If you think all denied claims are denied in good faith, I don't know what to do for you.
The insurers are hardly running up against hard resource limits, where there just isn't enough to go around and they have to triage. They are profit driven entities, and if they were legally allowed to deny all claims they would be required to do so by their shareholders.
No system is perfect, but patients shouldn't die to boost a stock price. And no patient should be required to fight for coverage at their most vulnerable.
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Why would an insurer who denied all claims have any customers? I think you're missing the market competition aspect of the insurance business.
Most people do not get to choose their own insurance company, they just get whatever their job picks. Most big companies have directors and officers that personally benefit when a particular insurance company does well. The market is completely broken.
Insurance is an arbitrage leach at best, and extortion at worst. It provides no value to society.
Without insurance Market prices would drive down the cost of healthcare.
I was presenting an extreme hypothetical to a make a point that the insurers are motivated by selfishness.
In the real world, not a hypothetical, your market driven approach ensures they approve the minimum necessary to prevent customers from leaving. They require patients to to fight them for coverage while they're undergoing cancer treatment, because a dead patient they didn't pay out for is more profitable. Paying for insurance in a for-profit marketplace isn't paying for health coverage, it's paying for a CHANCE at health coverage, and you better be willing and able to fight for that chance while you're undergoing cancer treatment/surgery, or be willing to go bankrupt, or not get the treatment and die. That's the choice the insurance marketplace presents to you.
Not hyperbole, many such stories. My own father in law died in part because his private medicare advantage plan refused to approve in-patient rehab after a brain surgery that every MD working on him said he needed, but would have cost 6 figures out of pocket that nobody could front. The grim irony is he later tried to get out of bed to use the bathroom, couldn't support his own weight and suffered a skull fracture that resulted in a second brain surgery inside of a week, and that was fully covered.
I'll take the bureaucrats. The real world shows they're simply better at this, and Ayn Rand is simply wrong.
Isn't it also not the direct customer purchasing the insurance, but their employer, who also has to pay into the pot and so is incentivized to find cheap options? (I'm not 100% on this - I'm not American.)
Depends on your employer/occupation. You can purchase insurance directly as an individual but it's usually the most expensive way to go as you have no group bargaining power. Small businesses are also hit by this, as they're only trying to cover a small group of people.
For this reason many small businesses don't offer insurance directly, but provide a tax-free health insurance stipend to their employees who then source their own insurance, effectively subsidizing the more expensive premiums as a benefit.
Larger employers have more bargaining power due to the number of employees they bring with them and can get better rates/plans from the insurance companies, and these better rates/plans are typically passed along to employees as a benefit for working there. An employer might cheap out, but that's the same as offering a bad salary.
Very large employers (Fortune 500s and such) are often self-insured, where they contract all the bureaucracy out to a private insurer but the company is actually doing all the payouts. The quality of this coverage naturally varies from employer to employer. I once had a co-worker have a claim denied for an expensive psychiatric facility he sent his son to, but because he had the claim pre-approved he had grounds for a lawsuit. He had to sue both the insurance company and the company we worked for while working there.
The elderly have medicare, and the poor have medicaid, which are taxpayer funded but not always 100% coverage, and there's a bunch of private plans you can buy to fill in the gaps if you do desire with various pros/cons.
Our system is a complete fucking mess, although it's arguably still better than it was pre-Obamacare