Americans are paying more than ever for health insurance. Denials add to their pain.

Health insurance costs are far outpacing inflation, leaving more consumers on the hook each year for thousands of dollars in out-of-pocket expenses. At the same time, some insurers are rejecting nearly 1 in 5 claims. That double whammy is leaving Americans paying more for coverage yet sometimes feeling like they’re getting less in return, experts say. 

Frustration over denials and medical costs has fueled an outpouring of vitriol against health insurance companies in the wake of the murder of UnitedHealthcare CEO Brian Thompson. Also last week, a similar outcry led Anthem Blue Cross Blue Shield to reverse a decision to limit anesthesia coverage during surgeries.

The anger may be rooted in fears that unexpected medical costs could prove financially ruinous, as well as concerns that essential care could be denied by an insurer, putting health and well-being at risk even for those who have health insurance. 

Some of those anxieties are well-founded: The top cause of bankruptcy in the U.S. is health care-related debt, underscoring the financial stresses that can stem from high medical costs. 

In fact, most adults say they worry about their ability to pay for health care services or unexpected medical bills, a sentiment shared by people regardless of whether they’re financially comfortable or struggling, a KFF survey found earlier this year. 

In 2024, the average health insurance premium for families carried a price tag of $25,572 per year, while single workers paid an average of $8,951, representing a 6% and 7% increase from the year earlier, KFF data shows. Since 2000, the rise in health insurance premiums has outpaced inflation for all but a handful of years, the health policy research firm found.

“Unhappiness with insurers stems from two things: ‘I’m sick and I’m getting hassled,’ and the second is very much cost — ‘I’m paying more than I used to, and I’m paying more than my wages went up’,” said Rob Andrews, CEO of the Health Transformation Alliance, a cooperative representing major companies such as American Express and Coca-Cola that works on improving health insurance for their employees. “A lot of people think they are getting less” from their insurers, Andrews said.

And while Americans have unhappily encountered other types of inflation in recent years — sky-high grocery prices have been credited with helping President-elect Donald Trump claim victory last month — health insurance can take on an even more personal edge, Thomas pointed out. 

“It’s not like, ‘How much do I have to pay for a lawn chair or a steak,'” Andrews noted. “People are sick or having some sort of health problem they are worried about.”

To be sure, people with employer-sponsored health insurance typically don’t pay the full premium, as their employers pick up much of the tab. 

Yet KFF data shows that employees’ share of their premiums are also on the rise, with a worker with family coverage typically paying premiums of $5,700 per year in 2017, the most recent year for that data, up from about $1,600 in 2000, KFF data shows. The average family deductible — the amount paid out-of-pocket before insurance kicks in — has increased from $2,500 in 2013 to $3,700 in 2023, according to KFF.

About 81% of Americans last year said they were dissatisfied with the cost of health care in the U.S, a 16-year high, Gallup polling found.

“We’ve gotten to a point where health care is so inaccessible and unaffordable, people are justified in their frustrations,” Dr. Céline Gounder, CBS News medical contributor and editor-at-large for public health at KFF Health News, told CBS Mornings on Friday.

Health insurance denials

Aside from rising health insurance costs, Americans are also expressing anger at coverage denials, which a KFF analysis of nongroup qualified health plans in 2021 found impacted almost 1 in 5 claims. However, their study found denial rates varied considerably by insurer, with some as low as 2% while others were as high as 49%. 

“When you are paying for something, and then they don’t give it to you and they keep raising prices, of course you will be frustrated by that,” noted Holden Karau, a software engineer who created a free service called Fight Health Insurance to help people appeal their denials. 

Karau says she came up with the app, which uses AI to craft appeal letters, after her own and her dog’s experience with insurance. Her pet insurer initially refused to pay for anesthesia for her dog’s root canal, while Karau, who is transgender, said she dealt with many appeals to get her own procedures and surgeries covered by her insurance. 

More insurance companies are using AI to review claims and issue denials, which isn’t always obvious to consumers. The shift to AI-based reviews has sparked lawsuits against insurers, with UnitedHealthcare sued last year by the families of two now-deceased customers who alleged the insurer knowingly used a faulty algorithm to deny elderly patients coverage for extended care deemed necessary by their doctors.

“With AI tools on the insurance side, they have very little negative consequences for denying procedures,” Karau added. “We are seeing really high denial rates triggered by AI. And on the patient and provider side, they don’t have the tools to fight back.”

Most people may not be aware that they have the right to appeal a denial, Karau noted. The majority of people who are hit with a denial or billing errors don’t contest, a study found earlier this year. For those that do, a first appeal will be dealt with by the insurer, but if that in-house appeal is also denied, you have the right to ask for an independent reviewer to look at your claim, according to the National Association of Insurance Commissioners.

“There are multiple levels of appeal, and in my experience, I would say it’s important to appeal until you at least get to an independent reviewer,” Karau said. “If you don’t appeal, you won’t get the care you need.”