Industry Watch Alert
The executive order allows federal AI policies to supersede those of individual states. However, specific exceptions may be made for child safety, data center regulation, and state procurement.
Last week, we released an Industry Watch Alert analyzing Governor Ron DeSantis’ proposal for a Florida Artificial Intelligence Bill of Rights. Only a few days later (on December 11, 2025), President Donald J. Trump issued a federal executive order titled Ensuring a National Policy Framework for Artificial Intelligence.
The order promotes a single national standard for AI governance and directs federal agencies to challenge state laws that conflict with that standard. It also announces the creation of a Department of Justice AI Litigation Task Force.
Executive Summary
- The executive order establishes a national policy that prioritizes a unified federal AI framework instead of individual state approaches.
- A Department of Justice AI Litigation Task Force will evaluate and potentially challenge state AI laws that are identified as conflicting with federal policy.
- The Department of Commerce will publish a list of state AI laws considered onerous. This list will guide potential legal action and funding decisions.
- Federal agencies may condition certain grants and broadband funds on state alignment with federal AI policy.
- The FCC and FTC will evaluate whether national standards for AI disclosures or model outputs should be adopted. These standards could supersede conflicting state requirements.
- The administration is seeking federal legislation that would explicitly preempt state AI laws that conflict with national objectives, with limited exceptions for child safety, AI compute and data center infrastructure, and state procurement.
How This Affects the Florida AI Bill of Rights Proposal and the Implications Identified Last Week
Florida’s proposed AI Bill of Rights includes broad consumer protections, parental controls, restrictions on insurer use of AI, and local authority over hyperscale data centers. Last week, we outlined how these provisions directly affect payer and UM operations. Trump’s executive order does not remove or weaken these operational impacts. In several ways, it reinforces the importance of the areas we highlighted.
Claims and UM Workflows
The Florida proposal made clear that AI driven logic in claims and UM workflows would require visible human oversight, auditability, and defensible rationale. Trump’s executive order does not change that expectation. The order focuses on the relationship between federal and state authority, not on altering oversight standards in regulated healthcare contexts. Federal agencies have not indicated that human review requirements should be reduced. For payers and UM leaders, the operational need to maintain human accountability remains unchanged.
Vendor Dependency
Per DeSantis’s plan, AI enabled vendors would be responsible for understanding how those vendors apply AI, what data is used, and where decision authority resides. Trump’s executive order does not modify these obligations. If state and federal frameworks eventually conflict, vendor visibility and governance will become even more important, not less. Plans will need to demonstrate appropriate oversight regardless of which regulatory structure prevails.
Behavioral Health Exposure
Florida’s proposal created a clear boundary between supportive AI tools and licensed therapeutic functions. Trump’s executive order does not expand AI’s authority in clinical care. It does not authorize AI to substitute for licensed professionals. Behavioral health applications therefore remain high exposure areas, and oversight expectations remain in place.
Overall Effect
In summary, the key implications identified last week still apply. The executive order shifts the legal environment surrounding state level proposals. It does not alter the operational expectations that payers and UM organizations must meet today. Organizations should continue to maintain human oversight, strengthen documentation, and evaluate vendors carefully. These practices remain best positioned to withstand changes at either the federal or state level.
Broader Implications for States
Federal Scrutiny of State AI Laws
The Department of Commerce will publish a list of state AI laws considered onerous. This list will guide federal litigation and funding decisions.
Funding Incentives and Restrictions
Federal agencies may require states to limit enforcement of certain AI laws in order to receive select grants or broadband funds. This information appears directly in the executive order.
Possible Federal Preemption
The order calls for legislation that would explicitly preempt conflicting state laws. This is an official directive, although the outcome depends on congressional action.
Areas Where States Retain Authority
The executive order identifies specific domains where state authority remains intact. These include child safety, AI compute and data center infrastructure, and rules that govern state procurement and use of AI.
How Governors and State Leaders Are Reacting
The executive order has generated strong reactions across states. These reactions come from news reporting rather than official federal documents:
- California officials criticized the order and expressed concern that it weakens state protections.
- Leaders in Illinois stated they intend to maintain state level AI safeguards.
- Utah lawmakers reported that they will continue regulating AI harms, particularly those involving minors.
- Governor DeSantis indicated publicly that he believes Florida’s proposal can proceed and withstand challenge.
These statements reflect public reporting and do not appear in the executive order itself.
In Closing
President Trump’s executive order signals a clearer federal intention to shape AI governance at the national level. It does not nullify state proposals, including Florida’s, but it creates a new environment where state level AI laws may face structured federal review and possible legal challenges.
For payers and utilization management organizations, the core operational expectations remain consistent. Human oversight, transparent vendor governance, and defensible AI supported processes continue to represent best practices in an evolving regulatory landscape.
Sources
Official Sources:
- The White House. “Ensuring a National Policy Framework for Artificial Intelligence (Eliminating State Law Obstruction of National Artificial Intelligence Policy).” Executive Order, December 11, 2025.
- California Office of the Governor. “Trump’s AI executive order advances corruption, not innovation.” Public statement regarding Trump’s AI Executive Order, December 11, 2025.
News Sources:
- Politico. “Trump signs AI order to shut down state laws.” December 11, 2025.
- Florida Phoenix. “DeSantis confident Florida will not run afoul of Trump’s AI order.” December 15, 2025.
- WTSP. “DeSantis outlines ‘AI Bill of Rights’ despite President Trump’s executive order.” December 2025.
- The Guardian. “Gavin Newsom pushes back on Trump AI executive order preempting state laws.” December 2025.
- Capitol News Illinois. “Illinois leaders will not back down following Trump’s order limiting AI regulation.” December 2025.
- Utah News Dispatch. “What Utah leaders say about Trump’s preemption on AI state regulations.” December 15, 2025.
- StateScoop. “State leaders and civil rights groups respond to Trump AI executive order.” December 2025.
FAQ
The order directs federal agencies to challenge state AI laws that conflict with federal policy, establishes a Department of Justice task force for litigation, allows certain grants to be conditioned on state cooperation, and calls for federal legislation that would explicitly preempt conflicting state rules.
No. The order does not automatically override state laws. It initiates legal and policy processes that may lead to court challenges or changes in funding conditions. Outcomes will depend on future litigation and congressional action.
The order does not reduce the importance of human oversight in claims and UM workflows, vendor accountability, or strict controls around behavioral health applications. These remain critical areas for payer organizations, regardless of the federal state alignment question.
The formation of a federal litigation task force and the possibility of national preemption have led to widespread commentary. News outlets have published varying interpretations. Our analysis relies solely on official documents, and any predictions reported in the media should be regarded as commentary rather than established fact.
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