Artificial intelligence (AI) is quietly transforming the way health insurance companies decide what care you receive. While AI promises efficiency and cost savings, it also raises serious questions about fairness, transparency, and patient well-being. Let’s take a closer look at how these algorithms work, the impact on your health coverage, and what you can do if you find yourself caught in the system.
The Rise of AI in Health Insurance
Over the past decade, health insurers have increasingly turned to AI algorithms to make decisions about which treatments and services to cover. Unlike the AI tools used by doctors to diagnose or treat patients, insurers use AI to determine whether a recommended treatment is “medically necessary” and how much care a patient is entitled to. This process, known as prior authorization, often means your doctor must get approval from your insurer before you can receive certain treatments.
The Patient Experience: Delays, Denials, and Dilemmas
If your insurer denies coverage for a treatment, you typically have three options: appeal the decision (a process that can be lengthy and complex), accept an alternative treatment, or pay out of pocket. Unfortunately, only a tiny fraction of patients appeal denials, often due to the time, cost, and expertise required. This can leave patients—especially those with chronic or serious illnesses—without the care they need.
Research shows that AI-driven denials disproportionately affect vulnerable groups, including people with chronic illnesses, nonwhite ethnicities, and LGBTQ+ individuals. The lack of transparency around how these algorithms make decisions only adds to the frustration and uncertainty.
Why Insurers Use AI—and the Risks Involved
Insurers argue that AI helps them make faster, safer decisions and reduces unnecessary or harmful treatments. However, evidence suggests that these systems can also be used to delay or deny legitimate care, sometimes in the name of cost savings. The appeal process can drag on for months or even years, and in some tragic cases, patients may not live long enough to see a resolution.
The Push for Regulation
Unlike medical AI tools, insurance algorithms are largely unregulated. They don’t require approval from the Food and Drug Administration (FDA), and insurers often claim their algorithms are trade secrets. This means there’s little public oversight or independent testing to ensure these tools are safe, fair, or effective.
Some states have started to propose or pass laws requiring more oversight, such as mandating physician supervision of AI decisions. The Centers for Medicare & Medicaid Services (CMS) has also introduced rules for Medicare Advantage plans, but these don’t apply to private insurers and still leave much discretion to the companies themselves.
Many experts believe that the FDA should play a larger role in regulating insurance algorithms, but current laws may need to be updated to give the agency this authority. Until then, patients and advocates are pushing for more transparency and independent testing.
What Can You Do If Your Care Is Denied?
- Appeal the decision: Don’t be discouraged by the statistics—if your claim is denied, ask your doctor for help with the appeals process.
- Request a detailed explanation: Insurers must provide a reason for denial. Understanding the rationale can help you and your healthcare provider respond effectively.
- Seek support: Patient advocacy groups and legal aid organizations can offer guidance and resources.
- Contact your state insurance department: They may be able to assist with complaints or appeals.
Looking Ahead
AI is here to stay in health insurance, but the rules governing its use are still evolving. As patients, staying informed and advocating for fair treatment is more important than ever. Regulators, insurers, and healthcare providers all have a role to play in ensuring that technology serves the best interests of those who need care.
Key Takeaways:
- AI is widely used by health insurers to make coverage decisions, often with little transparency.
- Denials and delays can have serious consequences, especially for vulnerable patients.
- Regulation is lagging behind technology, but momentum for change is building.
- Patients have options if care is denied, including appeals and advocacy.
- Greater oversight and transparency are needed to ensure AI serves patients’ needs.