Rising healthcare costs are hammering Americans, and now artificial intelligence is raising the price tag even more.
The Blue Cross Blue Shield Association (BCBSA), a consortium of insurers, released a new report showing that hospitals’ use of AI is the biggest factor behind nearly $1 billion in added healthcare spending for the Blue Cross Blue Shield companies over two years.
The upshot of those additional payments made to hospitals: higher insurance premiums for you and me.
And the insurers contend that patients did not receive any extra treatments for the extra billings.
“Our research showed that there was a change in the way patients were coded, but no evidence of a corresponding change in the care delivered,” David Merritt, senior vice president of external affairs at the Blue Cross Blue Shield Association, told Yahoo Finance.
More data, more diagnoses, higher bills
The analysis of claims data between 2023 and 2025 found that “as more hospitals apply AI coding tools, an increasing number of patients are coded as medically complex.”
Blue Cross Blue Shield Association’s network of independent health insurance companies covers 1 in 3 Americans.
Using AI tools, hospitals are vacuuming up more information about their patients and submitting fatter claims, according to the BCBSA findings.
What that means is that patients often fall into a higher-cost billing category after a secondary diagnosis, flagged by AI, in addition to the condition that brought them in originally.
The secondary diagnoses for conditions like low sodium or anemia move the claim into a higher-paying category, according to the analysis.
Read more: What is a healthcare FSA? How to save on medical costs.
AI-assisted billing software scans records and lab data for anything that can be coded, according to the research. With a majority of hospitals now tapping AI coding tools to document patient appointments and dissect lab tests and physicians’ notes, insurers are responding by upping premiums.
“When the same care costs more, it flows through the system, driving up premiums and out-of-pocket costs for families who are already struggling with higher prices,” Merritt said.
Soaring healthcare premiums are a serious concern for Americans.
The median proposed premium increase for 2027 is 15%, according to an analysis from the healthcare research nonprofit KFF. That’s likely to be the second consecutive year of double-digit premium hikes. This year, the median rate increase was 20%.
Westend61 via Getty Images Insurers embrace AI too
Just as hospital providers are leaning on AI tools to justify more medical care, insurance companies are also accused of using the tools to delay or deny care.
The companies have come under sharp criticism for their use of AI in requiring prior approval for treatments and medicines.
A new pilot program in Medicare, for instance, relies on sophisticated technology to help determine certain kinds of care.
Though traditional Medicare beneficiaries generally don’t need prior authorization before receiving medical treatment, a new program launched by the Centers for Medicare and Medicaid Services (CMS) began implementing prior authorization, including the use of artificial intelligence to review requests for care.
The program, known as the Wasteful and Inappropriate Service Reduction (WISeR) model, requires additional approvals for a range of procedures, including epidural steroid injections, treatments for spinal stenosis and knee osteoarthritis, and nerve stimulation for conditions such as tremors and Parkinson’s disease.
According to CMS records from a lawsuit against WISeR — along with the previous reporting — this model has continued to result in delays and denials of care.
“AI in healthcare is quickly turning into a battle between providers and payors, with patients caught in the middle,” said Eric Miller, a vice president and actuary at Segal, which consults with companies on their benefits. “Ultimately for individuals, this has the likely outcome of increasing costs and premiums at a time when trends are already historically high.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance