Despite the much ballyhooed sticker shock of health insurance price hikes, unaffordability is not considered the biggest obstacle to getting medical care. According to a just-released KFF survey, the U.S. public considers prior authorization (PrAuth) the “greatest hurdle” to obtaining the care they need when they need it.
PrAuth is a process that third-party payers use to decide if they will pay for care recommended by your doctor. If the answer is yes, the third party decides how much to pay and to whom, all pre-arranged by contract.
There is a way to remove the PrAuth barrier and at the same time, solve the unaffordability crisis.
Repeal the ESI.
Shortly after the attack on Pearl Harbor, Congress passed the Stabilization Act of 1942 that imposed strict wartime wage and price freezes. Since employers could not increase wages to recruit, retain or reward workers, Congress passed an accommodation, the employer-sponsored [health] insurance provision (ESI), that allowed employers to offer employees a non-monetary benefit: paying for employees’ health insurance tax-free to the employer. After the war, Congress repealed every element of the 1942 wage freeze act, except one: the ESI.
For 84 years, U.S. employees have been denied their full wages, with the missing portion being paid to insurance companies for insurance policies in employees’ names. In 2025, the average amount paid to an insurance company — of wages denied — was $26,993.
Repealing the ESI will restore full compensation to more than 80 million American workers and their families. Median household income in 2025 was $83,592. If workers were paid full wages by repealing ESI, they would receive a 32 percent increase is take-home pay.
Repeal of the ESI would eliminate the objectionable PrAuth obstacle as the person “authorizing” payment would not be a third party but the consumer himself/herself.
With consumers paying providers directly and immediately, there will be no delay in either service delivery or payment to the provider as currently occurs with PrAuth.
Note: One other legislative act should accompany repeal of ESI: creation of a no-limit HSA. All accounts currently available — Health Savings Accounts, Medical Savings Accounts and Flexible Spending Accounts — have numerous restrictions including contribution limits well below $10,000. Americans would need a no-limit HSA to make the full amount of $26,993 available to spend tax-free on medical needs.
Putting more money in consumers’ hands through repeal of ESI would create a free market for healthcare goods and services with more than $1 trillion for consumers to spend.
By injecting free market forces — buyers’ need to economize and competition among sellers — repeal of ESI would produce dramatic results for five stakeholders in healthcare.
Patients who spend their own money rather than other people’s money (as patients do now) would have a powerful incentive to spend less. They would demand lower prices from sellers of both care and insurance as well as more timely service than is currently available. Wait times for care would plummet as consumers would flock to those who provide prompt service and avoid those who don’t. Insurance companies would no longer be able to use PrAuth to make medical decisions for their clients (patients.) Put more succinctly, patients’ medical autonomy would be restored.
Providers as well as care facilities would have to adapt — compete, lower their charges, and offer prompt service — or have empty waiting rooms and vacant operating suites. Physicians would be paid more than at present because patients would pay their full albeit reduced charges, which still would be more money than the small fraction of their charges that Washington’s Allowable Reimbursement Schedule allots to them.
After repeal of ESI, insurance companies will no longer be able to use PrAuth to activate their “3-D Strategy:” delay, defer, or deny payment for care. Just like providers, insurers will have to compete for consumer dollars. They will either offer policies consumers want — from short-term “junk” insurance to high-deductible, full-pay catastrophic coverage — at prices consumers can afford, or they won’t buy. Elimination of PrAuth will produce large savings for consumers and providers in time, money, and lives, but lower profits for insurers.
Washington politicians will initially oppose repeal of ESI repeal as they will lose the support of the powerful insurance lobby along with a modicum of power. However, there are several positive outcomes for politicians.
First there will be millions of Americans grateful for the large increase in compensation and the gain in personal control. Second, the federal budget will no longer be at the mercy of whatever price hikes insurance companies choose. Third are the optics – Congress will be seen as doing the right thing, completing a necessary and long overdue legislative/bureaucratic oversight.
Taxpayers gain, not only as patients, but also by lessening their tax burden. Repeal of ESI, canceling current HSAs, MSAs, and FSAs, and creation of a remarkably simple no-limit (no oversight other than IRS) HSA will reduce the hassle and particularly the massive cost of healthcare BURRDEN: bureaucracy, unnecessary rules and regulations, directives, enforcement, and noncompliance activities. As bureaucrat jobs become unnecessary, there will be a sizable reduction in force, saving Americans billions in taxes.
Repeal of ESI combined with a new no-limit HSA will begin the process of restoring power to We the Patients. Medical care will become both affordable and available. Empowering patients will require actions in addition to repeal of the ESI such as Medicaid block grants, reduction in all manner of federal BURRDEN, and senior no-limit HSAs, all detailed in the Empower Patients Initiative released by Americans for Tax Reform.
Deane Waldman, M.D., MBA, is professor emeritus of pediatrics, pathology, and decision science; former director of the Center for Healthcare Policy at Texas Public Policy Foundation; former director of the New Mexico Health Insurance Exchange; and author of “Empower PATIENTS – Two Doctors’ Cure for Healthcare.”
