Preauthorization, also called prior authorization (PA), is a process where healthcare insurance companies must approve before paying for medications, procedures, surgeries, or other medical services. 

These are usually standard and approved therapies. For medications, PA approval is required for many FDA-approved (though expensive) drugs, used according to label, meaning in accordance with the detailed package insert.

MAHA rainmaker, Health and Human Services Secretary Robert F. Kennedy Jr, is trying to fix this problem.

This process started in the 1960s as part of Medicare and Medicaid’s “utilization review” to reduce unnecessary hospital stays and manage costs. It comes from an intentional effort to establish a third-party payer system, separating the patient from the service providers, meaning physicians and hospitals.

Such disconnection exists in few other spheres. If you hire a plumber, lawyer, or tennis coach, they charge by the hour or job and you pay them directly.

Education is one area besides healthcare where this disconnect exists. Taxpayers fund education, either directly or through grants, subsidies, and loan guarantees; however, they are often disconnected from the consumers, namely students and their parents. Those providing the education, teachers, are disconnected from the payers and consumers.

As a result, both education and medical inflation grow faster than overall inflation, with education inflation leading the way. But quality metrics are going the other way resulting in a dumber and unhealthier population.

The main issue is that when someone else covers the cost, the consumer becomes insensitive to price and value. Meanwhile, the provider must serve the payer rather than the patient, which leads to inefficiency, overuse, and lower quality. 

Or as I tell my patients, “He who pays the piper calls the tune” with the insurance company paying me as the piper and telling me and my patient that the tune is a Rolling Stones classic, “You can’t always get what you want.”

In defense of insurance companies, in our current healthcare delivery scheme, large systems are vulnerable to misuse. Think of military procurement and $10,000 toilet........

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