A new report from the Blue Cross Blue Shield Association suggests that the use of artificial intelligence by hospitals and insurers may be pushing American healthcare costs higher by nearly a billion dollars.
The association, which represents Blue Cross insurance plans, found that billing codes were more complex in 2024 and 2025 than in 2023, even when patient treatments had not changed. According to the report, hospitals using AI tools collect more patient data and submit larger claims, a practice that ultimately raises costs for patients. Between 2024 and 2025, Blue Cross companies saw costs rise by $653 million, and hospitals were paid an average of almost $12,000 more per case because of the additional codes generated by AI.
An illustration of the effect appears in bowel‑surgery patients. Billing codes that include secondary conditions such as partial intestinal blockages or increased acid rose 55 percent and 33 percent, respectively, from the first quarter of 2023 to the fourth quarter of 2025. While insurers blame hospitals for inflating bills, hospitals counter that insurers use AI to reject claims.
Experts cited by The New York Times warn of a “tug of war” between bots that prioritize corporate profit over patient well‑being. Blue Cross spokesman Luke Chalker calls the situation “not a war” but a “completely one‑sided bloodbath,” noting that the company does not use AI to process claims but does employ it to guard against inappropriate billing. The debate highlights the growing tension between AI‑driven efficiency and its impact on healthcare costs for patients.
