Insurance Is a Scam: Denial Is the Business Model, and What We Do Instead

What happened to Dr. Potter, in her words and in the insurer's

Dr. Potter's account: an insurer called during surgery, the overnight stay was denied, and the patient later received a bill in the region of $100,000. She has said the insurer's own estimate for the operation was about $240,000 while her cash price for the same surgery, same patient, same zip code, was about $17,000. UnitedHealthcare has said it never required her to leave the operating room and never threatened to deny coverage, and it sent her a legal letter demanding she remove the videos. She has since said the dispute could push her practice toward bankruptcy because her surgery center cannot get into the insurer's network. Every one of those numbers is her public statement, not a study. I put it first because it is the shape of the whole problem: the price is not the price, the decision is not made by the person with the scalpel, and the bill lands on the person who was unconscious.

Denial is not a bad day. It is measured behavior.

The reason the Potter story spread is that millions of people recognized it. The public data says they are right to. Insurers selling on HealthCare.gov denied 19 percent of in-network claims in 2024, roughly 85 million claims, with individual insurers ranging from 3 percent to 36 percent. Fewer than 1 in 100 of those denials was appealed, and when people did appeal, the insurer upheld its own denial two times out of three. A 2026 multipayer analysis of 2019 claims found initial denial rates of 15 percent for Medicaid managed care professional claims and 20 percent for Medicare Advantage inpatient claims, and safety-net providers, the ones treating the poorest patients, were denied more across every service type [2]. A Senate investigation of the three largest Medicare Advantage insurers found that UnitedHealthcare more than doubled its denial rate for care after a hospital stay between 2020 and 2022, and that all three denied post-acute care at several times their overall denial rate. The subcommittee's own phrase was that the companies were substituting a calculation about financial gain for a judgment about medical necessity.

• A 2026 systematic review of 25 studies found prior authorization associated with care delays, disease exacerbation, preventable hospitalization, longer hospital stays and lower disease-free survival [1].
• Cancer patients describe prior authorization as blinded navigation and care interference, with anxiety and delays that erode trust in their own treatment [3].
• Medicaid patients were denied MRI prior authorization more often than others for the same orthopaedic problems, with no difference explained by race or social factors [4].
• In pediatric inflammatory bowel disease, insurer and pharmacy benefit manager barriers produced a median 18-day treatment delay, and 60 percent of affected children had an adverse outcome or reduced quality of life [5].

The price is a negotiation you were never invited to

Insurance is sold as protection from prices. The measured record says the prices are largely created by the insurance system itself. Across 6.7 million price points at four major insurers, the facility fee for the same implanted heart device ranged from about $6,700 to about $36,000 depending only on which insurer was paying [6]. Cardiac procedure prices vary three-fold inside the same hospital, and the hospitals charging the most were not the ones with better outcomes [7]. Coronary bypass prices varied widely with no link to quality [8]. Then there is the cash price. Across 2,379 hospitals and 70 shoppable services, the cash price was lower than the median insurer-negotiated rate at about half of hospitals [9]. For imaging in California, paying cash saved 10 to 22 percent against the in-network price, and 45 to 64 percent if the patient also chose the cheapest facility [10]. For a vaginal childbirth at top-ranked hospitals, posted cash prices ran from $0 to $55,221, and fewer than half of hospitals' online prices matched what they quoted by phone [11]. Cash does not win every time. The bypass study found list prices for self-pay patients above the commercial rate [8]. The honest sentence is: the number you are charged is a function of who is asking, and a person with insurance is often asking from the weakest position in the room.

Your pharmacist knew a cheaper price and was not allowed to say it

Until October 2018 it was legal for a pharmacy benefit manager, the middleman that sets your drug prices, to write a gag clause into its contract with your pharmacy. The clause barred the pharmacist from telling you that paying cash would be cheaper than your copay. Two federal laws, signed that month after a 98 to 2 Senate vote, banned those clauses. The reason Congress moved is in a 2018 JAMA analysis: in 23 percent of filled prescriptions the patient's copay exceeded what the drug actually cost the insurer, by an average of $7.69, and on generics it happened 28 percent of the time. The difference did not go to the pharmacy. It was clawed back by the benefit manager. The gag is gone, but the incentive is not, which is why the same generic can cost a different amount at Costco, Walgreens and the pharmacy in your grocery store on the same day, and why the price your plan shows you is not the floor. Ask for the cash price every time. Ask whether a discount card beats the copay. The pharmacist can answer now.

A $1,900 line item for holding your own baby

In July a social worker posted a hospital bill on X with a $1,900 charge labeled skin-to-skin post-delivery. The hospital described it as additional nursing resources. His question was the right one: every kind of nurse was already in that room, so which extra nurse was being paid to watch a mother hold her child? The reporting site said it could not independently verify the bill. The story is not new. In 2016 a Utah father posted a $39.35 charge for skin to skin after C-section, and the hospital explained that a second nurse is brought into the operating room to stay with the baby during surgery. Maybe that is true in an operating room. It does not explain a four-figure charge in a delivery room. This is my argument, not a study: no parent should be handed a bill for the first minutes with their own child, and a system that can generate that line item will generate any line item. The itemized bill is not a record of care. It is an opening bid.

What the bill does to the body after the bill

This is the part that puts insurance on a health site rather than a finance site. The bill is an exposure. Financial toxicity, the measured harm of paying for care, affected between 28 and 73 percent of cancer survivors depending on how it was measured, and hit younger, lower-income and female patients hardest [12]. Financial hardship from cancer was far more common under age 65, the working-age years when people are insured through a job, than after Medicare age [13]. Medical debt drove an 11.9 percentage point increase in the use of payday loans and similar products in the years after [14], and Black borrowers carried the most medical debt in collections through 2022 [15]. Debt is stress. Stress is measurable in the nervous system, in sleep and in inflammation, which is why the Mind pages on this site and the emotional regulation tools exist. A denied claim is not paperwork. It is a physiological event with a start date.

Why I call it a scam, and what the law calls it

Here is my argument, and I will keep it separate from the evidence above. A product that charges more when you are sicker, decides after the fact whether it will pay, denies one claim in five, and upholds its own denials when challenged is not protection. It is a toll booth on the road to care. The provider charges the insured patient the inflated negotiated rate rather than the cash rate, the insurer denies the part it would rather not fund, and the patient pays twice: once in premiums, once in the bill. If a private citizen ran a scheme where the price rose because you had already paid, we would have a word for it. My word is racketeering. Legally it is not; nearly all of this is lawful, and that is exactly the point. The law was written around it. Insurance is supposed to make care affordable. In practice, care costs more because insurance exists.

What a health share is, where it came from, and why it is not insurance

Sharing medical bills is older than insurance. Amish and Mennonite congregations in the early 1900s pooled money so a family's hospital bill did not become a family's ruin. Christian ministries scaled the same practice up from the 1980s and 1990s. When the Affordable Care Act passed in 2010, section 5000A(d)(2)(B) exempted members of health care sharing ministries that had operated continuously since 1999 from the individual mandate. Membership went from about 100,000 people in 2010 to more than a million by 2018. Two honest caveats: those ministries were faith-based by law, and none of them guarantees payment, because none of them is insurance. That last point is the feature, not the bug. A health share does not have a network, does not negotiate a secret rate, and does not decide after your surgery whether it feels like paying. Newer platforms took the same idea outside the religious requirement. CrowdHealth, the one we chose, describes itself as a crowdfunding tool and community, not an insurance company. Bills are first negotiated to a fair cash rate, often with a good-faith estimate up front, then shared by members. Any provider. No network.

The one we chose, with the actual numbers

We joined CrowdHealth because it fit our family and because the arithmetic was visible. As of September 2026 its full-service membership asks members to cover the first $500 of a health event, meaning a hospital stay, a surgery, an injury, and $3,000 for a pregnancy; the crowd shares the rest of the negotiated bill. Monthly costs on its site run from $200 for an adult under 55 to $660 for a family of four or more, including the advocacy fee. A basic tier runs $85 to $315 a month with a $15,000 member commitment per event and no pregnancy coverage. Those are their published figures on the day of writing and they can change. What does not change is the structure: cash pricing negotiated before or after care, a fixed member share you can plan around, and every monthly payment going to other members' bills rather than to a denial department. I am not telling you it is right for you. I am telling you what we chose, why, and where to read the terms yourself. It is not insurance, it does not guarantee payment, and you should read that sentence before you read the price.

What to do this week if a claim was denied or a bill is too high

Whatever you are enrolled in, the moves are the same and they work better than people expect, because almost nobody makes them. Appeal every denial in writing and ask for the denial reason code and the clinical criteria used; fewer than 1 percent of denied marketplace claims are appealed, and a third of appeals win. Request an itemized bill and question every line you do not recognize, including the skin-to-skin ones. Ask the hospital's billing office for the cash price and the financial-assistance policy; nonprofit hospitals are required to have one. Ask the pharmacist for the cash price and whether a discount program beats your copay. Get a good-faith estimate before any planned procedure. Write down every call, name and date. And treat the stress as real: a bill is an exposure, so use the tools on this site the same week you use the phone.

• Appeal in writing, ask for the denial code and criteria, and escalate to your state's external review if the internal appeal fails.
• Get the itemized bill. Dispute unrecognized codes before you pay anything.
• Ask for the cash price and the financial-assistance policy. Ask again, higher up.
• Ask the pharmacist for the cash price. It is legal for them to tell you now.
• Get a good-faith estimate for planned care. Compare it with a second facility.