In a significant move to safeguard patient care, California has enacted a groundbreaking law that limits the role of artificial intelligence (AI) in denying health insurance claims. Senate Bill 1120, also known as the “Physicians Make Decisions Act,” signed by Governor Gavin Newsom last September, mandates that AI cannot be the sole factor in determining the denial, delay, or alteration of coverage for medically necessary services. This law ensures that a human perspective remains central in making critical health care decisions, reinforcing the importance of the doctor-patient relationship.
The legislation was introduced in response to the growing frustration surrounding the health insurance industry, which, in California alone, sees about 26 percent of claims denied annually. Nationally, more than 49 million claims were denied in 2021, with fewer than 0.2 percent of those being appealed by patients, according to data from the Kaiser Family Foundation. These statistics have sparked public outcry over the perceived lack of empathy in AI-driven decisions, a sentiment amplified following the tragic killing of UnitedHealthcare executive Brian Thompson in New York City.
State Senator Josh Becker, a Democrat from Menlo Park, sponsored the bill after hearing from patients and medical professionals frustrated with the current system. “An algorithm cannot fully understand a patient’s unique medical history or needs,” Becker stated. “This law ensures human oversight remains at the heart of health care decisions, safeguarding Californians’ access to the quality care they deserve.”
While the law does not ban AI tools in health insurance, it ensures that they cannot be used to override physician judgments. This crucial distinction emphasizes that AI should assist—not replace—human medical expertise. The law also introduces strict timelines for health insurance companies to make coverage decisions: five business days for standard cases, 72 hours for urgent cases, and 30 days for retrospective reviews. The California Department of Managed Health Care will monitor compliance, auditing denial rates and holding insurers accountable for violations.
The law’s passage has been widely praised by medical professionals and patient advocacy groups. Erin Mellon, spokesperson for the California Medical Association, which co-sponsored the bill, said, “Artificial intelligence has the potential to improve patient care, but it should not harm or replace the doctor-patient relationship.” This sentiment is echoed by Paula Wolfson, a manager at Avenidas Care Partners, who works closely with families facing insurance denials. “It causes enormous stress,” she said. “I hear from families dealing with high-risk situations because they can’t access the health care services they need.”
California’s proactive stance on regulating AI in health care is setting a national precedent. Senator Becker noted that 19 other states are now considering similar legislation, and even congressional offices are exploring the possibility of federal regulations. “We are proud to lead the way in ensuring that health care decisions remain in the hands of those who know patients best—the doctors,” he said.
As AI continues to play a larger role in the health insurance industry, this law offers a balanced approach that protects patients while allowing technology to improve the efficiency and quality of care. California’s new legislation is not only a win for local patients but could serve as a national model for ensuring that healthcare remains human-centered in an increasingly automated world.
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