California Limits AI Use In Healthcare Claims - But I Have A Problem With This Story…
By: Desmond Price
When you’re constantly in the news cycle, it’s pretty easy to get lost in the emotions that come from seeing different news articles.
It’s honestly pretty common.
You see a headline, and it can either cause a slight jolt of happiness, or a heavy slap of anger, after only reading a sentence.
In a lot of ways, I feel like politicians rely on how reactive we are as a society to headline culture. That’s something we touched on back in our December 28th post, but this time we’re going a slightly different direction when we talk about headlines.
In our previous installment, the focus was on how headlines can be deceptive; finding ways to create an illusion of a victory, but the truth was something else entirely.
This time, it’s less about being deceptive with the words presented, but rather trying to create a feeling of achievement, when you’re really just covering up the continued existence of a massive problem….
Let’s go out to California to check out a new healthcare law ⬇️
Last year, about a quarter of all health insurance claims were denied in California — a reality mirrored nationwide that has stoked public anger toward health care companies, and led to accusations that such decisions lack human empathy.
But this month, a new state law is taking on the latest twist in the debate, ensuring that a human’s perspective cannot literally be removed from such decisions by prohibiting coverage denials be made on the sole basis of artificial intelligence algorithms.Signed by Gov. Gavin Newsom last September, Senate Bill 1120 — known as the “Physicians Make Decisions Act” — comes as frustration with the health insurance system has intensified. Last month’s high-profile killing of UnitedHealthcare executiveBrian Thompson in New York City ignited a wave of reactions that often reflected the public’s anger.
According to 2024 data from the California Nurses Association, approximately 26% of insurance claims are denied, one of many factors that inspired the law’s primary author, state Sen. Josh Becker
In November 2023, a lawsuit against UnitedHealthcare spotlighted concerns about the misuse of AI in health insurance decision-making, accusing the company of using artificial intelligence to deny claims.
This section was taken from an article from - Government Technology
Okay, so let’s begin to talk about this now.
As I was mentioning in the previous section, when news like this is discussed, it’s supposed to elicit a positive response.
Look at California tackling the healthcare industry 💪
Yet, what’s glaring at me, is the absolutely staggering first sentence from that passage.
“Last year, about a quarter of all health insurance claims were denied in California”
While someone might point to AI involvement in this particular matter, this isn’t unique to the involvement of AI, or the state of California. This is a systemic issue across the U.S.
This story to me, is less about the involvement of AI in the decision making process, but more about the fact that health insurance claims are being denied around the country, and we have seemingly nothing on the books preventing this from happening.
According to personal finance website ValuePenguin – which used federal data from 2022 to compile in-network claim denial rates by companies offering plans on at least some Affordable Care Act exchanges – UnitedHealthcare denied nearly one-third of claims, topping the list.
So yes, on some level I guess it’s nice to know that AI won’t solely be involved in making these decisions, but that’s far from the real issue here. The real issue is the rate of claims being denied in general.
In fact, it’s not even just the rate, it’s the fact that health insurance companies can even deny medical claims at all!
Where’s the law preventing health insurance companies from denying claims?
For those of you who were here for my previous talks on healthcare, you know that I’m a big proponent of universal healthcare. I believe the United States absolutely must transition to that model.
However, while we’re waiting for that to come to fruition, let’s not give praise for applying a solution that isn’t solving the real problem.
I just can’t help but think about the folks who are paying for insurance, have an illness or accident happen to them, go to the doctor for treatment they prescribe, and to be denied coverage from a for-profit medical insurance company.
These predatory companies are absolutely draining the life out of so many people in this country.
“In 2021 alone, (nationwide) data showed that health insurance companies denied more than 49 million claims,” said Becker, citing data from the Kaiser Family Foundation. “Yet customers appealed less than 0.2% of them.”
Let’s not forget that the number 1 cause of bankruptcy in America, is medical debt.
Again, it’s nice to hear that AI won’t be making the decisions on claims themselves, but that’s not solving the real problem.
It’s not preventing insurance companies from taking your money and denying you coverage when you need it the most.
It’s not saving you from the mountains of medical debt you’re acquiring in the process.
It’s not transitioning us away from this for-profit system.
In fact, it’s not even fully removing AI from the decision making process.
While SB 1120 does not entirely prohibit the use of AI technology, it mandates that human judgment remains central to coverage decisions.
In summary, California’s new law doesn’t protect you from your claims being denied, it just makes it so a human has to do it.
Here’s my take home point from this conversation
It’s easy to get swept up in the emotions of headline culture.
From reading that initial sentence, I think it’s natural to feel a positive reaction to California trying to lessen the use of AI in the decision making process of health insurance claims.
However, I think it’s absolutely critical, that we don’t allow ourselves to get swept up by these half measures. They’re nothing more than inadequate fixes to massive problems.
Like when we criticize our government for not taking the climate crisis seriously & their response is - we’re mandating new federal trucks be electric!
That’s nice and all, but barely an adequate response to a crisis, and hardly addressing the real problem we face.
Healthcare that is prescribed by a doctor as medically necessary should never be denied.
Period.
We need a law that makes it illegal for health insurance companies to deny these claims.
As I said before, I believe we need universal healthcare, but in the meantime, we at the very least, need protection from these companies that have no regard for our lives whatsoever.
No insurance company should ever be allowed to deny a claim that is deemed necessary by your doctor.
What was your biggest takeaway from this story?
Please comment below and share your thoughts!
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Ive been excited about this article since you hinted on it! Like you said, we shouldn’t be praising half measures for things we pay for (on multiple levels). I expect a computer algorithm to deny my healthcare. Before AI, medical professionals hired by insurance companies were the ones doing the denying. I agree that this headline was made to placate the rest of us into thinking that somehow there will be more ‘compassion’ in the process of a claim- but that absolutely isn’t it. It’s almost funny how quickly these companies (and politicians who support them) are trying to prove that our system of health insurance isn’t a total scam and it is backfiring.