(DCNF)—Artificial intelligence is likely to fuel surging medical care costs to surge over the next year.
A PricewaterhouseCoopers (PwC) report released on June 11 projects that U.S. healthcare costs will increase 9% for employers and 8.5% for individuals in 2027. The expected increases are being driven by “AI-enabled revenue optimization tools,” rising reimbursement pressure among providers and heightened spending by pharmacies, according to PwC.
“The deeper channel is the one most [news] coverage misses, and notably PwC’s own analysts flag it: 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.. “Call it the micro-versus-macro paradox. The Silicon Valley playbook says you automate a task, the product gets cheaper, and total costs fall. Medicine is not a factory supply chain. Making a clinical task nearly free can drive total spending up by expanding the market.”
“Ambient scribes that listen to a visit and draft the note are the clearest case, and they have genuine but marginal, evidenced value. Across more than two million uses, they have saved clinicians roughly 20 minutes a day,” Estiri continued. “But the same richer documentation captures more diagnoses and comorbidities, so under fee-for-service, the visit gets coded at a higher complexity and reimbursed at a higher rate even when the care does not change.”
Of health plans surveyed, 70% ranked providers’ use of AI-enabled tools that capture more revenue as one of the top three cost drivers, PwC’s report found.
Providers have begun to increasingly rely on AI tools in recent years. Usage of AI-powered scribes has become more widespread across healthcare sectors, partly in an effort to reduce documentation burden and combat burnout among clinicians, according to a September 2025 report from npj Digital Medicine.
Estiri noted that AI “is actually a small slice” compared to some of the other factors that are expected to fuel healthcare unaffordability next year.
“The cost that matters most is not financial,” Estiri explained. “Healthcare resources are finite, so every dollar spent on AI that does not improve outcomes is a dollar not spent on one that does, and every clinician hour spent learning a system that does not change care is an hour not spent with a patient.”
A recent Blue Cross Blue Shield Association report found that the 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.
Proponents of AI have argued that the technology can actually help bring down medical costs. The use of AI tools in areas such as drug discovery, hospitals and value-based care could generate $400 billion to $1.5 trillion in total savings across the U.S., according to a Sept. 2025 report from Morgan Stanley Research.
“Where AI can be a boon [in the medical industry] is by helping specialization and the division of labor make health care more universal,” The Cato Institute’s Director of Health Policy Studies Michael Cannon told the DCNF. “AI is already enabling less-expensive clinicians—e.g., physician assistants (PAs), nurse practitioners (NPs), registered nurses (RNs)—to do more and more of what previously only doctors could do. It is inevitable that the AI will reach a point where it will enable RNs to do most of what doctors do, but at a much lower cost.”
Rising financial pressures from unaffordable health costs are quickly becoming a top issue for voters as the 2026 midterm elections loom. A Gallup poll published Thursday estimates that 2.8 million more Americans said they were unable to afford healthcare in 2025 compared to in 2024.
“AI is an extremely wonderful example of how markets make health care more universal as a matter of course,” Cannon added. “Unfortunately, AI is also an example of how regulation blocks that normal market process. The efforts by regulators and physician groups to stifle AI is an example of incumbent providers using government to protect their status, power, and incomes at the expense of consumers.”
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