Insurers say AI coding tools are already driving up healthcare costs

What the BCBSA analysis found

Hospitals' use of artificial intelligence tools while submitting insurance claims added an estimated $942 million to healthcare spending over two years, according to an analysis published by the Blue Cross Blue Shield Association (BCBSA) on September 24, 2026. The estimate covers costs borne by Blue Cross and Blue Shield companies from 2023 to 2025.

The findings rest on de-identified claims data from BCBS companies that cover one in three Americans and provide a view into care across the country. BCBSA says the growth in complex coding has come alongside the rapid adoption of AI billing tools, adding pressure on premiums and on out-of-pocket costs for families, employers and taxpayers.

A disconnect between coding and treatment

Roughly 70% of the additional costs, more than $650 million, were tied to secondary diagnoses: conditions recorded on top of a patient's primary reason for care. Such a diagnosis can push a claim into a higher-severity, higher-reimbursement billing category, and because it may be derived from a single laboratory value, it is well suited to detection by AI tools.

More than 60% of hospital systems now use AI-enabled technology that can document visits and scan lab results and doctors' notes. Researchers singled out anemia diagnoses after major bowel surgery: those rose sharply at the hospitals studied, while the number of transfusions did not increase.

“If patients are truly sicker, we'd expect to see more treatment,” said Luke Chalker, BCBSA's senior vice president of product and data science. “We're seeing significantly more anemia diagnoses at these hospitals without a corresponding increase in transfusions. The disconnect between diagnoses and treatment suggests that AI is identifying more billable conditions, not sicker patients.”

Hospitals, insurers and a widening dispute

The New York Times described the analysis as the latest sign that AI is contributing to higher healthcare costs. Fights between hospitals and insurers over treatments and payments are nothing new, the paper noted, but AI on both sides appears to be making them worse.

Dr. Shiv Rao, founder of the AI startup Abridge, acknowledged that the technology could lead to “a horrible dystopic future nobody wants to live in,” with bots fighting bots and agents fighting agents. He argued it might also ease tensions and cut costs instead.

Chalker rejected the framing of a two-sided battle. “It's not a war. It's a completely one-sided blood bath,” he said, with insurers on the losing side. BCBSA's David Merritt said the research underscores the urgent need to understand how these AI tools may be worsening an affordability crisis.