Can AI help lower Medicaid costs, protect data? KY lawmakers want to know
A task force of Kentucky legislators has been learning about practical applications of artificial intelligence across the Bluegrass State and made policy recommendations for the General Assembly to consider when it reconvenes in January.
The group is suggesting lawmakers strengthen consumer protections around data collection, work with the state agency responsible for regulating utilities to make policy about data centers and collaborate on the shared use and study of Medicaid data sets for preventative care.
The set of recommendations, issued Nov. 13, comes after the group heard presentations this summer on how to legislate about the use of AI. This summer there was also expert testimony about the power demands of data centers and the application of AI in education, public safety and retailing.
The 10 broadly worded suggestions are meant to guide forming a long-term plan for governing AI, said the group’s co-chair, Sen. Amanda Mays Bledsoe, R-Lexington, during the recommendations meeting last Thursday.
A group of legislators started discussing AI in 2023, but the Special Committee on Artificial Intelligence Task Force has met monthly since June during the interim session. The recommendations are as follows:
- Amend the Kentucky Consumer Data Protection Act to strengthen protections as AI technology advances.
- Consider changes to the acceptable use policy for all state agencies.
- Consider policies that promote collaboration between service providers, state agencies and research universities for the shared use and study of Medicaid data sets for preventative care that may result in lower health care costs.
- Acknowledge AI “may be harmful” to minors and consider policy protections for minors across social media platforms.
- Consider policy in coordination with professional standard boards for when and how AI should be used in their jobs.
- Create an AI work group to bring together state and local governments, educational institutions, health care providers and others to identify needs, collect data, develop solutions, promote AI literacy and “ensure trusted artificial intelligence development and governance” across the state.
- Consider policy that governs the location of data centers in Kentucky, including setting minimum requirements for collaboration among local, state and private entities.
- Consider legislative policies in consultation with the Public Service Commission for data centers’ need for large amounts of water and power to ensure grid sufficiency.
- Encourage Kentucky’s federal delegation to work on national policies for AI.
Just one data center is being built in Kentucky in the South Louisville area, but the user of it has yet to be announced.
In July, the U.S. Department of Energy said four pieces of federal land, including the Paducah Gaseous Diffusion Plant, could be utilized to lower energy costs and power AI.
And in October, the Public Service Commission responsible for regulating the state’s utility rates and projects said Kentucky Utilities and Louisville Gas & Electric can move forward with plans to spend $3 billion on two natural gas power plants to support an influx of high-energy demand customers — namely data centers for AI.
Throughout the summer, local officials in Mason County have been engaging in a “global site selection process” for a data center largely in secret.
The increase of data center projects is in part a result of a 2024 policy that created a tax incentive program to attract companies to build in Kentucky, citing job creation and economic development benefits. The 2024 law targeted just Jefferson County, but was expanded in 2025.
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