Why Healthcare Costs Keep Rising

Forget about the price of eggs. It’s healthcare costs that are rising fast. Double digit increases are coming for 2026 and cost sharing is rising for employees. Weight loss drugs like Ozempic are adding billions to the bill and AI is a wild card, which could bring costs down or make them rise even faster. 

In this episode, David E. Williams and John Driscoll unpack what’s driving the rising cost of healthcare and what it means for the future.

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CareTalk is a weekly podcast that provides an incisive, no B.S. view of the US healthcare industry. Join co-hosts John Driscoll (President U.S. Healthcare and EVP, Walgreens Boots Alliance) and David Williams (President, Health Business Group) as they debate the latest in US healthcare news, business and policy.

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Transcript

David: 0:00

Well, you can forget about the price of eggs. It's really healthcare costs that are rising super fast. Double digit premium increases are coming for 2026, and more of that cost is being dumped right onto employees. Meanwhile, weight loss drugs like ozempic or adding billions to the bill, and then there's ai, a wild card that could either bring costs down or make them rise even faster. Welcome to Care Talk America's home for incisive debate about healthcare, business and policy. I'm David Williams, president of Health Business Group.

John: 0:37

And I'm John Driscoll, the chairman of Yukon Health. Hey Dave. You know, AI could be either a cost increase, which should be conve, that'd be the conventional wisdom. Uh, with all this technology that we've added to healthcare, it's just added a cost. It could reduce cost materially or it could be a nothing burger based on kind of the most recent studies through MIT. But let's, let's hold that AI conversation for a while. Tell us, Dave, what healthcare costs always

David: 1:03

go up. Why are they in the news right now? Well, because right at the point in time where. Um, people are saying, what's the cost gonna be for 2026? As companies are planning their budgets and they're seeing, you know, other costs which are usually flat or up a couple percent and healthcare is a big cost and it's up something like 10%. So it's actually is higher than normal. And the other reason, John, is because as we see this big, beautiful, you know. Bill, you bill, whatever it may be, come into play and it's getting tighter. For those folks that have Obamacare, they're gonna see perhaps even bigger increases in a more difficult time getting coverage. So cost is on the mind, John, because there's some big announcements and big cost increases for next year.

John: 1:45

Dave, I thought that the president was gonna bring all costs down as like, like magic. Overnight.

David: 1:53

It is like Magic John. I mean, everything's being dictated by the president right now. It's like, you know, what are the president's, uh, what are the president's priorities for NIH funding and so on. And so I, I think it is with healthcare too, John. And basically I think what he's assuming is that hey, he's 79 and he's in perfect health, and all he needs for, you know, for his healthcare costs is a, is a, is a little bit of, uh, makeup. For his hands and a little something special for his ankles. So if that's all everybody needs, then you know, maybe that's gonna be the health plan, John. It'll be the Trump plan.

John: 2:22

Well, I think, let, let's, let's unpack exactly why healthcare costs are going up with Medicaid cuts. That's means there's less funding for hospitals, but hospitals still have to be in business with the reduction in the Obamacare subsidies, there's gonna be more employers. Employees paying more for their insurance and more employers probably dropping. Insurance and people falling off the exchanges with fewer insured people, uh, you're gonna sa have those, uh, the healthcare systems needs to get paid for. So those prices, that's just gonna be cost shifted to the employers and the employees Additionally. There appears to be some, some material increased trends that all of the health plans are saying they're seeing in their numbers. So even before the host, the cost cuts and costs shifts, you're actually feeling an increase in healthcare cost. I think this, this, uh, the Trump healthcare is gonna turn into Trump healthcare inflation shock, and that's gonna be the, the, we're gonna have to find therapy to fix and it's not gonna be covered by. Just, uh, I don't know, a little bit of, uh, a, a little bit of makeup here and there. Can't make up for healthcare cost writing at twice the rate of inflation.

David: 3:38

Well, John, people that are obese, like, uh, Mr. Trump himself, according to his doctor who was on here before, are eligible for drugs like Wegovy and Ozempic. These GLP one drugs, they're hugely popular and theoretically they might bring down costs over time, but in the near term, they certainly drive costs up. There's the cost of the drug itself, and then people go for more. Doctor appointments to get a prescription and then when they have side effects. So that's also a factor.

John: 4:02

Well, I, I think the gl you are always pounding on the GLP ones. I actually think the GLP ones are probably a transformational drug. And the, and actually the costs are, are coming down. What, what's, what's, what's a that they're not a material add to anything other than certain individual line items that are probably running pretty fast, but healthcare costs are going up. Everywhere, Dave, don't, don't blame the, the, the, those, those lovely pharmaceutical makers who are charging exorbitant prices for something they, that costs a third to to, to 20%, uh, of the dollar, the rest of the world. They're actually, I think, I think that, that, that's last year's issue. Dave, wake up, this year's issue is expensive healthcare for everyone. That is the Trump healthcare plan appears to be. Less care, more costs coming to you very soon.

David: 4:53

Fine, John. So I said, okay. I said that these GLP ones are raising costs 'cause you have the cost of the drug upfront. But there is a place, I guess you could say where the costs are going down. But we may see the reverse, which is if no one can get a vaccine, John, then there won't be any spending on vaccines. That'll save some money upfront.

John: 5:10

Cost lives and, and illness later. Now, the, the, the, the, the consistent attacks on undermining what we already know to be true. Um, the, it, it's, it's, it's, it's exceedingly painful. But I, I do think, Dave, that there's a, uh, there's all this really happy talk coming outta Washington about things we're going to get rid of, like administrative costs and waste and fraud. But it, it appears that other than cutting the budget, most of this is just. Talk, not really regulatory mandate. Do you think there's gonna be any improvement in healthcare based on the new administration's approach to healthcare policy?

David: 5:51

Well, any is, uh, leaves it pretty wide open for, there could be some. I'm just somewhere moving for something positive here, dude. Yeah. Um, well, their ai, maybe their AI guidance, uh, will be helpful and if they can, um, help a AI get out of the case. I thought I didn't even

John: 6:05

like that. You, you, you said you're, you're, now you're flipping. Yeah, I got you. I got beat you back on GLP ones and now you're sort of waffling on, on ai. Is AI good or bad? Like

David: 6:16

pick up a, pick a line here Dave. I'm trying to wait. My LLM is a little, I didn't pay my subscription. I guess it's not giving me the answer that I should have on the fly here. They have interviews like that, John, where you're supposed to like the AI pause. It's like, um, let me, let me think about that. Let's talk about AI actually John.'cause I'm not sure. Uh, you know, a lot of times you look and say, well a will AI finally like bend the cost curve. You have something that's gotta stop cost from going up. And that would be one perspective. But another perspective is, well, it depends, you know, who has the AI and what they're trying to do with it, and I can certainly see some reasons why it would help drive costs up. So, for example, if I am. Provider and I'm trying to bill, I might use AI to help, uh, my billing and maybe to fight through the prior authorizations faster. On the other side, the insurers are definitely trying to use it to tamp down costs. I would say when you see these examples maybe outside of healthcare, like you heard about Delta Airlines. Using a lot of information in AI to say, Hey John, you look like you look pretty desperate. Like you probably, you probably did, so you probably said something nasty to your wife and now you need to take her an expensive trip. Trip. Please

John: 7:23

stay healthcare. Uh, let's, let's stay on this all. It's, you're just, you probably got in some awful healthcare, uh, a delta delay recently, but if we think about ai, you're hearing in a number of the large payers. Um, a quarterly earnings that they're complaining that the engineering of artificial intelligence is generating higher bills. But from my perspective now, I'm a little biased as the chairman of Waystar, you know, if, if we get a cleaner bill with, with cleaner codes and cleaner notes, that. Require health insurance companies to pay for care that's been provided by someone who, who's qualified to provide it for someone in need. That's called better insurance, even though it's a little bit more expensive for the insurers. And I think what you are gonna see though, is both payers and providers leveraging technology.'cause I do think that the possibility of taking costs out is more. Dramatically available now with artificial intelligence, and I actually think the administration is doing a nice job at cultivating a tech friendly environment from, from a regulatory perspective to accelerate. The investment and engagement of new technologies of traditional healthcare, which has been slow, which has been slow to embrace it. And there's a lot of it. We, we in the United States have a lot of administrative hassle that you'd expect, you know, um, machine learning to be able to make go away, which could be a big pickup from us and, and could reduce the rate of inflation in healthcare. You don't, you think that's possible?

David: 8:53

So all of the crazy stuff that's going on, uh, right now from, you know, sending the National Guard into Washington DC and there is crime in Washington, dc I'm not sure it's always on the streets. Uh, between that and all the things that are going on, we say, wow, you know, we're really in big trouble now. It's possible that ai, if we look at the long sweep of history, it's actually going to be more significant, and the things going on in AI are gonna be more dramatic, both in terms of improving the quality of healthcare and the outcomes. Potentially keeping the cost under control. It's far from, uh, predetermined. And I do think we should be looking for those opportunities to make healthcare better and at least not more expensive, if not cheaper.

John: 9:34

Well, and, and, and this year, the a CA exchanges, the Obamacare exchanges are projected to increase prices to the con the employers, 15 to 20%. We need the help from artificial intelligence and machine learning, um, to ca to, to make healthcare more accountable. To reduce administrative waste and hopefully reduce some of the friction. Um, I, I think that what's hard is that I think it's kind of been oversold in the short term in terms of AI is gonna be magic at your fingertips tomorrow across all industry, I think. But it, I suspect what's gonna happen is what Gates says, says, uh, is it warns us about technology and Bill Gates warns us about technology in general that you underestimate in the short, overestimated it in the short term and underestimated it in the long term. And I think that's happening with AI right

David: 10:20

now. I do think that people are, uh, more broadly understanding that because the, the, the lessons from the internet. Where, uh, those who are old enough to remember like us, you know, and just said, Hey, I can get my dog food delivered for nothing. Uh, to then realizing, wow, you know, it's, it's profoundly changed everything. I do think AI's like that.

John: 10:41

Well, and it's, and it's, and if you think about how quickly Google changed the way people thought about accessing knowledge, know chat, GPT is, is growing the access, consumer access to artificial intelligence is growing at five and a half times as fast as Google's penetration. So it's, it's consumers are. En engaging and embracing it, at least at a very high level. I think it's gonna take a little time for it to insinuate itself into healthcare, but I'm, I'm actually quite optimistic. I think the challenge is it's happening at a time when you've got massive cost shift happening in healthcare that are going to kick inflation up in healthcare costs. And I think that's, I think the, I think the Trump administration and the Republicans are gonna pay a price for that.

David: 11:21

Good. Well, that price may be, uh, you know, inflated and hopefully it is. So let's talk about, I think it's hard to say what's gonna happen overall in the system, because you can see places where AI AI's gonna push costs up and where it might push costs down. So what, maybe let's talk about some things where it might be able to, um. You know, have costs reduced in a way that's also enhancing quality. One that I have in mind is the diagnostic odyssey. Sometimes someone has something that's rare,

John: 11:49

it's a very pompous way. Like what are you, what are you talking about here? The Diagnostic Odyssey.

David: 11:54

It's pompous John. It's like, uh, yeah, the Royal, I'm talking about the Odyssey. You know The Odyssey? There was a book and they had those, and it was actually probably before it was written down, but. It takes sometimes, some takes a long time to get a diagnosis, especially have something unusual. And during that time, first of all, people suffer and there's also a lot of expense in the system. And then when you ultimately find out what it is, it may be more costly to treat and less effective. So if you could find out very quickly that you had a rare disorder, what it is and what the treatment is for it. Um, then you could see, and you could see, you could imagine AI integrating all this sort of data that's out there to be able to do that, then that's gonna be better for the individual and it's gonna be less expensive for the healthcare system. And I think there's a lot of different examples. Um, of those odyssey if people can't think about them? Well,

John: 12:43

there's, and there's two aspects to that. You know, it currently takes 15 to 17 years between the time something is actually accepted and understood by medicine as a, as a new mode of care or a new standard of care to be actually to, to be propagated and spread throughout healthcare. So if that's a long time, I would hope that artificial intelligence at the point. Of care would allow caregivers to learn more and of, of what we already know to be indicated and correct. And integrated it into the current care loop. And the other piece of that, the diagnostic journey is figuring out what you've got and then leveraging all of the facts available faster. I think both of those could be big pickups for machine learning and artificial intelligence, and could help, you know, E, even if it doesn't reduce costs, really reduce suffering.

David: 13:33

Do you think that there's going to be, now the, the, the combination also with the consumerization of healthcare, that's gonna have an impact there. So, you know, in the first part of the internet, people would be very interested in their own health. I mean, it's fundamental. And they'd bring in these long printouts. The doctors would sort of poo poo it and say, I had to spend the whole appointment explaining why that wasn't right. But the patient really does care about it, and they're motivated. So if you've got better tools as opposed to like Dr. Google. But using AI for your own diagnosis and putting in all the information and then working with a healthcare provider, I mean, is that gonna be a benefit? Is that the way you get there or is it more about having the medical profession leverage ai?

John: 14:11

I think that AI, we're, we're still getting our arms around where it's gonna have an impact and how much, I think the most important thing is. For everyone to embrace it at some level. I'm a little bit skeptical. I think that the, the, the move from. Authority to student. The way doctors and patients used to deal with in our parents' generation has already shifted. So the, the consumer's engagement in their own health and feeling accountable and engaged and in the detail that, that's already happened. So all you're doing is accelerating access to better tools With ai, I don't think it's gonna really change that. What it's going to potentially do is make the entire system more accountable because with more access to better information, you can hold your doctor, your hospital, your clinician, your physical therapist to this, to the best standards that you can identify. Leveraging the, the big brain of artificial intelligence. But I don't think it's really gonna change the relationship. It's just gonna make, but, and, and both the doctor and the patient are gonna be equally empowered. If they're using these tools appropriately. So I, I think ho hopefully it'll just improve the care. I don't think it's gonna really change the, the way consumers access and, uh, and relate to their caregivers, uh, unless their caregivers are totally disconnected from ai. I mean, what do you think?

David: 15:41

So if we talk about like the, you know, the doctor patient relationship, how does it affect if I'm there with, uh, with my, my physician? You know, that's, that's one element of it, and I agree. It has shifted. People still have to be the quarterbacks for their care. Even though you've got all these, uh, you know, care navigators and other things that people try to put in. It's really kind of the consumer has,

John: 15:59

you are you, are you, you, you have to be your own. Yeah, your own and your family's care navigator. Don't delegate that to anyone.

David: 16:05

And it always seems like every time I'm involved in that, somehow it's like, wow, you know, how do people do this? And it's, it's very overwhelming, especially at the time you're sick or dealing with stress. And I wonder whether an underappreciated. Possibility for AI is in that coordination side. You know, can AI be used even if it's directed by the consumer, by the patient? Can that be used to help to organize the whole care team, keep them, uh, keep them informed, allow them to, you know, communicate the, the relevant information? I don't know, but that seems like a real pain point that I haven't seen directly addressed. I'd like to see it. Maybe you build an app, Dave. Yeah,

John: 16:47

you could, we could take you public. No, I, I, I I think that the reason you haven't seen it is, I think it's tricky. Yeah. I, I, I don't, I, I, it, it is, um, there's a level of complexity there, um, that we still haven't solved for, but it's interesting. You actually could see an agentic companion there that could be pretty powerful.

David: 17:08

And what about for mental health, John? Behavioral Health, you know, this is a, a big, a big factor and you've actually seen some things. I mean, here's an example where AI can be great, right? It's hard to get an appointment with a therapist. You can get an appointment with check GPT in half a second, and that can be positive for some people. But then you hear about people going way down the deep end and sometimes actually being given information that's not super helpful to them might be helpful. Well, I,

John: 17:29

I think that's, I think, but I think, I think if you, you're dealing with a principle. Provider. I mean, we've had, you know, we've had some folks on the show that are lever. I think, I think the only way we solve for the lack of supply of therapists and caregivers and the increasing demand for care and mental health and behavioral health is through technology. So I'm, I'm, I'm hopeful here because I think we have to be helpful because it can be a solution, but you've gotta be, you shouldn't be dealing with generic bots on this, or bot bots that you help engineer and, and customize yourself. Intentionally or unintentionally, you should be going to a recognize provider of, of psychiatric and, and social or kind of care that's leveraging bots. Uh, so that they're tuned to what would really be effective.'cause the, there are actually good standards on things like cognitive behavioral therapy and opioids use and, and, you know, abuse. You know, and, and, uh, recovery. Um, so I, I, but I would just be careful there. But no, I, I, again, I'm, I am more of a techno optimist here, uh, in spite of your, uh, you know, kind of typical. Luddite skepticism. Yes,

David: 18:35

indeed. Luddites weren't too successful. John. So we've been talking about healthcare costs and kind of the policy, big picture side of it. Um, there's only one person in this country that wields power at the moment. So if we put him aside for a second and say, is there anything an individual can do? Either, uh, someone who's, uh, employed at a, at a big company or self-employed or on Medicare or Medicaid, anything that they can do to keep costs under control for 2026.

John: 19:03

Uh, you know, it goes back to the basics. You know, uh, eat, eat, probably eat more vegetables, get outside and get the, get in the sun at a higher level of a, a physical activity and, and, and maintain your social connections to your friends and family. The basics still matter more than the esoteric new stuff. You know, we, the, the, the, the math shows that people who are, you know, stay active, stay engaged in their community, have a sense of purpose, are connected to their friends and family. Um, I think the one thing that you can do is make sure you've got access to, um, a decent care and to decent caregiver. Um, but the basics of, of if you really wanna be accountable here for your health, be accountable for your daily activities that affect health. And that's probably the most important thing. It's gonna actually drive. It's, it's not novel advice, but it's the right advice for folks who, uh, in the, in the current environment, as you think about care navigation, it'd be best to navigate away from care and towards better health.

David: 20:03

Great. Well, I, I'll end on something a little less uplifting, which is that a lot of the, uh, savings that are coming from uh, federal programs in particular have to do with erecting hurdles so that people are, who are actually eligible have a harder time accessing. So things like shortening the open enrollment period, or, or getting rid of auto enrollment and having more, you know, income verification means it's particularly important. Oh, it's. Part of how they're gonna just cut

John: 20:29

the, the roles and medicate. Yes, they're cutting costs by, by, by, by complicating access.

David: 20:34

Right? But that makes it, that makes it essential that people continue to act the way that they have. And instead, if you wanna do something for yourself to make sure you have coverage, don't miss that shorter open enrollment period. Make sure you get the verifications in. Don't assume that uh, you know, that the government's just trying to, uh, help you out by keeping you on a program.'cause that is, don't get a case. Don't ever assume

John: 20:54

the government's just trying to help you out. Dave. Gotta be accountable there too.

David: 20:57

Alright, John. Well, I don't make any assumptions about my health, except that if I spend too much time in the sun, I am going to bake into a lobster and gonna be at my dermatologist and maybe my oncologist. So that's it for you. In another episode of Care Talk, we've been talking about healthcare costs. I'm David Williams, president of Health Business Group,

John: 21:14

and I'm John Driscoll, the chairman of Yukon Health. If you liked what you heard or you didn't, we'd love you to subscribe on your favorite service.