Democrats spent the last four years trying to expand Obamacare enrollment, largely by ramping up federal premium subsidies. However, the health coverage available through the exchanges often doesn’t do much good, as too many Obamacare enrollees discover when a medical bill comes due.
According to new research from KFF, health insurers operating through the federal exchanges denied one in five claims in 2023. In other words, the United States is funneling billions of taxpayer dollars to insurance companies so they can deny claims. It’s long past time for officials to curtail their corporate welfare for insurers.
The new KFF report analyzed transparency data from health insurance companies that operated through HealthCare.gov in 2023. On average, insurers denied 19% of in-network claims and 37% of out-of-network claims—or 20% total. In-network denial rates for individual insurers varied from 1% to a whopping 54%.
Some of the country’s biggest insurance companies scored worse than average. Blue Cross Blue Shield of Alabama, for instance, denied 35% of in-network claims. UnitedHealth Group denied 33%, and Health Care Service Corporation 29%.
Out of 175 health insurance companies, only 22 had an in-network denial rate of less than 10%.
Sometimes insurers have good reasons for denying claims — say, if a patient wants coverage for a service the insurer plainly advertises it doesn’t cover. But the most common reason insurers gave for denying payment was “other” (34%). Next came administrative reasons (18%), followed by excluded service (16%) and lack of prior authorization or referral (9%). Only 6% of decisions were grounded in “lack of medical necessity,” such as with elective cosmetic surgery.
For most patients, a denial ends up being final. Obamacare enrollees rarely ask their insurers to reconsider. In 2023, exchange customers appealed a mere 376,527 — or 1% — of 73 million in-network denied claims. The insurer stuck with its original decision in over half of these cases.
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But data like these haven’t stopped Democrats from pressing for an extension of Biden-era premium subsidies, which expire at the end of this year. The subsidies guarantee that no Obamacare enrollee pays more than 8.5% of income on premiums, and they cover a steadily increasing share of premiums as income declines below four times the poverty level.
According to the Congressional Budget Office, making these enhanced subsidies permanent would cost $335 billion over the next decade. Ending the premium subsidies is a commonsense way to reduce wasteful spending. Republicans should ensure they do indeed expire at the end of this year.
Sally C. Pipes is president and CEO, and Thomas W. Smith is a fellow in healthcare policy at the Pacific Research Institute. Her latest book is The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy—and How to Keep It (Encounter 2025). Follow her on X @sallypipes.