Minnesota Moves to Ban AI Decision-Making in Health Insurance Authorizations | Insurify

Minnesota is set to become the latest state to restrict how and when insurance companies can use artificial intelligence. A bill that would prohibit health insurers from making prior authorization decisions solely on the basis of AI recommendations passed the state's House of Representatives and Senate by wide margins on May 16 and 17, respectively.

"There is already so much about our health insurance system that doesn't work for Minnesotans," bill author Rep. Alex Falconer said in a press release. "The last thing we should be doing is removing the human element entirely. Medical decisions should be made by medical professionals, not profit-driven AI algorithms."

The bill went to Gov. Tim Walz on May 20 and is awaiting his signature to become law.

Requiring expert human review for preauthorization requests

The bill requires health insurance companies to have a licensed physician review any decision to deny a policyholder's preauthorization request. Insurers can't rely on AI review alone to turn down a preauthorization, although the legislation doesn't bar insurers from using AI as part of the review process.

Pending Gov. Walz's signature, the bill will take effect on Jan. 1, 2027, and apply to all health insurance plans "offered, sold, issued, or renewed on or after that date."

Minnesota is the latest state to address AI in health insurance

Other U.S. states have also enacted or are considering legislation to regulate how health insurance companies can use artificial intelligence in decisions that directly affect patients, like claims and preauthorizations.

In 2025, Arizona, Illinois, Maryland, Nebraska, and Texas enacted legislation to control how health insurance companies can use AI in decision-making, according to the American Medical Association's Advocacy Resource Center.

Maryland now requires insurers that use AI or similar technology when making an adverse decision to report these actions to the state insurance commissioner every quarter. Arizona's bill was more roundabout. Instead of banning or limiting AI use, Arizona now requires an insurer's medical director to review a claim before the company can issue a denial.

Nebraska, like Minnesota, banned AI as the sole factor in adverse determinations, and insurers must disclose whether they've used AI in the decision-making process. Texas also barred insurers from basing decisions solely on AI and empowered the state's insurance commissioner to audit how insurers use AI.

Other noteworthy legislative actions on AI use in health insurance include:

Alabama advanced legislation in February that requires insurers to have a licensed healthcare professional review any AI decision to decline a claim or preauthorization. The human professional will make the ultimate decision.Michigan is considering a bill that would bar Medicaid from using AI to evaluate and deny claims. The legislation is in the hands of the state House Communications and Technology Committee.A bill to limit how mental health professionals can use AI is currently with the Massachusetts Senate Committee on Ways and Means.

What's next: Legislation follows class-action lawsuits

States considering or implementing AI regulations may be getting ahead of potential lawsuits. Multiple plaintiffs have sued different health insurers over their use of AI in healthcare decision-making.

One case filed in 2023 against UnitedHealth Group alleges the insurer used an AI algorithm to deny claims payments on Medicare Advantage plans. The case remains active in the U.S. District Court in Minnesota. Cigna and Humana also face allegations that they used AI to deny claims.

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