Insurance claims rejections are becoming faster, more frequent and increasingly driven by artificial intelligence, as insurers deploy automated systems to process vast volumes of requests with speed and consistency, a shift that may reduce costs but also risks sidelining medical judgment and leaving patients to navigate opaque decisions and complex appeals processes, even as regulators struggle to keep pace and the balance of power tilts further toward companies whose algorithms now play a growing role in determining who gets care and who does not.
In the long and often opaque world of American insurance, where patients and policyholders already struggle to understand why claims are rejected, a new force is quietly reshaping the process. Artificial intelligence, once marketed as a tool to streamline paperwork and reduce costs, is now being deployed in ways that critics say could make it easier, and faster, to deny care.
No one who has dealt with an insurance claims adjuster would describe the system as generous. But some now say they preferred the human version.
Across the United States, insurers are increasingly turning to automated systems to process claims in health, home and auto coverage. What was once the domain of trained adjusters reviewing forms and medical notes is shifting toward algorithmic decision making, where approvals and denials can be issued in seconds. The change is part of a broader push within the industry to cut administrative costs and manage rising payouts, particularly as healthcare expenses continue to climb.
The implications are becoming visible in routine moments. When a patient visits a clinic for a simple test, such as a rapid strep screening, the claim is typically submitted through a standardized form. A human reviewer might quickly recognize the necessity of the test. An automated system, however, may flag discrepancies, technicalities or missing fields and issue a denial without context.
For patients, those decisions can feel arbitrary.
Take the case of Iris Smith, an 80-year-old retiree in Florida who suffers from arthritis. As reported by the Palm Beach Post, she may be among those affected by a new wave of AI-driven preauthorization systems being tested in several states.
“I don’t think a corporation… should be telling people what they can and can’t do,” Iris Smith, an 80-year-old Florida retiree suffering from arthritis told the Palm Beach Post in an investigation into the phenomenon. “My doctors know me. I know my doctors. And when I’m in pain — which is every morning, waking up to two fists that can barely open — I need something to take care of the pain.”
The program in Florida is part of a broader experiment. At least six states are exploring the use of AI to screen Medicare-related requests before they are approved, a shift that has drawn sharp criticism from some lawmakers who argue it risks inserting technology between patients and their doctors.
Florida Representative Lois Frankel has emerged as one of the program’s most vocal opponents. “We believe Medicare was based on a promise that if your doctor says you need care, if you’re hurt and you need care, Medicare will be there for you, not AI,” she told the Palm Beach Post.
Behind the scenes, insurers describe a different reality. The volume of claims has surged in recent years, and companies have long relied on predictive models to estimate risk and control losses. Artificial intelligence, they argue, simply accelerates a process that was already governed by rules and probabilities.
The scale of adoption is striking. By 2023, nearly 88 percent of auto insurers reported that they were using or planning to use AI in claims processing. A survey by the National Association of Insurance Commissioners found that 84 percent of health insurers were already using such systems for functions like prior authorization.
Supporters say automation can reduce fraud, speed up approvals and lower premiums over time. But critics warn that the same efficiency can work against patients, especially when errors occur. A clerical mistake, an incomplete form or a flaw in the algorithm itself can trigger an immediate denial, leaving individuals to navigate appeals processes that can take weeks or months.
The regulatory landscape remains uneven. Twenty-two states have yet to adopt specific rules governing the use of AI in underwriting and claims decisions. Some of them, like Florida and Georgia, have traditionally favored lighter regulation. Others, including Oregon and Minnesota, have surprised consumer advocates by holding back.
That patchwork has left oversight largely in the hands of states at a moment when the technology is evolving faster than the laws designed to contain it. For patients, it can mean that access to care depends not only on medical need, but also on geography and the internal logic of a machine.
The shift arrives at a time when trust in the American healthcare system is already strained by high costs and uneven access. For many, the introduction of AI into claims decisions feels less like innovation and more like another barrier.
What is at stake is not only the efficiency of insurance companies, but the balance of power between patients, doctors and the institutions that decide what care is covered. As algorithms take on a larger role, that balance is being rewritten, often out of public view, one automated decision at a time.
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