Denying claims generally doesn't improve health insurance company profits. It's not like auto or homeowner's insurance. Due to the minimum medical loss ratio rule, insurers can generally increase their profits by approving more claims. Their most important customers are self-funded employers.
When insurers tighten their claim approval policies it's usually due to pressure from those self-funded employers to control costs. If employers wanted it, insurers would be happy to sell custom health plans that would pay every claim with zero denials; this would be enormously profitable for insurers because they wouldn't have to do any work.
Claim approval or denial rates don't have much direct impact on consumers being able to afford insurance. Most of the cost is borne by employers, and low-income consumers who buy individual policies through the exchanges receive government subsidies. But of course that indirectly impacts all of us through lower wages and higher taxes.
> Denying claims generally doesn't improve health insurance company profits.
If this is true, why do several of the larger companies deny so many claims? I can't imagine they would do this if what you were saying were true; the board would have leadership's heads.
As I wrote above, health insurers ultimately have to answer to their customers. Those are mainly employers, especially large companies with self-funded health plans. Those employers are constantly pressing insurers to cut medical expenses, and so sometimes insurers tighten coverage rules on their standard health plans in order to close more sales.
Payers do make errors in claims processing and improperly deny some claims, but the majority of denials are due to errors on the provider side. They often fail to code claims correctly or don't obtain required prior authorization or don't follow step therapy or fail to attach enough clinical documentation to establish medical necessity. Many of those initial denials are later approved once the provider corrects the errors and resubmits the claim. But in fairness to the providers, it's hard to get everything right the first time because every payer has different rules and they're sometimes ambiguous.
https://www.cms.gov/marketplace/private-health-insurance/med...
When insurers tighten their claim approval policies it's usually due to pressure from those self-funded employers to control costs. If employers wanted it, insurers would be happy to sell custom health plans that would pay every claim with zero denials; this would be enormously profitable for insurers because they wouldn't have to do any work.
Claim approval or denial rates don't have much direct impact on consumers being able to afford insurance. Most of the cost is borne by employers, and low-income consumers who buy individual policies through the exchanges receive government subsidies. But of course that indirectly impacts all of us through lower wages and higher taxes.