When Insurance Says No, Children Pay the Price

California’s collective need to attend to the mental health of its young people is obvious. In a study last year, 94% of those surveyed aged 14 to 25 reported struggling with mental health challenges in an average month, and one third rated their mental health overall as either fair or poor.

All of those numbers have been on the rise over the past several years, particularly during and immediately after the pandemic. But kids’ ability to access mental health care is compromised on multiple fronts, including by a lack of providers. The federal defunding of Medicaid and Obamacare will also cost millions of Californians their health coverage.

And there’s another element to add to this dynamic: patients who have coverage and see their doctor, only to find that the care ultimately recommended for them is denied by their insurer.
 

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Often, the reasons for denials are vague, the appeals process labyrinthine. Most families don’t bother, and the problem goes unaddressed. Partly as a result of that, the Oakland-based advocacy group Children Now has consistently handed California low grades when it comes to supporting kids’ mental health needs.

But there’s some movement in the State Legislature to address one aspect of this equation. Authored last year by state Sen. Scott Wiener (D-San Francisco), the Health Insurance Accountability Act would force insurers to publicly disclose how often they deny care — and to face fines if their denials are overturned too often upon appeal.

“Accountability is critical when insurance companies wrongfully deny Californians health care coverage,” Wiener said when introducing the measure. 

The stakes are certainly high enough. “There is such a domino effect when we talk about not having easy access to care,” said Lishaun Francis, senior director for behavioral health at Children Now, which is co-sponsoring Wiener’s legislation. “If we start to shut that pipeline off, we will see effects through the whole family, not just the kids.”

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Inadequate access to mental health care services in California is a long-running issue, and not only for young people.

Kaiser Permanente, by far the state’s largest health program with 9.5 million members, has been fined and cited repeatedly for its failure to build out a sufficient mental health program for its patients, most recently agreeing to pay a record $50 million fine as part of a $200 million settlement with the state’s Department of Managed Health Care.

When someone is denied medical care by their insurer, including mental or behavioral health care that has been recommended by a provider, they can appeal. But the initial appeal rests with the same health group that denied the care in the first place, and the second — a formal request for review — goes either to the Department of Managed Health Care or the state Department of Insurance, depending upon which body oversees that particular health plan.

The process is opaque and time-consuming. Most people never even attempt it — partly, critics say, because patients aren’t automatically directed to it and often don’t know the option exists. A review of 2023 federal data by the health research organization KFF last year found that fewer than 1% of denied claims are ever appealed — a massive financial win for the insurers who deny them.

And this isn’t just a matter of tedious procedure; it also results in wildly unequal access to care. Call center records maintained by the state’s Department of Managed Health Care (DMHC) show that 94% of medical claim appeals to the state are filed in English and only 4% in Spanish, even though four out of every 10 Californians are Latino. Immigrant working families and English second language families are far less likely to appeal their cases, both Wiener and Francis say.

The kicker? Of the cases whose appeals actually make it to the state level, according to the DMHC, the patients wind up getting approved for the medical care they need 73% of the time — a staggering reversal rate of the original denials.

“This suggests insurers are engaging in widespread violations of state law and wrongfully denying urgently needed healthcare, potentially in a widespread way,” Wiener said last year. “We must gain a clearer picture of what is happening with coverage decisions and hold health plans accountable for unwarranted denials.”

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Wiener’s bill not only requires the insurers and plan providers to show how often they deny care, it penalizes them if more than half of their denials are overturned upon appeal to the state. The fines start at $25,000 and can escalate to $500,000 or more.

Its prospects for passage are uncertain. The senator introduced the measure almost a year ago, and it reached the powerful Assembly Appropriations Committee before being carried over to the new legislative session. Both Francis and Wiener expect heavy pushback from the health insurance lobby, which wields considerable influence in the halls of the Capitol.

Mary Ellen Grant, vice president for communications at the California Association of Health Plans, said the industry lobbying group opposes the bill, in part because the CAHP believes it duplicates some reporting requirements that are already on the books and imposes “severe penalties” for overturned denials.

“Medical necessity is a nuanced issue, with qualified clinicians sometimes reaching different conclusions based on complex patient needs,” Grant said. “The excessive penalties and additional administrative burdens proposed in [the bill] will only raise costs for consumers and complicate operations, without delivering improvements in patient care or transparency.”

But the subject of health care access is critical right now. In the face of expiring federal subsidies, about 1.4 million fewer Americans so far have enrolled in Affordable Care Act health plans than did so last year. Experts expect many more people to drop out of Obamacare in the months to come in the face of skyrocketing premiums, and that’s in addition to the millions of Californians likely to lose coverage due to Medicaid cuts.

That is a problem in its own right. When it comes to California’s kids and their mental health, anything that reduces access to care is worrisome — and forcing insurers to at least make public how often they deny such care is a first step toward greater accountability.

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