There needs to be a consequence for improper denials, regardless of mechanism. Banning AI just means they have to hire people to rubber-stamp.
If the value proposition for antisocial behavior is positive when successful and zero when caught, then antisocial people will keep trying. Self-policing or teaching them to be "well-behaved" does not work. Many of them don't feel shame or remorse, some from birth, some because or psychological adaptations later in life. If their goal is to climb the ladder, get rich, get famous, they will not care how many people they hurt along the way unless the rest of society makes them lose something they value.
The value proposition needs to be sufficiently negative to offset the potential payoff.
For example they're was a case in Ireland regarding the local arm of Bupa[0]. To condense a complicated saga, a regulation obliged them to pay competitors to compensate for the fact that their clientele were a better risk than the average consumer. They considered all the obvious options: appeal, loophole, sell the business, temporary government takeover, merge into a competitor.
In the end they did several of these and the Irish entity continues on as Laya, independent of the Bupa parent. At no point was it considered that people would lose cover, and in fact the regulator and government ensured that continuity of things like pre-existing conditions was covered so that the consumers weren't disadvantaged.
Of course Ireland and the EU don't operate exactly like the US. I only mean to say it's possible to go through this process without harming the healthcare outcomes (except by the unavoidable loss of competition among providers).
[0] https://www.americanbar.org/advocacy/governmental_legislativ...