Understanding the Surge in Health Insurance Premiums and Claim Denials

by Dahlia

Health insurance premiums are paid monthly by Americans in order to maintain their health coverage. Over the past decade, premiums have surged significantly, often outpacing wage growth and inflation (Kaiser Family Foundation [KFF], 2023). Claim denials, on the other hand, occur when insurance providers refuse coverage for specific treatments, medications, or services, compelling patients to shoulder the full financial burden.  Unfortunately, claim denials happen far too often, even to individuals who are keeping up with their costly health insurnace premiums 

For Americans grappling with chronic, lifelong conditions—such as diabetes, cardiovascular diseases, or rheumatoid arthritis—these financial hurdles can severely impede access to essential healthcare services and can mean high debt and death in many cases.

Quantifying the Increase in Health Insurance Premiums

Across both employer-sponsored and individual market health insurance, there have been dramatic increases in costs, year over year. According to the Kaiser Family Foundation’s Employer Health Benefits Survey (2023), employer-sponsored health insurance premiums have risen markedly over the past decade. Single coverage increased from approximately $5,000 annually in 2013 to around $8,000 in 2023, marking a 60% rise. Family coverage escalated from roughly $13,000 annually in 2013 to about $21,000 in 2023, reflecting a 62% increase.

In the individual insurance market, premiums have doubled over the same period. The Bureau of Labor Statistics’ National Compensation Survey (2023) reported that average premiums for individual plans surged from approximately $3,500 in 2013 to $7,000 in 2023, representing a 100% increase.

Contributing Factors to Premium Increases

Several factors contribute to the rising cost of health insurance premiums. Advances in medical technology and increased utilization of healthcare services have significantly contributed to higher expenses (Centers for Medicare & Medicaid Services [CMS], 2023). Furthermore, an older population of Americans demands more healthcare services, due to illnesses related to aging, which elevates overall costs (CMS, 2023). The growing incidence of chronic diseases throughout the population necessitates ongoing and often expensive medical care (KFF, 2023). Shifts in healthcare policies and regulations can influence premium levels, either mitigating or exacerbating cost increases.  In this case, policy changes have increased costs significantly.  (Congressional Budget Office [CBO], 2023). Increased administrative costs within insurance companies, including billing and compliance, contribute to higher premiums as well (National Association of Insurance Commissioners [NAIC], 2023).

The Financial and Emotional Toll

Financial Strain

The financial toll that healthcare premiums take on families is outrageous, not commensurate with inflation and cannot be ignored. Rising premiums significantly burden individuals and families, often leading to decreased quality of life in other areas when there is reduced disposable income. A larger portion of income is diverted to health coverage, leaving less for essential needs like housing, education, and nutrition which are key to a decent quality of life (Employee Benefit Research Institute [EBRI], 2023). Many struggle to keep up with premium payments as well and may miss payments. Unfortunately, this creates more issues such as loss of coverage, increasing out-of-pocket costs and financial instability (KFF, 2023).

Impact on Treatment Adherence

High premiums can force patients to make difficult choices regarding healthcare. In many cases, cost concerns may lead patients to skip doses or forego necessary prescriptions (BLS, 2023).  This can be dangerous, as they are unable to follow doctor’s recommendations due to the financial strain that doing so brings. Financial constraints might cause individuals to delay or cancel essential medical visits, which can lead to negative outcomes such as delayed diagnosis of chronic or mortal diseases (CMS, 2023). Neglecting regular check-ups can result in deteriorating health conditions and escalated long-term costs (Health Affairs, 2023).

The financial burdens associated with rising premiums and claim denials contribute to significant emotional and psychological distress and unfortunate mental health outcomes. Worries about affording necessary care for self or family members can lead to heightened stress and anxiety levels (EBRI, 2023). Financial strain adversely affects overall well-being and life satisfaction, as many patients may feel that they are missing out on life experiences due to so much of their income going to healthcare costs. (Health Affairs, 2023).  Finally, repeated claim denials may diminish confidence in insurance providers and the broader healthcare system (KFF, 2023).

Societal Implications

When individuals cannot afford their premiums or face frequent denials, they are more likely to seek emergency care, which is substantially more expensive than preventive or routine treatments. Many prefer to live without health insurance and only use the doctor when absolutely needed. This trend contributes to the overall rise in national healthcare expenditures (CMS, 2023).  Chronic health conditions already impact workforce productivity through absenteeism and reduced efficiency. Financial barriers to care exacerbate these issues, leading to significant economic losses for employers and the broader economy (BLS, 2023).  

Policy Reforms

Free universal healthcare is a necessity and a human right for ALL Americans, regardless of socioeconomic status.  Systemic changes are vital if Americans want to address the root causes of rising premiums and claim denials. Strengthening ACA provisions can make coverage more affordable and comprehensive. This has been attempted in the past and has unfortunately not had enough congressional support (CBO, 2023).  Other measures that can be taken include implementing measures to control the rate at which premiums can rise annually and can help maintain affordability (NAIC, 2023).  Congressional action to ensure that insurance plans cover a broader range of essential treatments without excessive restrictions can improve access to care for millions of Americans who are denied due to pre-existing conditions (KFF, 2023).

Individual Strategies

Individuals can adopt proactive measures to mitigate the impact of rising premiums and denials. Joining organizations that offer resources and advocate for policy changes can empower individuals and foster collective action (Health Affairs, 2023).

Conclusion: A Call to Action

The persistent rise in health insurance premiums and the increasing frequency of claim denials pose significant challenges for all Americans, but especially those managing chronic health conditions. These financial barriers not only jeopardize individual well-being but also have far-reaching implications for society and the economy. Addressing these issues necessitates a comprehensive and collaborative approach involving policy reforms, employer initiatives, and individual advocacy. By uniting efforts across these domains, we can strive toward a more equitable and supportive healthcare system that ensures all individuals have access to the care they need.

Are you or someone you know facing the challenges of high health insurance costs and claim denials? Join our 286 community to share experiences, access resources, and advocate for meaningful change and free universal healthcare together.

References

Bureau of Labor Statistics. (2023). National Compensation Survey. https://www.bls.gov/ncs/

Centers for Medicare & Medicaid Services. (2023). National Health Expenditure Data. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData

Congressional Budget Office. (2023). Health Insurance Reports. https://www.cbo.gov/topics/health

Employee Benefit Research Institute. (2023). Health Benefits Data. https://www.ebri.org/health-benefits

Health Affairs. (2023). Journal Articles on Health Insurance and Chronic Conditions. https://www.healthaffairs.org/

Kaiser Family Foundation. (2023). Employer Health Benefits 2023 Annual Survey. https://www.kff.org/report-section/ehbs-2023-summary-of-findings/

National Association of Insurance Commissioners. (2023). Health Insurance Information. https://content.naic.org/industry_data_health_insurance.htm

Healthcare.gov. (2023). Marketplace Annual Reports. https://www.healthcare.gov/coverage-outcomes-data/