In 1850, the French economist Frédéric Bastiat published an essay titled “What Is Seen and What Is Not Seen.” His argument was simple. Every act and every policy produces a series of effects. The first is immediate and visible. The rest unfold gradually and escape notice. The difference between a bad economist and a good one, Bastiat wrote, is that the bad economist stops at the effect that can be seen.
The debate over utilization management (UM) is dominated by the effects that can more easily be seen. The costs of prior authorization, step therapy, and formulary restrictions are immediate and visible: administrative burden, denied requests, delayed treatments, and frustrated clinicians and patients. Some of those costs reflect requirements that should not exist and decisions that were simply wrong. Critics are right to count them. But the benefits of UM are far harder to see, because prevention leaves no record. No one thanks a health or drug plan for what did not happen.
The best way to see benefits that leave no record is to imagine a world without them. Those calling for UM’s elimination are, in effect, inviting us to imagine that world as a better one.
Defining the world without
Imagine that the coverage rules payers set in advance through formularies and medical policies disappeared: no prior authorization criteria, no step therapy requirements, no formulary exclusions, no quantity or duration limits. For any drug or service within a broadly covered benefit category, payment would follow the prescription or order — no questions asked.
Even so, a world without UM would not be a world without rules. Benefit designs would still exclude entire categories of care, and provider networks would still influence where and by whom care is delivered. Network design operates through contracts rather than the coverage rules, although the two can intersect. Payers today often relax or waive review for gold-carded providers and at designated centers of excellence. Clinical guidelines, professional norms, and malpractice exposure would still shape practice. Hospitals would still manage care within their walls with their own formularies, protocols and order sets, and utilization review. Some providers would still bear financial risk, giving them reason to manage utilization themselves.
The question is simple: What happens when the party paying for care stops setting conditions on its use?
At first: the promised gains
The immediate effects of removing UM are genuine improvements. Clinicians and their staff reclaim hours every week. Prescriptions, procedures, and tests proceed without waiting for payer approval. The grinding conflict between clinicians and payers subsides. Patients whose care would have been wrongly delayed or denied receive it promptly, and that is a real gain. Practices redeploy staff time from paperwork to patients. Satisfaction rises across much of the system.
So far, the world without UM is exactly what its advocates promised.
What begins to change
Over time, the world without UM changes, not because anyone behaves badly but because behavior responds predictably to new conditions. Ordering moves more quickly to the newest and most expensive drugs, devices, and procedures. Clinically reasonable first-line options are used less because coverage no longer depends on whether they were tried. Variation in practice patterns widens. Manufacturer promotion and patient requests meet less resistance. Care drifts toward higher-cost settings and providers, because the rules that steered an infusion from the hospital outpatient department to the office or the home, or that conditioned payment on who delivers a service, are gone. Services with marginal or uncertain benefit face no payer checkpoint at all. Clinicians answer instead to the everyday realities of practice: incomplete information, crowded schedules, patient expectations, and outside of risk-bearing arrangements, little direct exposure to the cost of what they order or deliver.
The world without UM also pays higher prices, not just for more care. For drugs, the ability to prefer one product and restrict another through formularies or medical policies gives payers leverage to secure rebates, discounts, and lower net prices. Unconditional coverage weakens that leverage.
The bill arrives
The bill is clinical before it is financial. More care is not better care; some unnecessary care injures patients who receive it. Additional medications can bring adverse effects and interactions, and regimens can grow into polypharmacy. Unnecessary procedures carry complication risks with no offsetting benefit. Low-yield imaging can produce false positives, and false positives can lead to biopsies, follow-up scans, anxiety, and occasionally surgery. Bypassing a proven first-line option can expose a patient to avoidable risks, and if the newer choice fails, a clinically reasonable alternative begins late. Some of what UM prevents is spending. Some of it is harm.
A health or drug plan cannot simply absorb a sustained increase in claims; sooner or later, it passes on the increase. The new spending is financed by employers through premiums, employees through premium contributions and slower wage growth, taxpayers through public program costs, patients through deductibles and coinsurance, and providers through pressure on payment rates. Money committed to marginal care is money unavailable for care that works.
Rationing returns in another form
A system cannot pay for everything requested at any price. That constraint does not disappear when UM does; rather, it waits. Some of the waiting is literal. As demand rises faster than clinical capacity can expand, queues lengthen for appointments, imaging, and procedures. When the coverage rules are gone and premiums climb, payers and purchasers reach for the blunter instruments that remain: newly excluded benefits, higher deductibles and coinsurance, and narrower networks — all of them landing on patients. None of these asks a clinical question, but the rules they replace do. A step-therapy requirement, whatever its defects, asks whether a proven alternative was tried first. A deductible asks nothing; it taxes the necessary treatment and the unnecessary one alike. A denied request can be appealed; a deductible cannot.
Where even the blunter instruments fail to contain costs, coverage itself gives way. Employers and individuals drop it, and government programs narrow eligibility or benefits. The exits are not random; among those deciding whether to stay insured, healthier people have the strongest incentive to gamble on going without. The pool left behind is sicker and more expensive to insure, and premiums face another round of pressure.
Coverage loss is where the least visible rationing begins. Decades of research on the uninsured show the pattern: Preventive care and screenings decline, chronic conditions such as diabetes and hypertension go undiagnosed and unmanaged, prescriptions go unfilled, and treatable problems are deferred — many of them surfacing later as avoidable hospitalizations and worse outcomes. The care that disappears is the less costly, scheduled kind; the care that remains is the urgent, expensive kind.
Providers do not escape the world without UM either. Newly excluded benefits remove services from coverage outright, with no clinical criteria to meet and no patient-specific exception to request. Narrower networks remove providers entirely rather than reviewing the services they order or deliver. Public programs respond to rising spending by holding down the rates they pay. Coverage loss also reduces paid utilization. Some visits, tests, and procedures simply do not occur, taking potential revenue with them.
Prior authorization determined whether a request met the plan’s coverage criteria before the service was delivered. In its absence — and with the list of excluded services growing — more coverage disputes are settled retroactively through denials and clawbacks for services already provided. As coverage erodes, more patients become collections cases. Providers trade prior authorization paperwork for bad debt, uncompensated care, and patients who arrive later and sicker. The hours reclaimed at first are spent again, this time on worse problems.
Calls to eliminate UM rarely follow the thought experiment to its end. The gains of eliminating UM are immediate and concentrated; the harms emerge later, spread across patients, providers, and purchasers. Eliminating UM would not eliminate rationing. It would relocate it to mechanisms that cannot tell necessary care from unnecessary care and rarely hear an appeal. A system living with those mechanisms would eventually reach again for something more discriminating: rules that ask clinical questions before payment, applied where they matter most. Followed to its end, the world without utilization management reinvents it.
Reform, not abolition
Nothing in this thought experiment implies that every prior authorization requirement is justified, that every step-therapy requirement is clinically sound, or that every denial is correct. Some are not, and the system contains corrective mechanisms. Appeals and overturns do more than remedy individual cases. When they reveal recurring problems, they can lead plans to revise criteria, clarify documentation requirements, strengthen exceptions, or retire rules that do not earn their keep. Periodic review, purchaser oversight, and regulation reinforce that feedback loop. Evidence of bad UM argues for better UM, not for a world in which no one may ask whether a treatment is appropriate before paying for it.
Even Sanofi, while campaigning to rein in prior authorization and step therapy, concedes the point. In a June 2026 statement, the company acknowledged that “when used as originally intended, both tools can promote clinically accurate and cost-effective prescribing.” That concession defines the actual dispute, which is about calibration and execution: Where review belongs, how much burden it may impose, and how quickly it must decide. An argument about calibration assumes the function survives.
Bad utilization management can cause real harm, and critics have made that harm impossible to miss. The costs of unmanaged utilization are far harder to count because the spending, the inappropriate care, and the complications that coverage rules prevent rarely become anyone’s story. That asymmetry makes the unseen easy to ignore. But hard to count is not impossible to know. Bastiat would recognize the problem, and he would insist on the discipline it demands: Judge utilization management by what is seen and by what is not.