Dental Insurance in Decline: Current Troubles and a Bleak Future
As a dental patient, there’s a good chance you have dental insurance because it’s something many patients think they need to receive quality dental care. In fact, patients often received great value from their dental insurance decades ago and was the reason so many sought it, but that value has been steadily decreasing over the years.
That decline has changed how patients regard their dental insurance today, and many people believe it may not even exist ten years from now. If you’re wondering why there’s growing negativity about dental insurance companies, keep reading to find out and learn how this might impact your relationship with dental insurance, including if you’re a patient at our practice.
Insurance in Decline
There are many contributing factors to the increasing loss of value in dental insurance, but you’ll find the three key reasons below:
Increased Premiums, Decreased Benefits
Over the last 40 years, dental insurance premiums have increased steadily. That shouldn’t be surprising on its own; however, benefits (i.e., the claim payouts) have not increased to keep pace with rising premiums, and those benefits are worth even less now when adjusted for inflation.
According to HealthInsurance.org, the benefit per patient is typically approximately $1,500 to $2,000 per year.¹ The most insurance companies will pay in benefits is generally about $2,500, the same as they paid in the 1980s!
So, why aren’t insurance companies increasing benefits? It’s most likely because if they increase benefits, they’ll want to raise premiums, and they’re unlikely to do so as the premiums may already be as high as customers are willing to pay. Concurrently, if they did raise premiums, most customers likely wouldn’t want to pay more for a minimal benefit increase. Although insurance companies are making record profits, there hasn’t been enough pressure on them to increase benefits because policyholders and dentists haven’t banded together to demand change.
Increase in Claim Denials
During the past 20 years, there has been a massive increase in claim denials, and our practice has experienced this firsthand since we began our operation in 2008. We believe the reason for an increase in denials is that the insurance companies are understaffed, a problem that has escalated since the onset of COVID-19. They don’t have enough employees to review claims and supervise the process, so the companies find it easier to deny many of them instead of approving or dedicating more resources to handling them. Our dentist, Dr. Adrienne Hedrick, has often experienced this setback. “I’ve never seen denials at this frequency before,” said Dr. Hedrick. “I’m getting so many denials for procedures that should be reimbursed and always were at one time.”
Poor Transparency with Benefits and Costs
Dental insurance companies have never been mandated to be transparent regarding costs and what patients will be reimbursed for. This leaves patients and dental practices in the dark because they don’t know for sure what insurance will cover, and it causes patients to often pass on certain procedures because they don’t want to risk denial for something high cost.
What Is Being Done About Decreasing Benefits and Low Transparency?
Fortunately, states nationwide are starting to do something about this problem. Recently, several states have passed legislation mandating that the percentage of patient benefit payouts be higher than in the past. The caveat, however, has been that some dental insurance companies have responded to this legislation by choosing not to sell dental insurance in a particular state because reimbursing at a higher level means less profit for them. One example is Guardian Life, which ceased insuring customers in the small business market in Massachusetts instead of providing more benefits.²
State legislatures have also mandated that insurance companies be more transparent about what they will reimburse for, a crusade that the state of Colorado has joined. Colorado is preparing to collect data from dental insurance plans, create accountability for companies that don’t spend enough premium dollars on patient care, and implement policies based on findings.³
Data collection will begin in 2024, but the downside is that it will take two years to collect data for recommendations, and it could be years before we see any effective legislation.
ADA and Other Class Action Lawsuits Against Delta Dental
An example of the lack of transparency of dental insurance providers are the lawsuits against Delta Dental for antitrust violations. This is occurring in several states, including in Illinois and California.
In Illinois, the American Dental Association has filed a lawsuit against Delta Dental,⁴ specifically alleging that the company has divided the market to restrict competition and reduce reimbursement amounts.
In California, the California Dental Association has filed a lawsuit against Delta Dental.⁵ Allegations include diminished value of benefit plans and moves to increase its own profits at the expense of dentists and patients, including 20% to 40% rate reductions for most periodontists, endodontists, and oral surgeons².
As in most cases, possible resolutions take time, as the Illinois case isn’t expected to go to trial until late 2025.
Can Dentists Address the Rising Costs of Insurance Companies by Charging Patients More?
No, because insurance companies dictate how much dentists can charge for procedures for in-network patients.
Insurance companies dictating costs wasn’t much of a problem in the past, but it is now because of the inflation they refuse to address. As a result, dentists earn much less for each procedure, when adjusted for inflation, than in the past. It’s a major issue when equipment, supplies, and labor costs increase by 2% to 8% a year, but dentists can only charge 1% more for procedures within that same year. In fact, the ADA Health Policy Institute (HPI) released data in 2022 that showed a significant increase in operational expenses for dental practices, with 1 in 4 dentists stating they’ve seen the costs of supplies and materials increase by at least 20%. Furthermore, 44% of dentists reported staff wages had increased by more than 1% to 10%.⁶
No dentist can survive earning less each year, and it’s a big reason — along with a lingering hygienist shortage — why we expect many private dental practices to go out of network in the coming years.
Below are more statistics that further reflect the current state of dental insurance:
- Delta Dental of Colorado allowed us to raise the rates for our procedures by an average of just 1% over the last ten years. Not per year, but for the decade!
- According to the S. Bureau of Labor Statistics’ inflation calculator, inflation has increased 26% over the last ten years. That means we’re now paid approximately 25% less for procedures than we were ten years ago.
- According to a study by the ADA, 1 in 6 dentists report dropping out of at least some insurance networks,⁷ further reflecting the increasing trend in this direction.
We believe that most private practices that care about quality care will eventually have no choice but to be out of network. At Longmont Dental Loft we recently decided to be out of network with all dental insurance. And we have a post about why we are going out of network in case you want additional details.
It’s worth noting, however, that some dental practices will continue to be in network as long as dental insurance exists in its current form. An example of this is the corporate-owned practices that have many providers and don’t strive for above-average care; instead, they rely on maximizing their number of insured customers who depend on dental insurance.
Seeing a Dentist Out of Network
People with dental insurance can still receive benefits by visiting an out-of-network dentist . In fact, there are a lot of surprising advantages of seeing an out of network dentist.
Some insurance, like Delta Dental, rely on patients paying upfront before they reimburse them; other insurance companies are billed first, and the patients receive a bill for anything the insurance doesn’t cover.
The prospect of dental insurance one day becoming obsolete is a very real one. Decreasing benefits directly translates to a decline in value, and the worse it gets, the fewer people will opt for dental insurance and the fewer dentists will be in network. We’re already at a point where policyholders are growing wary as insurance payouts and their programs, in general, are treated more like discount programs than legitimate care. Furthermore, the legislation trend forcing insurance companies to increase benefits and transparency has led them to no longer sell policies in certain markets. Lastly, if more dental practices go out of network, there will be even less value in these insurance policies.
- Norris, L. (2022, March 3). If I Buy a Dental Insurance Plan, What Sort of Out-of-Pocket Costs Should I Expect? Healthinsurance.org. Retrieved October 4, 2023, from https://www.healthinsurance.org/faqs/if-i-buy-a-dental-insurance-plan-what-sort-of-out-of-pocket-costs-should-i-expect/.
- Insurance Newsnet (2023, August 18). Guardian Life exits Massachusetts’ small-plan dental market after referendum. insurancenewsnet.com. Retrieved Novemer 7, 2023, from https://insurancenewsnet.com/innarticle/guardian-life-exits-massachusetts-small-plan-dental-market-after-referendum.
- Colorado Dental Association. (2023, July 17). Legislative Deep Dive: Dental Insurance Transparency Bill (SB23-179). cdaonline.org. Retrieved November 7, 2023, from https://cdaonline.org/news/latest-news/legislative-deep-dive-dental-insurance-transparency-bill-sb23-179/#:~:text=SB23%2D179%20is%20an%20important,maximize%20patient%20benefits%20going%20forward.
- ADA News. (2023, March 2). Court amends schedule in ADA’s class action lawsuit against Delta Dental. ada.org. Retrieved November 7, 2023, from https://adanews.ada.org/ada-news/2023/march/court-amends-schedule-in-ada-class-action-lawsuit-against-delta-dental/.
- CDA Files New Legal Action Against Delta Dental of California. (2023, January 3). CDA.org. Retrieved October 4, 2023, from https://www.cda.org/Home/News-and-Information/Newsroom/Article-Details/cda-files-new-legal-action-against-delta-dental-of-california.
- DeStefano, A. (2022, September 16). Through the Roof: The Impact of Rising Costs on Dentistry. DentistryIQ. Retrieved October 4, 2023, from https://www.dentistryiq.com/dentistry/article/14282852/how-much-are-rising-costs-impacting-dentistry.
- Versaci, M. (2023, March 9). HPI: 1 in 6 Dentists Report Dropping Out of Some Insurance Networks. ADA.org. Retrieved October 1, 2023, from https://adanews.ada.org/ada-news/2023/march/hpi-1-in-6-dentists-report-dropping-out-of-some-insurance-networks/#:~:text=1%2C%20about%2016%25%20of%20dentists,of%20the%20dentists%27%20patient%20bases.