Commercial healthcare costs are projected to rise 9% in 2027, the highest medical cost trend in nearly two decades, according to a new report from PwC with the top concern being the rapid adoption of AI-enabled documentation and coding tools by providers
Nearly 70% of health plans rank AI-enabled tools that capture more provider revenue as a top-three inflator. These tools allow providers to document more billable complexity per visit, raising reimbursement without necessarily changing the underlying care delivered.
Provider reimbursement pressure is the second major driver. Hospital and related services inflation spiked in early 2026 to post-pandemic highs, reaching 7.59% year over year in February. Ongoing consolidation among hospital systems and physician practices is reducing payer negotiating leverage, pushing commercial rates higher across markets.
Pharmacy spending is the third inflator. More than 85% of survey participants cited a 2027 pharmacy cost trend that was outpacing overall medical trend. GLP-1 prescriptions for obesity and related conditions are a significant contributor, with 3.5 million prescriptions filled in December 2025, nearly twice the number filled in December 2024. Specialty oncology and immunology drugs are also driving structural cost growth.
Behavioral health utilization is the fourth inflator, and unlike the others, it is driven primarily by volume rather than unit cost. Utilization of behavioral health services claims rose 62.6% between 2018 and 2024. Access has expanded significantly through telehealth, which now accounts for the majority of behavioral health visits.
The fifth inflator is the No Surprises Act’s Independent Dispute Resolution process. Providers have won 88% of disputes under the No Surprises Act, with 2.6 million cases filed in 2025. That lopsided outcome is driving up out-of-network reimbursement costs for commercial payers well beyond what Congress originally anticipated when the law was enacted.
On the deflator side, PwC notes that traditional cost controls such as biosimilars, generic drugs, and site-of-care optimization are already baked into baseline assumptions and cannot be counted on to materially slow the trend. The report urges health plans and self-funded employers to focus on payment integrity, targeted utilization management, pharmacy governance and network strategy as the most actionable levers available.
