The Senate Committee on Business and Commerce convened on February 27, 2025, to discuss Senate Bill 815, which aims to prohibit the use of artificial intelligence (AI) algorithms in health care decisions made by insurers. The bill is a response to growing concerns that insurers are prioritizing profits over patient care, often using AI to deny or delay necessary health services.

During the meeting, a committee member highlighted that AI algorithms have been increasingly used by insurers to automatically deny claims, leaving patients without essential care. This practice has prompted investigations by federal agencies and accrediting organizations to assess whether insurers are neglecting patient protections and quality standards. The member emphasized the need for accountability, stating that the bill is designed to ensure that human oversight is integral to medical decision-making and coverage determinations.

Key provisions of Senate Bill 815 include a requirement for insurers to inform patients when AI is used in their claims process and a definition of "downcoding" as an adverse determination. The bill aims to protect patients from what has been described as systematic abuse by health insurers, who may use AI to enhance their financial outcomes at the expense of patient care.

However, some committee members expressed concerns about the implications of the bill. One member noted that the legislation could lead to significant fiscal impacts, potentially costing billions of dollars. They cautioned that prohibiting all AI use in adverse determinations might hinder the efficiency of the Medicaid and CHIP programs, which rely on managed care organizations (MCOs) to provide services.

The discussion highlighted a tension between ensuring patient protections and maintaining the efficiency and cost-effectiveness of health care delivery. As the committee opened the floor for public testimony, it became clear that the debate over the role of AI in health care is just beginning, with stakeholders on both sides eager to weigh in on the potential consequences of the proposed legislation.

The outcome of this bill could reshape how health insurers operate in Texas, with significant implications for patient care and the financial sustainability of health programs in the state.