Introduction
On December 4, 2024, UnitedHealthCare CEO Brian Thompson was fatally shot by Luigi Mangione, who was arrested on December 9 and charged with first-degree murder and other offences. This incident has brought to light widespread public anger over UnitedHealthCare’s high denial rates and the broader systemic flaws in the U.S. healthcare insurance system.
High Denial Rates: Prior Authorization and the Role of AI
UnitedHealthCare’s denial rate, approximately 30%, is among the highest in the industry. Denial rate refers to the percentage of insurance claims that are rejected by insurers. This process is largely driven by “prior authorization” (PA), wherein insurers assess whether a proposed treatment is necessary and falls within coverage. Increasingly, companies like UnitedHealthCare have turned to AI systems to automate aspects of PA, such as organizing patient profiles, verifying details, and requesting additional information.
In theory, this system could work in favor of both insurers and patients. By denying unnecessary treatments, insurers could prevent fraud or errors by healthcare providers while reducing costs for all parties. However, two key issues undermine this model. First, insurers often deny claims based on economic motives rather than patients’ best interests. Studies indicate that about 80% of patients abandon treatment after an initial denial, deterred by high medical costs and the slim chances of a successful appeal. Second, as highlighted in a 2023 lawsuit, UnitedHealthCare’s AI system allegedly denied medically necessary treatments to two elderly patients who later died. Although the company claimed that final decisions rested with medical professionals, this case illustrates how automated systems could potentially override expert judgment.
Broader Issues
These concerns reflect larger structural problems within the U.S. healthcare insurance system, particularly the dominance of private insurers and insufficient regulation. Unlike countries with government-led systems, such as the UK's NHS, private insurers in the U.S. cover roughly half of all medical costs. While this system offers advantages such as consumer choice, lower taxes for universal coverage, and innovation driven by competition, it also has significant drawbacks.
First, Americans lack a central authority, like the NHS, to negotiate standardized prices for medical services. This allows profit-driven insurers and providers to inflate costs. Second, private insurance is often tied to employment and income, leaving millions uninsured or underinsured. These systemic flaws, compounded by issues like prior authorization and high denial rates, underscore the urgent need for reform.
Proposals for Reform
To address these injustices, several reforms could be implemented. First, states could pass laws exempting PA requirements for medical emergencies or for physicians with a proven track record of obtaining PA in similar cases. Second, the use of AI should be limited to preliminary stages of PA and restricted to non-critical cases. Finally, more fundamental changes are necessary to reduce the healthcare industry’s reliance on privatization.
However, reform faces significant challenges. The deeply entrenched nature of the U.S. healthcare system means that changes would disrupt numerous interest groups. Nevertheless, the tragic events surrounding Luigi Mangione’s case could serve as a catalyst for legislative action to address the system’s gaps and inequities.
References:
‘AI ushers in next-gen prior authorization in healthcare’ (McKinsey & Company)
‘CEO Brian Thompson's killing exposes simmering anger at US health system’ (BBC)
‘Denying Your Health Care Is Big Business in America’ (New York Times Opinion)
Relman, Arnold. “Why Markets in Healthcare Don’t Work: Lessons from the US.” BMJ: British Medical Journal, vol. 344, no. 7856, 2012, pp. 26–28.
‘UnitedHealth uses faulty AI to deny elderly patients medically necessary coverage, lawsuit claims’ (CBS News)
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