Doctors dismissed Colleen Henderson’s 3-year-old daughter’s complaints of pain during bathroom breaks as a urinary tract infection or constipation, which are frequent conditions during the potty-training years.
Henderson charged the $6,000 operation to her credit card after learning that her health insurance would not pay for an ultrasound. Then the news arrived: Her toddler’s bladder had a tumor the size of a grapefruit.
That was back in 2009. Henderson claimed that the following five years turned into a drawn-out dispute with her insurance company, UnitedHealthcare, over the cost of hiring the experts who ultimately identified and treated her daughter’s uncommon inflammatory pseudotumor. She unsuccessfully appealed to the insurer and state regulators about unpaid hospital stays, surgeries, and prescription drugs. She claimed that the insurer informed her that the doctor-recommended procedures were unnecessary, causing the family to accrue over $1 million in medical debt. The family filed for bankruptcy.
Henderson of Auburn, California, whose daughter eventually recovered and is currently a successful 20-year-old junior at Oregon State University, stated, “My daughter would have died if I hadn’t fought tooth and nail every step of the way.” You spend a lot of money on health insurance in the hopes that it will prioritize your treatment, but this isn’t the case at all.
Despite an increase in insurance denials, research indicate that few Americans are responding to them. In contrast to Henderson’s instance, numerous analyses have revealed that many people who file complaints with government regulators are successful in having their denials reversed. Policymakers and consumer activists believe there’s a blatant indication that insurance firms frequently refuse care that they shouldn’t. The California Legislature is currently considering a proposal to penalize insurers who consistently make poor decisions.
Experts say SB 363 may be one of the most daring attempts in the country to limit health insurance denials both before and after care is provided, even though it would only cover around one-third of insured Californians whose health plans are subject to state regulation. Additionally, California may be one of the few states requiring insurers to reveal refusal rates and justifications—statistics that the insurance industry frequently views as confidential.
Additionally, if more than half of appeals submitted to regulators are reversed in a given year, the legislation would fine insurers up to $1 million per case and attempt to make them more selective in their denials.
According to state data from 2023, an insurer’s initial refusal was overturned in roughly 72% of appeals submitted to the Department of Managed Health Care, which oversees the great bulk of health plans.
According to Sen. Scott Wiener, a Democrat from San Francisco who presented the bill, you should feel secure knowing that your health insurance will cover your medical requirements. It is intolerable that they can simply postpone, refuse, block, and, frequently, avoid having to pay for medically necessary care.
The California Association of Health Plans said it was still examining the bill language and declined to comment. Elana Ross, a spokesman for Governor Gavin Newsom, stated that his administration usually refrains from commenting on legislation that is still pending.
State legislators around the country are increasingly searching for measures to ensure that insurers are paying claims properly as a result of the skyrocketing costs of consumer health care.
According to the National Conference of State Legislatures, 17 states passed legislation addressing private insurers’ prior authorization of care in 2024. An annual report card outlining the number and percentage of claims each insurer has refused, as well as the share that ends up being reversed, is published by Connecticut, which has one of the strictest denial rate disclosure rules. Prior to the recent gap in state disclosure rules, Oregon disclosed comparable information.
Since mental health care among adolescents and young adults is at crisis levels, health experts say it is particularly concerning that insurers in California do not keep track of how frequently they reject care. A diagnosis of, say, sadness can be more subjective than that of a broken limb or cancer, making it simpler to refuse mental health care, according to Keith Humphreys, a professor of health policy at Stanford University.
Lishaun Francis, senior director of behavioral health for the advocacy group Children Now, a bill supporter, stated, “We believe it is unacceptable that the state has no idea how big of a problem this is.”
Private insurers subject to the Department of Managed Health Care and the Department of Insurance would have to provide comprehensive information regarding denials and appeals under Wiener’s proposal. They would also have to record the appeals’ results and provide an explanation for those rejections.
Insurers whose denials are overturned more than half the time would be subject to crippling fines for appeals that reach the state’s independent medical review procedure, or IMR. A fee of $50,000 would be imposed in the first instance if a business exceeds the 50% threshold, and for a second instance, the penalty may range from $100,000 to $400,000. After that, each would cost $1 million.
If approved, the bill would provide private insurance to almost 12.8 million Californians. Patients on Medicare, Medi-Cal, or the state’s Medicaid program would not be covered, and major employer-sponsored self-insured plans—which are governed by the US Department of Labor and insure around 5.6 million Californians—would not be included.
Following the assassination of UnitedHealthcare CEO Brian Thompson, the phrase “deny and delay” is still used in the healthcare sector. According to a survey conducted by the NORC at the University of Chicago shortly after the heinous attack, seven out of ten respondents said they thought that Thompson’s death was mostly or somewhat caused by health insurance companies’ profits and denials of health care.
Following Thompson’s passing, UnitedHealthcare released statements claiming that highly regulated insurers usually have low- to mid-single digit margins and that wildly false and egregiously deceptive information had been spread on the company’s claims handling practices.
Although Wiener described Thompson’s murder as a cold-blooded assassination, he claimed that his bill was based on a more comprehensive plan that was unsuccessful last year and sought to provide mental health coverage for adults and children under the age of 26. However, he agreed that the response of the country to the murder highlights the long-standing resentment that many Americans have toward the actions of health insurers and the pressing need for reform.
The U.S. health system provides insurers with significant financial incentives to refuse care, according to Humphreys, a professor at Stanford. “State and federal penalties are so small that they can be written off as a cost of doing business,” he continued.
“They make more money the more care they deny,” he remarked.
According to Shawn Gremminger, president of the National Alliance of Healthcare Purchaser Coalitions, big companies are increasingly beginning to incorporate clauses in their contracts with claim administrators that would penalize them for clearing too few or too many claims.
Gremminger primarily works with big businesses that pay for their own insurance, are subject to federal regulations, and would not be covered by Wiener’s bill. Determining denial rates for the insurance companies engaged merely to handle claims can be practically impossible, he noted, even for such so-called self-funded policies.
Sandra Maturino of Rialto expressed her hope that politicians will address insurance denials so that other Californians can avoid the ordeal she went through to seek care for her niece, even if it could be too late for many families.
After her sister passed away, she adopted the now 13-year-old child. Her niece had a history of aggressive conduct and self-harm, but her insurer, Anthem Blue Cross, would only pay for 30 days of inpatient mental health treatment when therapists suggested it.
Maturino claimed that because her insurance would not pay for a prolonged stay, her niece cycled in and out of counseling and facilities for over a year. A vast list of prescription medications and dosages were tested by doctors. It didn’t work.
A request for comment from Anthem was denied.
The adoption agency eventually paid for Maturino to enroll her niece in a residential program in Utah, where she received a bipolar disorder diagnosis and has been receiving therapy for a year.
Maturino claimed she lacked the stamina to make an appeal to Anthem. Maturino declared, “I wasn’t going to sit around and wait for the insurance to kill her or for her to hurt someone.”
The California Health Care Foundation’s editorially independent service, California Healthline, is published by KFF Health News, which also produced this item.
One of KFF’s main running initiatives is KFF Health News, a nationwide newsroom that specializes in in-depth reporting on health-related topics.the impartial resource for journalism, polling, and health policy research.
