Overview:
Trump's December 11 executive order pushes a single, "minimally burdensome" national AI policy and directs the Department of Justice (DOJ) to challenge what it calls "excessive State regulation." The administration frames AI as a "race with adversaries for supremacy" and argues U.S. firms must be "free to innovate without cumbersome regulation." In plain language: the order aims to preempt state rules. See whitehouse.gov.
State response:
States are not backing down. In 2025, Arizona, Maryland, Nebraska, and Texas passed limits on insurers' use of AI, after Illinois and California acted in 2024. Rhode Island moved a transparency bill through one chamber, and North Carolina proposed language that says AI cannot be the sole basis for a denial.
California Governor Newsom signed SB 1120, which prohibits AI-only denials of medical necessity, but he vetoed broader AI bills. The result is an odd alignment: some Republican state leaders like Florida's DeSantis and Maryland are pushing tight guardrails, while the White House and some Democrats favor lighter, uniform rules. For more reporting, see KFF Health News.
Medicare pilot and prior authorization:
Medicare is testing AI-supported prior authorization (PA). The WISeR pilot (a Medicare PA pilot running Jan 1, 2026-2031) will operate in Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. The Centers for Medicare & Medicaid Services (CMS) says licensed clinicians make final decisions, but critics worry that vendor incentives based on savings could push denials at scale. That trade-off looks like faster approvals for some patients - or faster, systematized denials for others. See the American Hospital Association summary: aha.org.
Congress and industry signals:
Congress is watching closely. At a January House Ways and Means hearing, Cigna CEO David Cordani said AI is "never used for a denial," and a Cigna spokesperson reiterated that their claims-denial process is not powered by AI. At the same time, Optum (the health-services arm of UnitedHealth Group) announced an AI-powered prior authorization product on Feb. 4 designed to speed approvals, while emphasizing "no auto-deny" functionality. Read the hearing transcript at Rev.com.
Why this matters (founder edition):
Build for a patchwork now. States are banning AI-only denials and granting audit rights (for example, Texas gave the Texas Department of Insurance audit power; Maryland requires inspection and reporting). Add per-state feature flags and policy configurations so your product can switch behavior by state. See Texas legislation details: capitol.texas.gov.
Log like a regulator would read it. For every adverse decision, record the request ID, inputs cited, model and version, decision score, human reviewer ID and specialty, timestamps, and a clear rationale. Expect audits from states such as Maryland, Nebraska, and Texas. See Nebraska law on audits and oversight: law.justia.com.
Make "human-in-the-loop" real. Don’t let AI be the sole basis for a denial. Enforce specialty-matched reviewers and require explicit, per-decision attestations when state law requires them. Coverage of legislative targeting of AI in claims decisions: AlmanacNews.
Ship explainability and an exportable audit bundle. Provide an on-demand API that delivers the data used, criteria applied, comparable precedents, and clinician sign-off for any contested decision.
Prepare for Medicare WISeR. If you touch claims in the six pilot states (Arizona, New Jersey, Ohio, Oklahoma, Texas, Washington), map which services are in scope, tag them, and separate workflows for WISeR versus commercial prior authorization. Background on the WISeR pilot: KFF Health News.
Public mood:
The public is skeptical. A recent poll found 63% of voters are very or extremely concerned about AI, and KFF reports that prior authorization is the single biggest burden patients face. Design your products with that risk tolerance in mind. See the poll coverage: Yahoo News.
Bottom line: expect legal fights, state audits, and a demand for real human oversight. Build auditability, clear logs, and per-state controls now to avoid costly rewrites later.
Get daily insider tech news delivered to your inbox every weekday morning.
