Artificial intelligence is fueling a sharp spike in medical care costs heading into 2027, with employers facing a projected 9% increase and individuals bracing for 8.5% higher costs, according to a PricewaterhouseCoopers report released June 11.
The surge is being driven by what the report calls “AI-enabled revenue optimization tools” — systems that help providers capture more billable diagnoses without necessarily changing the care delivered.
“AI’s strength at spotting complex patterns can tip from earlier detection into overdiagnosis, which means more treatments and more spending.”
Harvard Medical School Associate Professor of Medicine Hossein Estiri told the Daily Caller News Foundation the phenomenon represents a paradox: automating a clinical task can actually drive total spending up by expanding the market for billable services.
“Medicine is not a factory supply chain,” Estiri said. “Making a clinical task nearly free can drive total spending up by expanding the market.”
AI-powered scribes — tools that listen to patient visits and auto-generate clinical notes — illustrate the problem. While they save clinicians roughly 20 minutes a day across more than two million uses, the richer documentation they produce captures more diagnoses and comorbidities. Under fee-for-service billing, that means visits get coded at higher complexity and reimbursed at higher rates even when the care itself doesn’t change.
Of health plans surveyed by PwC, 70% ranked providers’ use of AI-enabled revenue tools as one of the top three cost drivers.
A recent Blue Cross Blue Shield Association report found that increased use of AI in hospital billing is fueling higher costs by increasing the number and severity of diagnoses billed without any record of the expected treatment.
Providers have increasingly adopted AI tools in recent years, partly to reduce documentation burden and combat clinician burnout, according to a September 2025 report from npj Digital Medicine.
Proponents argue AI can generate $400 billion to $1.5 trillion in total savings across the U.S. through drug discovery, hospital efficiency, and value-based care, according to Morgan Stanley Research.
The Cato Institute’s Director of Health Policy Studies Michael Cannon told the DCNF that AI’s real promise is enabling lower-cost clinicians — physician assistants, nurse practitioners, registered nurses — to perform tasks previously reserved for doctors.
“AI is already enabling less-expensive clinicians to do more and more of what previously only doctors could do,” Cannon said. “It is inevitable that AI will reach a point where it will enable RNs to do most of what doctors do, but at a much lower cost.”
Rising healthcare costs are quickly becoming a top issue for voters ahead of the 2026 midterm elections. A Gallup poll published Thursday estimates that 2.8 million more Americans said they were unable to afford healthcare in 2025 compared to 2024.
Cannon warned that regulatory efforts to restrict AI adoption represent “incumbent providers using government to protect their status, power, and incomes at the expense of consumers.”
