What happened
States are legislating to restrict artificial intelligence (AI) use in health insurance, opposing a Trump executive order aimed at preempting state-level AI governance. Arizona, Maryland, Nebraska, and Texas enacted legislation last year; Illinois and California passed bills the year prior. Florida Governor Ron DeSantis proposed an "AI Bill of Rights" to restrict AI in claims processing and mandate algorithm inspection. Health insurers Cigna and Optum deny using AI for claim denials, with Cigna stating its process "is not powered by AI," while Optum announced tech-powered prior authorisation for "speedier approvals."
Why it matters
This emerging conflict between state-level AI regulation and federal preemption creates a fragmented regulatory landscape for health insurers. Procurement teams and legal counsel face increased complexity in deploying AI systems, navigating a patchwork of state laws versus a federal push for deregulation. This divergence could lead to inconsistent operational standards and compliance costs across different jurisdictions, impacting national insurance providers. The American Medical Association supports state regulations for greater accountability and transparency from insurers using AI in prior authorisation.
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