[THE VIEW]Frequent Insurance Claim Denials in U.S. Health Insurance

Recent Shooting Death of Insurance CEO
Suspected Dispute Over Medical Insurance Payouts
Calls Grow for Healthcare System Reform

Recently, Brian Thompson was shot and killed. He was the CEO of United Healthcare, a major health insurance company in the United States. Although the perpetrator's motive has not been officially revealed, most media outlets speculate that it was due to the refusal to pay insurance claims. What kind of structure does the U.S. health insurance system have that causes disputes over insurance payments to escalate to murder?

In South Korea, all citizens are automatically enrolled in the national health insurance, and the government provides insurance services. However, in the U.S., most health insurance is provided by private insurance companies. Since enrollment is not mandatory, some people do not have any health insurance at all. There are two ways to obtain private insurance: through an employer or by purchasing it individually. Government-provided insurance also exists but is limited to the extremely low-income, elderly, and disabled.

In South Korea, health insurance premiums are determined similarly to income and property taxes. That is, premiums are set regardless of the individual's age, place of residence, or pre-existing conditions. However, U.S. private insurance is different. When insured through an employer, the premium is shared between the employer and the employee. When purchasing insurance individually, the individual bears the full cost, and premiums vary depending on age and location. Previously, individual health insurance premiums were also based on health status, meaning those with pre-existing conditions paid higher premiums. However, after the passage of the Affordable Care Act in 2014, such price discrimination based on health status was legally prohibited.

In South Korea, all citizens receive the same medical benefits. Whether a person visits ENT Clinic A or ENT Clinic B, the same health insurance applies. If two people receive the same treatment at ENT Clinic A, they also receive identical health insurance benefits. Additionally, most basic medical services are covered by insurance. In contrast, in the U.S., the scope of medical benefits covered varies depending on the insurance company and insurance plan. Premiums also vary widely.

Most U.S. insurance plans apply only to specific hospitals. Therefore, before visiting a hospital, the insured must check whether their insurance is accepted there. More expensive and comprehensive insurance plans cover a wider range of hospitals. Furthermore, even when receiving the same medical service at the same hospital, coverage depends on the individual's insurance plan. In other words, the scope of non-covered services varies by insurance. Again, more expensive and better insurance plans cover a broader range of medical services. Therefore, even those with health insurance in the U.S. are not guaranteed access to medical services.

Because insurance plans vary so much, administrative procedures for insurance claims are lengthy and complicated. In South Korea, patients can quickly know how much they will have to pay before receiving treatment. However, in the U.S., due to the diversity of insurance plans, hospitals often cannot accurately determine the patient's out-of-pocket costs beforehand. Patients only learn the exact amount after receiving treatment and processing the insurance claim. During this process, unjustified denials of insurance claims frequently occur. In 2021, over 75% of insurance claim denials by companies were without special reasons.

Research shows that one in three Americans has delayed or forgone treatment due to health insurance and medical costs. Additionally, about 530,000 bankruptcies annually are caused by medical expenses. The U.S. healthcare system clearly needs improvement.

Seo Boyoung, Professor at Indiana State University, USA