850 Million Claims Denied Annually: What It Means for You
A recent Wall Street Journal investigation brought national attention to a staggering statistic: health insurance companies deny approximately 850 million medical claims every year in the United States.
To put that number in perspective, that's about 17% of the more than five billion claims submitted annually. And perhaps even more concerning: less than 1% of patients who receive denials actually appeal them.
The Scale of the Problem
These aren't just numbers on a spreadsheet. Behind each denied claim is a real person who needed medical care, expected their insurance to cover it, and was told no.
The investigation revealed patterns that many patients and healthcare providers have long suspected: denials are not always based on medical evidence or appropriate criteria. In some cases, insurance companies appear to be using denials as a cost-control strategy, banking on the fact that most people won't fight back.
Why So Few People Appeal
Dr. Ezekiel Emanuel, an oncologist and medical ethicist at the University of Pennsylvania, explained the dynamic clearly: "Because a lot of people won't appeal, won't call, don't have the knowledge to sit on the phone—a lot of those go away."
This creates a system where insurance companies benefit from complexity and patient exhaustion. The harder they make it to appeal, the more money they save on denied claims that patients simply accept.
Several factors contribute to the low appeal rate:
The process is intimidating. Many people don't know they have the right to appeal or how to do it.
People are already overwhelmed. When you're sick or caring for someone who is, fighting with insurance companies feels like an impossible burden.
The deadline is tight. Most appeals must be filed within 180 days, though some have much shorter windows.
It requires persistence. Successful appeals often require multiple attempts and substantial documentation.
People trust authority. When an insurance company says "no," many patients assume the decision was made by medical experts and must be correct.
Success Stories: When Appeals Work
The investigation highlighted several cases where patients successfully appealed denials—often for life-saving treatments.
One patient needed a liver transplant after cancer treatment destroyed his liver. His insurance company denied the claim three times, citing research about outcomes for patients with his specific medical history. After a determined appeal that included copying regulators, board members, and journalists, the insurance company reversed its decision. The patient received his transplant and is now back to work.
Another family fought for their young daughter's specialized treatment. After three years of ineffective conventional approaches and $40,000 in medical bills, they found a specialist three states away who offered hope. Their insurance initially denied coverage, claiming the treatment wasn't medically necessary. The family appealed, and the denial was overturned.
Research consistently shows that up to three-quarters of denied claims that are appealed are eventually approved. This means many of the 850 million annual denials could be overturned—if patients knew to fight and had the energy to do so.
The Insurance Company Perspective
Insurance companies defend their denial practices by saying they must determine which care is medically necessary to remain financially solvent. They argue that not every treatment requested is appropriate, and that some denials prevent unnecessary or ineffective care.
They point to the fact that healthcare costs are rising and that they face pressure to keep premiums affordable while providing comprehensive coverage.
However, critics note that major insurance companies remain highly profitable. UnitedHealth Group, for instance, reported over $22 billion in profits in a recent year, while its CEO compensation exceeded $23 million annually.
Common Denial Categories
The investigation and other research have identified patterns in what gets denied:
Prior authorization denials: Treatments requiring pre-approval are increasingly denied, particularly for expensive medications, specialized procedures, and infusions.
Medical necessity disputes: Insurance companies use proprietary criteria—often not shared publicly—to determine what's medically necessary, frequently disagreeing with treating physicians.
Experimental treatment claims: New or innovative treatments are often labeled "experimental" even when supported by medical evidence.
Out-of-network denials: Patients unknowingly receive care from out-of-network providers and face surprise denials.
AI-driven denials: Automated systems now flag claims for denial based on algorithms, sometimes without adequate human review.
The Human Cost
Beyond the statistics, the investigation revealed the personal toll of denied claims:
Patients delay or forgo necessary treatment while fighting denials. Medical conditions worsen during lengthy appeals processes. Families face financial devastation from unexpected medical bills. The stress of fighting insurance companies compounds the stress of illness.
Caregivers, already stretched thin, take on the additional burden of navigating appeals. Research shows family caregivers already spend an average of 22.5 hours per week on caregiving tasks—and insurance battles add to that load.
What's Being Done
The surge in public anger following high-profile denial cases has sparked calls for reform:
Increased transparency: Demands for insurance companies to publish their medical necessity criteria.
Faster appeals: Proposals to speed up the appeals process, particularly for urgent medical needs.
External review improvements: Making it easier for patients to access independent external reviews.
Automated denial limits: Restrictions on using AI to deny claims without human medical professional review.
Prior authorization reform: Legislation to standardize and streamline prior authorization requirements.
What You Can Do
While systemic reform is needed, you can take action now to protect yourself:
Know your rights. You have the right to appeal any denial and to access external review if internal appeals fail.
Read every denial letter carefully. Understand exactly why your claim was denied and what evidence would support an appeal.
Don't accept denials without question. Remember that three-quarters of appeals succeed.
Document everything. Keep records of all communications with your insurance company.
Get help if needed. Consider using patient advocates or services that specialize in fighting denied claims.
Some patients use automated claim monitoring services that help track denials and guide them through appeals. Tools like HealthLock can alert you to denials and provide resources for fighting them, taking some of the burden off your shoulders.
The Bottom Line
850 million denied claims per year isn't just a healthcare statistic—it's a systematic problem affecting millions of families. The system counts on you being too overwhelmed, too confused, or too exhausted to fight back.
But the success rate of appeals shows that many denials shouldn't have been made in the first place. Insurance companies are betting that you won't appeal. Proving them wrong not only helps you get the coverage you deserve—it challenges a broken system.
You're not powerless in this situation. Understanding the scope of the problem, knowing your rights, and being willing to appeal can make a real difference in your access to healthcare and your financial wellbeing.
Don't Let This Happen to You
The 850 million denied claims statistic is staggering, but you don't have to be part of it. HealthLock's experts monitor your claims 24/7 and alert you to problems automatically, so you can fight back before denials impact your care. HealthLock's members have saved over $243 million by catching billing errors, denied claims, and fraud before they became major problems.
Disclaimer: We're not medical billing experts or attorneys—we're patients and caregivers sharing resources to help you navigate a broken system. This information is for educational purposes only and should not be considered medical or legal advice.
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