Who Do We Trust to Decide What Health Care Gets Covered, and at What Price?
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Deciding what health care gets covered largely falls to health insurers, and it’s not a role that wins them many fans. A KFF poll finds prior authorization is the single biggest burden insured adults say they face beyond cost.
KFF’s Larry Levitt weighs insurers’ role as a check on care that lacks medical evidence against the impact that delays and denials have on patient care and health care providers.
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Video Transcript
Narrated by Larry Levitt, KFF Executive Vice President for Health Policy
Prior authorization keeps health care costs down. And patients often waiting for care.
The job of deciding what health care gets covered largely falls to health insurers, and it’s not a role that wins them many fans.
Costly insurance premiums are straining consumers and employers alike. But those premiums are high mainly because of spending for hospital care, physician services, and prescription drugs.
At almost a third of national health expenditures, hospitals account for the largest share of total spending and also drive more growth than other parts of the health care system.
Though they may not do it very effectively, insurers are a counterweight to a consolidated hospital industry that uses its market power to charge higher prices.
The prices paid by private insurers for hospital care are about double what Medicare pays and have risen much faster too. Up 30% for private insurers versus 21% for Medicare.
Insurers have limited tools to control prices. Prior authorization is their main lever on volume.
Insurers see it as pushing back against a system that incentivizes doing more rather than less, discouraging care that is not medically necessary. But patients and clinicians experience it as insurers saying no to care they believe is needed.
A KFF survey of insured adults found that prior authorization was the single biggest health care burden beyond costs.
When insurers push back on requests, some services don’t happen and even the possibility of a denial changes how clinicians practice. They order less, knowing some requests won’t be approved.
Nearly half of insured adults said they’d had care denied or delayed in the two years prior, with many reporting consequences for their physical health, emotional well-being, or finances.
Insurers may be imperfect referees, but some entity has to address what health care needs to be covered and at what price. The question is who do we trust to make those calls most effectively and fairly?
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