[zephen]

Spurious denials.

It's easy to find documentation of this. For example:

https://pmc.ncbi.nlm.nih.gov/articles/PMC10391242/

https://phrma.org/blog/70-denied-how-insurance-denials-are-d...

https://www.forbes.com/sites/joshuacohen/2026/05/04/independ...

Anecdote is not the singular of data, but when my late wife was dying of cancer, the oncologist was attempting to follow standard care procedures. Preauthorizations were denied even after physician consultation with the insurance company.

My research showed me that the insurance companies contract with other companies (who they may or may not own) to handle the dirty work. It was only after learning the magic incantations to directly contact the "third-party" company that I was able to get traction.

"We do not believe this treatment is warranted."

"Well, her doctor believes it, so she's going to get the treatment. The only question is whether you pay now, or after I file a small claims case."

It was miraculously authorized at that point. It's the same fucking thing with car insurance. The poor people who can't fight really get screwed.

[chongli]

None of your links provides data on spurious denials. The third link does provide this statistic:

"Over a six-year period between 2019 and 2025, almost half of a large set of denied health insurance claims in New York state were reversed when the cases reached independent review organizations, comprised of clinicians unaffiliated with insurers"

But that doesn't get into the reasons why the claims were denied in the first place. It doesn't tell us anything about bona fide spurious denials vs. improperly filed claims (mistakes in the paperwork), clerical errors, or clients placed under investigation for claiming too early (after applying) or too often (making a lot of spurious claims), or care providers who do the same.

Insurance companies are concerned with adverse selection and moral hazard. A client who files a lot of claims shortly after getting insurance raises the suspicion that they were not honest about their health prior to applying. Similarly, a client who claims every drug a pharmacy carries raises other suspicions.

Of course, most clients aren't like that, but a not-insignificant minority are, and a small number of clients can file a very large number of claims.

[zephen]

> But that doesn't get into the reasons why the claims were denied in the first place.

The first link in that article does. It starts off by noting that this the third level review, so there were ample chances for the insurance company itself to fix things, and also says that "The report also showed that 47.1% of denials on the basis of medical necessity, 44% of denials based on care determined to be experimental or investigational, and 42.9% of formulary denials were overturned."

It's a pipe dream to assume that, by the time the appeals got to that point, it could be chalked up to administrative error.

> Insurance companies are concerned with adverse selection and moral hazard. A client who files a lot of claims shortly after getting insurance raises the suspicion that they were not honest about their health prior to applying. Similarly, a client who claims every drug a pharmacy carries raises other suspicions.

Yes, every Canadian gets 5 abortions a year, even the men. But seriously, the moral hazard goes the other way. It is so fucking difficult to get doctor appointments that the insurance companies should be doing everything in their power to help keep people healthy, rather than worrying about the 0.1% of the population that suffers from Munchausen syndrome.

[ethbr1]

It's both.

Medical fraud is like retail stock shrinkage or fraudulent credit card charges -- no one on the customer side is aware of it, because it's handled on the other side and baked into pricing.

But there are substantial amounts of both straight fraud and too aggressively up-coding / over-billing.

The meta problem is that the because of the nature of the industry (legitimate volume dwarfs fraud), it's more financially impactful to pull levers that impact legitimate volume (read: prior auth requirements).

The anti-fraud systems are also pretty robust. As you'd imagine, insurers have been dealing with this for more than a few decades by now.