The practice claims to control costs. Instead, it lets insurers override clinicians and profit from denying care — at a cost of $32.7 billion a year 

Washington D.C. — The American Economic Liberties Project today released a report calling for federal and state bans on prior authorization, the process that lets private health insurers, rather than treating physicians, decide whether care is medically necessary before it can be covered. The report documents how private insurers use prior authorization to override physicians’ clinical judgment with little transparency or accountability — delaying care, worsening outcomes, and, in some cases, causing avoidable hospitalization and death.

The report opens with a personal foreword by co-author Hannah Garden-Monheit about her late father, who was repeatedly denied prior authorization for rehabilitation by his insurer, UnitedHealthcare, after his leg was amputated. An adaptation runs today as an op-ed on MS NOW. 

The report provides new data regarding the amount of time and money wasted on prior authorization paperwork: It finds that prior authorization is now consuming the equivalent of our entire national doctor shortage in clinician capacity — the equivalent of over 99,000 full-time clinicians — at an annual cost of $32.7 billion. The report details the history of how the privatization of our healthcare system and unchecked corporate consolidation transformed prior authorization from a narrow cost-control tool to a pervasive “corporate care veto.” Today it is plagued by an inherent conflict of interest: when insurers’ deny even medically necessary care, they increase their own profits.   

“We’re burning the equivalent of our entire missing doctor workforce on prior authorization paperwork whose main purpose is to wear people down. This practice has massive financial and human costs, as I know personally from my family’s own tragic experience,” said Hannah Garden-Monheit, Senior Fellow at the American Economic Liberties Project. “Prior authorization may have started as a narrow cost-control tool, but it’s mushroomed into private insurers’ strategy for diverting resources from care toward their own profits. It’s time to ban prior authorization as we know it.” 

“For too long, prior authorization has allowed insurance companies to put profits ahead of patients by overruling doctors and delaying and denying essential care,” said Emma Freer, Senior Fellow for Health Care at American Economic Liberties Project. “This status quo is failing patients, ratcheting up costs, and undermining the basis of effective, expert-informed care. It’s time to end this ‘corporate care veto’ and put medical decisions back where they belong: with patients and their doctors.”

BACKGROUND

One in five U.S. adults with private insurance report that they or a family member experienced a prior authorization denial in the past year, with 28% of those affected reporting that the denial worsened the health problem. Ninety-five percent of physicians report that prior authorization harms patient care by delaying treatment, and more than one in four report that these practices contribute to serious adverse events — including hospitalization, permanent impairment, birth defects, or death.

Prior authorization not only erodes care quality but increases costs by imposing administrative burdens and by delaying and denying timely treatments, forcing patients to try ineffective treatments and/or to need more expensive care—such as ER visits for untreated conditions. 

This administrative burden weighs heaviest on under-resourced independent practices and safety-net hospitals in rural and low-income neighborhoods, heightening their risk of acquisition and closure.

The conflict is structural: insurers now own the companies that adjudicate their prior authorizations. Cigna owns EviCore; UnitedHealth owns NaviHealth. When an insurer’s own affiliate denies care, the parent company keeps the savings. Voluntary pledges to trim prior authorization don’t address this underlying incentive and haven’t worked to meaningfully curb the practice.

The severity of this problem demands a ban on prior authorization as it exists today. To protect clinical decision-making from corporate interference, Congress and state legislatures must:

• End insurer conflicts of interest: Ban insurance conglomerates and their corporate affiliates from adjudicating prior authorization requests. Only independent third-party reviewers with no financial incentive to deny care should be allowed to hold this role. 
• Raise the evidentiary bar for prior authorization: Allow prior authorization only when regulators make evidence-based findings that a treatment has been the subject of fraud, overuse, or is a high-risk or experimental treatment. 
• Ban AI-driven denials: Permit AI tools to approve requests, but prohibit automated denials.
• Require real physician review: Mandate peer-to-peer review with a qualified specialist before any denial, with safeguards to ensure transparency and accountability.
• Speed up decisions: Adopt a 24-hour deadline for urgent requests and seven days for non-urgent requests, with automatic approval if deadlines are missed.
• Standardize the process: Create uniform submission, review, appeals, and reporting standards across insurers to eliminate fragmented and outdated processes that add to clinicians’ administrative burden.No more relying on faxes.
• Guarantee approved care: Prevent insurers from retroactively denying coverage after a prior authorization has been approved.

Past reform has failed to curb insurers’ abuses, with voluntary insurer pledges and incremental regulatory changes leaving conditions on the ground materially unchanged. Most recently, the Trump administration initiated the Wasteful and Inappropriate Service Reduction (WISeR) pilot program, which risks a dangerous expansion of AI-driven prior authorization in traditional Medicare by giving insurer-affiliated contractors financial incentives to deny care to seniors and people with disabilities. In July, Senate Republicans blocked a resolution to end the program, in a 46-50 party-line vote. 

The report is authored by Emma Freer and Hannah Garden-Monheit and accompanies the launch of the Break Up Big Medicine coalition, which is made up of 26 organizations representing a cross-section of the health care industry: nurses, dentists, independent pharmacists, small businesses, patients, and academics.

Read the full paper here. 

Learn more about the Break Up Big Medicine coalition here. 

Learn more about Economic Liberties here.