States begin to put legislative guardrails on artificial intelligence Image By HPN Staff Key Points AI adoption in healthcare is accelerating, prompting states to introduce more than 250 bills this year—shifting from studying AI to imposing binding rules on transparency, clinical use, and insurer practices. State regulations generally focus on four areas: disclosure to patients, consumer protection/anti-discrimination, limits on payer use (especially claim denials and prior authorization), and clinical safety standards. Analysts warn that inconsistent or overly aggressive state regulation could hinder innovation, creating a patchwork of rules that complicates compliance and slows the development of beneficial healthcare AI tools. As the healthcare industry experiences a surge in the use of artificial intelligence (AI), states are beginning to put boundaries around its use. AI is increasingly being used in healthcare, sometimes in transformative ways, as both a diagnostic and a pricing tool. Researchers and tech startups are using AI based algorithms to analyze CT scans — even those taken years ago — to help detect and quantify the presence of coronary artery calcium (CAC), a marker for heart attack risk. Meanwhile, the Center for Medicare and Medicaid Innovation within the U.S. Department of Health and Human Services (HHS) announced a six-year Medicare pilot program in six states beginning on Jan. 1, 2026, called the Wasteful and Inappropriate Service Reduction Model (WISeR), using AI to make the prior authorization process more efficient. While these examples demonstrate innovation in healthcare with AI, this increased use is also raising questions about the application of the new technology and prompting states to adopt new laws and regulations governing its use. Why it matters This year alone, 46 states have introduced more than 250 bills addressing AI use in healthcare. While legislation in previous years mostly revolved around studying the nascent technology, more recent efforts have been focused on the establishment of binding rules. Generally, state legislation covers four areas: transparency and disclosure requirements; consumer protection and anti-discrimination provisions; restrictions on payer use, including guidelines involving AI use in prior authorization and claim denial; and guidelines regulating clinical use. A bill passed this year in Texas, for example, requires health care providers who use AI for diagnostic purposes to disclose that use to patients. A more comprehensive AI bill was also signed by the state’s governor, which included anti-discrimination provisions. Legislation introduced in Pennsylvania would require three things of the state’s insurers, hospitals, or clinicians: 1) disclosure to patients whenever AI is used; 2) human verification and approval of all AI-made decisions; and 3) attestation to state regulators that use of AI is in compliance with existing anti-discrimination laws. Utah amended its existing 2024 AI laws to provide some guidelines on use in mental healthcare — including disclosures, advertising restrictions, and privacy protections — around the use of generative AI mental health “chatbots.” Several states — including Arizona, Connecticut, Maryland, Nebraska and Texas — have passed laws to limit the use of AI to deny insurance claims. Yes, but While states appear eager to get in front of the AI technology boom, some analysts fear that zealous overregulation or an emerging patchwork of regulations around the country could stifle technological innovation. Will Rinehart, a senior fellow at the American Enterprise Institute, says that “the single biggest risk to AI innovation … [is] from poorly designed state laws that undermine the innovation they claim to protect." SUGGESTED STORIES Blue states create health alliance in opposition to federal authority A new health alliance launched by 15 Democratic governors threatens to splinter the U.S. public health system. The Governors Public Health Alliance (GPHA) was created by the Governors Action Alliance (GovAct) in response to a shift in federal policies under the Trum Read more Trump’s drug price deal could bring relief to the states Patients struggling with obesity will have greater access to the drugs that can help them, at a much lower cost. The Trump Administration has negotiated a deal with pharmaceutical companies Novo Nordisk and Eli Lilly for GLP-1 drugs such as Zepbound and Wegovy. Those Read more Ivermectin debate reignites as more states eye over-the-counter sales Florida and Ohio lawmakers are considering bills that would allow pharmacies to sell ivermectin over the counter, joining a growing number of states moving to expand access to the controversial drug. Ivermectin is an antiparasitic medication used to treat several typ Read more
Blue states create health alliance in opposition to federal authority A new health alliance launched by 15 Democratic governors threatens to splinter the U.S. public health system. The Governors Public Health Alliance (GPHA) was created by the Governors Action Alliance (GovAct) in response to a shift in federal policies under the Trum Read more
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