ORLANDO, Fla. – Newsflash from Captain Obvious: health care in the U.S. isn’t cheap. America has the most expensive health care costs of any developed country, and prices aren’t projected to fall. It’s not only expensive to get sick, it’s increasingly costly just to stay insured.
Dark humor aside, in 2025, most Americans are paying record-high premiums, deductibles, and cost shares, whether they are accessing coverage through employer-sponsored programs (covering about 154 million people under the age of 65) or buying individual coverage via the Affordable Care Act Health Insurance Marketplace.
According to KFF.org, this year the average annual premium for employer-based coverage was $8,951 for single coverage and $25,572 for family coverage, dollar amounts that rose 6% and 7% respectively, from 2024.
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In 2026, health benefits per employee are expected to hit their highest year-to-year increase in 15 years.
In 2024, workers typically contributed 15.3% of single coverage premiums ($1,368) and 24.6% for family plans ($6,296), according to KFF.org.
Several factors are among many that are driving the surge in costs: sky-high drug prices, a fragmented public/private marketplace, labor expenses (labor in fact is a hospital’s largest annual expenditure), increased demand for mental health care, and the lingering aftershocks of the COVID-19 pandemic.
Another trend contributing to rising health care costs that most people didn’t have on their bingo card: accelerated adoption of Artificial Intelligence. Even more surprising is that while A.I. is pushing health care costs up, it’s also helping to bring those costs down.
Let’s break down the contradiction:
Investment in A.I. is booming for hospitals, insurers, and clinics, to, among other things, cut down on paperwork and record keeping, increase efficiency, and focus on patient engagement. Two years ago, health care consultant McKinsey & Company forecast that automation could save the U.S. health care business between $200 billion to $360 billion annually by investing heavily in core tech like electronic medical records (some providers still rely on outdated workflows, including the use of fax machines), predictive analytics, and automation.
The logic is that if you automate the tedious tasks, doctors and nurses will have more time to focus on patients instead of paperwork.
Looking for some real-world scenarios? According to Deloitte US Center for Health Solutions’ 2025 Global Health Care Outlook, new autonomous gen A.I. agents (known as “agentic A.I.”) can handle complex scheduling, billing, and referral tasks with minimal oversight, sharply reducing administrative burdens that contribute to mistakes like keypunch errors and burnout.
In radiology, for instance (an area where there is already a shortage of qualified workers), A.I. devices and software can now assist in reading CT scans, MRIs, and X-rays, helping to improve more accurate diagnoses. In some studies, A.I. spotted bone fractures more accurately than humans, provided better interpretation on brain scans, and in one study in particular in the U.K., A.I. was tasked with helping ambulance EMTs in the field assess whether a patient needed to be transported to a hospital.
But those investments are not cheap – like any new system, initiating modernization is financially painful, but the payoff down the road can be huge.
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This is also where the balance of investment and returns is delicate: according to the Deloitte survey, “more than half (52%) of the 81 non-U.S. respondents surveyed said digital transformation could have a significant impact on their organizational strategies, compared with just 30% of 41 US respondents.”
The Association of American Medical Colleges says in a March 2024 report, the U.S. could face a shortage of physicians of between 13,000 and 86,000 by 2036. Couple that grim prediction with today’s reality of rising costs, and everyone from hospitals to insurance companies is looking for even more innovative ways to move forward.
Because not every ailment requires a trip to a doctor, urgent care, or hospital. One cost-cutting trend that’s catching on is to physically shift where some diagnoses or treatments occur (we’ve seen this with the boom in telehealth in the last five years).
After diagnosis, the innovation continues: health care systems are now experimenting with home-based and virtual care programs, allowing patients to recover in familiar settings.
Known as HaH programs (Hospital at Home), these programs aim to reduce inpatient bed utilization. Patients are checked twice a day by paramedics or nurses and have remote monitoring, enhanced consultations, and specialized pharmacy support. Physical therapy patients are also increasingly finding some of their treatment can be done at home and guided through a smartphone app. The effectiveness, cost savings, and scalability of Hospital-at-Home models are promising, and randomized trials have shown a reduction in patient readmissions and high customer satisfaction.
Employers (especially small businesses) are also leaning into new financing models like Individual Coverage Health Reimbursement Arrangements (ICHRAs), shifting toward consumer-directed plans that offer flexibility without sacrificing preventive care. According to the Employee Benefit Research Institute, an ICHRA (they’ve been around for about five years) is “a type of employer-sponsored health benefit that allows businesses to reimburse employees for their individual health insurance premiums and qualified medical expenses.”
What are the ICHRA tradeoffs? The possibility of higher deductibles and limited choice in narrower networks.
Finally, health care systems are starting to rethink their relationships with their employees, treating them less as “costs” and more as assets. One commentary posted on Mayo Clinic Proceedings gives a real-world example of how shuttling patients between physicians takes more effort than attempting to postpone or reschedule an appointment, all because doctors can get bogged down with paperwork. The paperwork log jam also extends to nurses: one report from Deloitte states hospitals can help nurses reclaim 20% of their time by implementing automation and A.I., allowing them to better focus on patient interaction.
The U.S. health care system is costly and complex, but emerging innovations, from A.I. automation to home-based care and new insurance models, offer real hope for bending the cost curve.
But here’s the Captain Obvious truth: if meaningful change doesn’t keep pace with rising costs, everyone will continue paying the price.