The use of artificial intelligence in healthcare prior authorizations is sparking debate and potential legislative risk for the insurance industry. John Ransom, director of healthcare research at Raymond James, suggests the practice may have “gotten out of control,” raising concerns about public perception and potential government intervention.
Following the 2024 presidential election, health insurance stocks initially rallied on deregulation hopes. However, the unexpected death of UnitedHealthcare CEO Brian Thompson triggered a sharp reversal, accompanied by a surge of online criticism targeting insurance companies and their prior authorization practices. UnitedHealth Group stock, for instance, experienced a dramatic swing, rising 9% post-election only to fall 15% after Thompson’s passing.
Despite Republican control of Congress and the White House, the pre-election optimism surrounding the insurance industry now appears less certain. Ransom highlighted the uncertainty surrounding the incoming political landscape and the growing populist sentiment, making it challenging to predict future regulatory changes. He told CNBC, “The bet is a little bit hard to make because you don’t know who’s going to be occupying these seats… you do have a more populist party, and the industry is not as popular as it used to be.”
Thompson’s death amplified negative public sentiment towards insurers, focusing on instances of denied coverage. The incident also prompted increased security concerns among executives, leading to a surge in inquiries to security firms. UnitedHealth Group CEO Andrew Witty addressed the criticism in a New York Times op-ed, acknowledging the need for improvements within the healthcare system.
Ransom emphasizes the legislative risk associated with the controversy surrounding AI-driven prior authorizations. This process, requiring pre-approval for certain medical services and prescriptions, has become a focal point of public frustration. “That’s where I think there should be a healthy debate because maybe that has gotten out of control,” Ransom stated.
While acknowledging the potential for AI to positively impact healthcare—such as using large language models to analyze data and predict potential health crises—Ransom questioned the extent of its application in prior authorizations. “But yeah, did we overdo it on prior auth? That’s the debate. I’m not saying we did, but I think that’s where we need to have a debate.”
The increasing scrutiny of AI’s role in prior authorizations signals a potential shift in the healthcare landscape. The outcome of this debate could significantly impact the insurance industry, influencing future regulations and potentially reshaping the relationship between insurers, patients, and healthcare providers. The need for a balanced approach that leverages AI’s benefits while addressing public concerns remains paramount. A reevaluation of current practices and open dialogue among stakeholders are crucial to navigate this evolving landscape and ensure a sustainable future for the healthcare industry.
