How AI is making health care even less affordable
Summary
AI technology is causing health care costs to rise, mainly because it helps providers document care in ways that lead to higher billing. While AI may reduce some administrative costs over time, its current use mostly increases spending by encouraging more complex and frequent billing.Key Facts
- PwC predicts medical costs will increase by 9% in employer health plans and 8.5% in individual plans next year.
- AI tools help providers record more detailed patient care, which leads to higher payments from insurers.
- The cost increase is less about using more services and more about how care is coded and billed.
- Health care providers have financial incentives to use AI to increase revenue under the current fee-for-service system.
- AI investments are mostly focused on billing, revenue management, and developing new expensive drugs.
- Experts believe the hype about AI reducing administrative costs may decline as focus shifts to improving patient outcomes.
- Big, for-profit hospitals are likely to adopt AI faster and gain a market advantage over nonprofit hospitals.
- AI could support value-based care models that pay for patient results rather than services, which might help control costs long term.
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