The use of artificial intelligence (AI) in health insurance is sparking significant debate across the United States, resulting in a rare coalition of Republican and Democratic leaders working to regulate its application. Donald Trump, supported by some state governors, is advocating for minimal restrictions, while states such as Florida and Maryland are enacting measures to limit AI’s role in insurance decisions.
Regulation of AI has emerged as a contentious issue, blurring traditional political lines. Trump’s administration is pushing for the integration of AI into government systems, such as Medicare, while simultaneously attempting to block state-level regulations. A December executive order from Trump aims to prevent states from implementing laws that govern AI, claiming that such regulations hinder innovation. The order emphasizes the need for U.S. companies to innovate freely to maintain a competitive edge in what it describes as a “technological revolution.”
In contrast, states are taking action against AI’s unchecked use in health insurance. Last year, at least four states—Arizona, Maryland, Nebraska, and Texas—passed laws to restrict AI in health insurance. Additionally, Illinois and California made similar moves the previous year. In Rhode Island, legislators are revisiting a proposal to mandate data collection on AI use after a previous attempt failed. A bill in North Carolina garnered interest from Republicans, requiring insurers to avoid using AI as the sole basis for coverage decisions.
Former Republican presidential candidate Ron DeSantis has proposed an “AI Bill of Rights” in Florida, which includes provisions for restricting AI use in processing insurance claims. During his State of the State address in January, DeSantis emphasized the importance of ensuring that technological advancements align with American values, stating, “We have a responsibility to ensure that new technologies develop in ways that are moral and ethical.”
Public sentiment reflects a growing skepticism towards AI. A December poll conducted by Fox News found that 63% of voters expressed significant concern about AI, with majorities from both political parties voicing apprehension. Additionally, a January poll from KFF revealed widespread dissatisfaction with health insurers’ practices, particularly regarding prior authorization processes.
Concerns over the potential misuse of algorithms have been underscored by reporting from organizations like ProPublica, which documented instances where insurers rapidly denied claims without adequate physician review. Recently, executives from major health insurers including Cigna and UnitedHealth Group were questioned by the House Ways and Means Committee regarding affordability issues. Lawmakers sought clarification on the use of AI in claims processing, but many executives avoided directly addressing the technology’s role in denial processes.
Cigna’s CEO, David Cordani, stated that AI is “never used for a denial,” despite ongoing lawsuits against the company related to its denial methods. Meanwhile, Optum, part of UnitedHealth Group, announced plans to enhance prior authorization processes using technology, emphasizing improvements in speed and efficiency.
The push for regulation is supported by several medical professionals. The American Medical Association has expressed its backing for state regulations that promote accountability and transparency in AI applications within health insurance. CEO John Whyte highlighted the impact of AI on delayed patient care and inconsistent authorization rules, advocating for greater scrutiny of insurers’ practices.
Despite the momentum for state-level regulation, experts caution about the potential limitations of such laws. Daniel Schwarcz, a law professor at the University of Minnesota, noted that many state regulations may not apply to “self-insured” plans commonly utilized by employers. He stressed that while proposed laws often require human oversight for AI decisions, they may lack clarity on what constitutes adequate review.
Health insurers are increasingly viewing these legislative efforts as burdensome. Dan Jones, senior vice president for federal affairs at the Alliance of Community Health Plans, emphasized that navigating a patchwork of state and federal regulations detracts from insurers’ ability to focus on patient care. In Rhode Island, state senator Linda Ujifusa reported significant opposition from insurers to her proposed bill regulating AI.
In California, Gavin Newsom has signed some laws aimed at regulating AI, including requirements for fair application of algorithms in health insurance. However, he has vetoed broader proposals, likely aiming to balance consumer protections with the state’s financial interests, which are heavily tied to the tech industry.
The Trump administration’s executive order further complicates the regulatory landscape by threatening legal action against states that pursue what it deems excessive regulations, although this order may face constitutional challenges. Critics, like health policy scholar Carmel Shachar of Harvard Law School, argue that the authority to preempt state regulations typically resides with Congress, which has previously declined to restrict state oversight of AI.
As the debate unfolds, lawmakers grapple with defining the boundaries of state versus federal authority in regulating AI in health insurance. The central question remains whether states can effectively impose regulations that protect consumers while fostering innovation in an evolving technological landscape.
