California Health Insurers Deny 26% of Medical Claims

Author: California Nurses Association/National Nurses United
Published: 2011/01/31 - Updated: 2026/02/04
Publication Type: Reports & Proceedings
Category Topic: Insurance - Related Publications

Page Content: Synopsis - Introduction - Main - Insights, Updates

Synopsis: This report presents data from the California Nurses Association/National Nurses United showing that California's seven largest private health insurance companies denied 26 percent of all medical claims submitted during the first three quarters of 2010, totaling 13.1 million rejected claims. The analysis, based on data from the California Department of Managed Care, provides specific denial rates for each major insurer and tracks trends from 2002 through 2010. This information matters to patients, healthcare advocates, and policymakers because denied claims often shift financial responsibility to patients and their families, contributing to medical bankruptcies and creating barriers to necessary care for people with disabilities, chronic conditions, and seniors who depend on consistent coverage for ongoing treatment needs - Disabled World (DW).

Introduction

California Insurers Continue to Deny 26% of All Claims

Despite the passage of national healthcare reform and widespread uproar in California over insurance industry pricing practices and other abuses, California's largest private insurance companies continue to deny more than one-fourth of all claims, according to new data released today by the California Nurses Association/National Nurses United.

Blue Shield, which has recently garnered attention for pushing through premium rate hikes of up to 59 percent for individuals, denied nearly 2 million claims last year, trailing only Anthem Blue Cross, which denied nearly 6 million claims. PacifiCare had the highest percentage of denials at a shocking 44 percent.

Main Content

Nurses, patients, and consumer advocates will cite the data, along with the public criticized pricing practices of the insurance industry, at a big protest Tuesday at the San Francisco headquarters of Blue Shield, at 50 Beale St, at 11 a.m.

For the first three quarters of 2010, seven California insurance giants rejected 13.1 million claims, 26 percent of all claims submitted, a number only slightly below the 26.8 percent rate for 2009. The data, new findings by the Institute of Health and Socio-Economic Policy, the CNA/NNU research arm, is based on data from the California Department of Managed Care.

Claims denial rates by leading California insurers, first three quarters, 2010:

PacifiCare - 43.9%
Cigna - 39.6%
Anthem Blue Cross - 27.3%
HealthNet - 24.1%
Blue Shield - 21.9%
Kaiser Permanente - 20.2%
Aetna - 5.9%

Cigna, which denied 40 percent of claims, showed the biggest increase from 2009, increasing its rejection rate by 5.3 percent. Kaiser Permanente accounted for the biggest drop, a one year decline of 7.4 percent in denials. Blue Shield, which has attracted recent notoriety for its individual premium rate hikes of up to 59 percent, slightly increased its denial rate by.3 percent from 2009.

Since 2002, these seven firms, which account for more than three-fourths of all insurance enrollees in California, have rejected 67.5 million claims. Claims denials generally refer to insurance payment rejections - which far too often puts patients on the hook for payment to the provider whose claim is rejected.

"These obscene rejection rates demonstrate one reason medical bills are a prime source of personal bankruptcies as doctors and hospitals will push patients and their families to make up what the insurer denies," said CNA/NNU Co-President DeAnn McEwen.

The national reform law signed by President Obama last spring has, to date, had no impact on the high pace of insurance denials, she noted.

"The denials also illustrate the appalling degree of bureaucracy in a wasteful system; for all the hand-wringing about 'government,' healthcare, a real public program like Medicare is far less wasteful than the bloated private system that so casually rejects such a high number of medical claims," McEwen said.

Following past CNA/NNU reports on denials, insurance industry representatives offered the specious response that they pay most "eligible" claims. But, CNA/NNU research director Don DeMoro notes the insurers fail to distinguish between "eligible" and "ineligible" claims denied in data they provide the state. And, insurers can choose from a broad list of "ineligibility" criteria offered by the state including disputes over contracts, interest or late payments, benefits "not covered," and court disputes.

DeMoro called on the state to require more transparency in reporting. If further national reform is not forthcoming, he said, individuals and employers alike should have access to such data to aid them in determining the best value for their money and the best care for all concerned.

"The grave and potentially irreparable nature of the risk to patients subject to unfair claims denials cannot be overstated and certainly justifies the minimal cost to managed care organizations to provide accurate and meaningful claims denial reports," DeMoro said.

Insights, Analysis, and Developments

Editorial Note: The persistent high denial rates documented in this analysis raise fundamental questions about the practical value of health insurance coverage when more than one in four claims face rejection. While insurance companies maintain that most "eligible" claims receive payment, the distinction between eligible and ineligible remains murky in state reporting requirements, leaving consumers without clear metrics to evaluate coverage quality. For individuals managing disabilities or chronic health conditions who require regular medical care, a 26 percent denial rate translates into constant uncertainty about whether necessary treatments will be covered. The data suggests that shopping for insurance based solely on premium costs may miss the more important consideration: whether the policy will actually pay claims when needed most - Disabled World (DW).

Attribution/Source(s): This quality-reviewed publication was selected for publishing by the editors of Disabled World (DW) due to its relevance to the disability community. Originally authored by California Nurses Association/National Nurses United and published on 2011/01/31, this content may have been edited for style, clarity, or brevity.