente: 6% denial rate

●              Avera Health Plans: Just 1% denial rate

The disparity is even more apparent when you look at geographical data. According to statistics, if you live in Alabama, your
chances of having an in-network claim denied jumps to 34%. Meanwhile, South
Dakota residents experience only a 6% denial rate.

For out-of-network care, patients saw up to 37% of claims rejected. And if you think employer-sponsored insurance might offer better protection, the data shows that even these coverage options saw up to a 21%
denial rate.

The Impact of Claims Denial

It’s important to note that when an insurance company denies a claim, they aren’t just refusing to cover part of your bill. They’re shifting the entire financial burden onto you, often without warning and after you’ve
already received care and treatment.

This sudden whiplash of expectations can be devastating.

The Financial Consequences of Denied Claims

Naturally, a denied claim can leave individuals with thousands or even tens of thousands of dollars in unexpected medical bills. This is why unpaid medical debt is the leading cause of personal bankruptcy in
America – impacting even those with the best insurance coverage.

Denial Leads to Delayed or Abandoned Care

When individuals face healthcare denials, it can quickly lead to them giving up on seeking the specialized care they need. A recent study found that 36% of adults have experienced at least one coverage denial,
and many who were surveyed reported facing multiple rejections. Of those who
experienced a denial, nearly 60% reported that it delayed their care. Most alarmingly, almost half said their health problem became worse as they awaited
news on their coverage.

Healthcare Claim Denials Take a Mental Health Toll

If you or someone you know has even had to fight insurance companies to get coverage, you know just how difficult the process can be. Patients report spending hours on the phone, filling out paperwork, gathering documentation, and some even report feeling that they’ve taken a second job just to get the coverage they're already paying premiums for.

That stress isn’t just mental. It can have a very physical effect on those who may already be facing difficulties in their health and wellness, which then compounds the problem.

This reality creates a perverse situation where those most
in need of healthcare become the ones least able to take on the burden of
fighting denials.

In other words, the sicker you are, the harder it is to advocate for yourself against a system designed to wear you down.

Why Are So Many Healthcare Claims Denied?

Sometimes, a denial of coverage just happens – whether
that’s due to a misunderstanding of the original coverage offered, or a
legitimate reason within the treatment or process. But the high rates of claim
denial seem to point to another reason: profit.

Health insurers in the US operate on a simple business model:

1.             Collect premiums

2.             Pay out as little as possible in claims

3.             Keep the difference as profit

This model means that every dollar not spent on patient care flows directly to the bottom line. As you can imagine, this creates a conflict of interest at the core of the insurance system.

While insurers often market themselves as partners in your healthcare journey (and many do their best to offer life-changing coverage), it can’t be denied that financial incentives are directly opposed to paying for your medical needs.

When you look beneath the surface, you’ll find that most insurance executives have a fiduciary duty to maximize shareholder returns, not to optimize patient outcomes. Quarterly earnings reports don't measure lives improved or suffering alleviated. They measure revenue versus expenses.

And claim payments fall squarely in the "expense" column.

What Are The Common Reasons for Denials?

Most insurance companies have poured millions into developing a playbook for claim management and denial. Knowing the most common reasons for claim denial can help you understand why you may have received that unfortunate bill after your last treatment or surgery.

"Not Medically Necessary"

One of the most frustrating denials is often simply stated: “not medically necessary.” This determination usually contradicts your doctor's professional opinion.

But what you may not know is that many insurance companies employ their own medical directors who review claims without ever examining or even speaking to patients submitting the claims.

Missing or Incomplete Information

Did you know that a single missing code or incorrectly filled field can trigger an automatic denial? These "technical"
denials can delay payment and create additional obstacles that many patients
and providers won't pursue.

Prior Authorization Not Obtained

Here’s one you may have dealt with: “prior authorization required.”

Even when a treatment is covered by your policy, many insurers require advance permission. If you miss this step (which many patients don't even know exists), your claim will likely be denied regardless of medical necessity.

Network Restrictions

Insurance companies limit which providers you can see. If uou attempt to seek treatment outside your provider’s preferred network (or get treatment inadvertently or due to emergencies), you may find that the costs skyrocket, and your claim may be denied.

"Experimental" or "Investigational" Designations

Another denial occurs simply because insurers are slow to recognize new treatments. You may find that they label proven therapies as "experimental" years after they've become standard of care.

According to the data, the most common reasons for claim denials break down as follows:

●              Excluded services: 16%

●              Administrative issues: 18%

●              Prior authorization or referral issues: 9%

●              Medical necessity determinations: 6%

●              Benefit limits exceeded: 12%

●              "Other" reasons: 34%

That last category – "Other" – is particularly
concerning when it comes to denials. Stats show that nearly one-third of
denials fall into an “undefined category” that insurers can slap onto a claim
without explanation.

The Rise of AI in Denial Decisions

What you may not realize is that those making denial decisions may not actually be people at all. In an effort to speed up the
coverage process and reduce overhead, many insurance companies are turning to
artificial intelligence to aid their approval and denial process.

AI algorithms are trained on data and past behaviors to “learn” how to automatically approve or deny claims. This can quickly create a situation where innovation can override client care.

For instance, when a human reviews your claim, they might exercise judgment or compassion. But when an algorithm flags your claim for denial, it's not considering instances where deeper investigation may be necessary.

It’s simply following programmed rules designed to identify patterns that correlate with potential savings opportunities for the insurer.

The use of AI in claims is becoming increasingly controversial. UnitedHealthcare faced lawsuits in 2023 and 2024 alleging that its algorithms wrongfully denied care to elderly patients by disregarding doctor recommendations and clinical evidence.

The suits claimed the company knowingly used flawed algorithms that systematically rejected valid claims to boost profits.

What About Denial Appeals?

With denial rates as high as they are, it’s interesting that there are so few stories of patients fighting back. The reality is that the success (or lack thereof) of denial appeals may be the problem. Recent data
shows that fewer than 1% of denied claims are ever appealed.

Many patients simply don't know they have the right to appeal. Insurance companies don't advertise this as a potential option (for obvious reasons!, and denial notices often bury appeal information in fine
print.

Even filing an appeal requires hours of digging through medical records, providing context from doctors and healthcare providers, and waiting for appeals to move through the system.

Even when patients do manage to file appeals, the odds remain stacked against them. Data shows that insurers uphold about 56% of denials even after appeal.

How CrowdCare is Offering A Community-Based Alternative to Medical Care

It’s time that patients and their families find a way forward that isn’t blocked by profit-seeking gatekeepers. By creating a
community-based approach to funding medical needs, CrowdCare is removing the
profit motive behind claim denials and rejections.

Unlike insurance companies that view claim payments as growth limitations, CrowdCare sees funding members' healthcare needs as the driver of success. This approach is changing how healthcare funding works on a practical level:

No Denials Based on Fine Print

CrowdCare operates with transparent guidelines that give you full oversight into what the community funds. There are no hidden exclusions that may trip you up when you need medical care.

A System Built on Aligned Incentives

As the data has shown, insurance companies see profit when they can successfully deny care. CrowdCare succeeds when members get the care they need, and CrowdCare advocates work alongside community members to find the right path forward for each individual case.

Community-Driven Decisions

Everyone thrives with the community – not shareholders or executives – determines funding priorities. Taking a human-centered approach helps ensure that real health needs are driving healthcare decisions.

Direct Negotiation Has Its Advantages

One of the most powerful ways CrowdCare helps members is by eliminating the claim/denial cycle entirely. Instead of the standard process of receiving care, submitting a claim, and waiting to see if it will be covered, CrowdCare members follow a more straightforward approach:

1.             Upfront Pricing: Care Advocates help members obtain clear pricing before treatment begins.

2.             Direct Negotiation: CrowdCare leverages the power of cash payment to negotiate substantial discounts, often 30-60% below what insurance companies would pay.

3.             Community Funding: The community pools resources to support the member's care needs for eligible expenses..

4.             No Surprise Bills: With pricing established in advance, members don't face unexpected costs after receiving care.

The result? A community-first, simplified approach that has shown remarkable results in creating a more transparent process – one that benefits members and healthcare providers.

Ready To Take Control of Your Healthcare?

When one-fifth of healthcare claims are denied outright, it's no wonder that patients are feeling less hopeful about their options. When facing a system designed to profit off denials, many are afraid to seek the
care that could change their lives.

At CrowdCare, we believe that healthcare financing doesn't have to work this way. Our community-based approach exists to help individuals and their families find hope for a better, healthier future, together.

Are you tired of the denial-by-default system? Here are some steps you can take right now to find a better solution:

1.             Evaluate your existing healthcare coverage:

○              How much are you paying in premiums for coverage that might deny your claims?

○              What's your real financial exposure when considering deductibles and potential
denials?

2.             Understand the alternatives: Community-based healthcare funding like CrowdCare can offer a better approach to coverage – one built on transparency, fair pricing, and aligned incentives.

3.             Take action: You don't have to remain trapped in a system designed to profit from denying your care. Options exist that put patients first.

Ready to learn more?

Discover how TheCrowdCare's community-based approach is creating a better way to fund healthcare without the claim denial games.

Join CrowdCare today or schedule a consultation with one of our Care Advocates to see how our model could work for you and your family.

Learn More

Research

●             https://www.wallaceinsurancelaw.com/health-insurance-denial-rates-by-company/                 

●             https://www.axios.com/2025/01/30/aca-insurers-deny-claims-rate

●              https://www.kff.org/private-insurance/issue-brief/claims-denials-and-appeals-in-aca-marketplace-plans-in-2023/

●              https://www.kff.org/affordable-care-act/press-release/healthcare-gov-insurers-denied-nearly-1-in-5-in-network-claims-in-2023-but-information-about-reasons-is-limited-in-public-data/

●             https://www.healthsystemtracker.org/brief/the-burden-of-medical-debt-in-the-united-states/

●              https://www.ajmc.com/view/how-insurance-claim-denials-harm-patients-health-finances

●             https://www.reuters.com/legal/lawsuit-claims-unitedhealth-ai-wrongfully-denies-elderly-extended-care-2023-11-14/

●             https://www.cnbc.com/2025/02/22/why-so-many-health-insurance-claims-are-denied-in-the-us.html