What You Should Know:
– The latest HealthEdge’s 2026 Payer Survey reveals that managing costs remains the number one challenge for health plan executives, forcing a sharp reprioritization of technology investment toward Artificial Intelligence (AI) and modernization.
– AI automation is now the top strategy for cost reduction (34%), signaling a major shift away from legacy systems. However, a significant gap exists in customer experience, with only 51% of members viewing their health plan as a “partner in care,” despite 76% of payers believing they are perceived that way.
Managing Costs: AI Takes the Lead in the Battle Against $7.7 Trillion Projections
The healthcare payer industry is entering a period of “unprecedented pressure” defined by rising costs, regulatory complexity, and escalating expectations. According to HealthEdge’s annual payer market survey, managing costs remains the number one challenge for the second year in a row, with projections indicating costs will skyrocket to $7.7 trillion by 2032.
In response to this “existential” threat, payer leaders are making strategic shifts in technology investment:
- AI as the Top Strategy: 34% of leaders report that automating manual processes using AI, machine learning, or advanced analytics is their top strategy to combat rising costs. Payers see this as the fastest path to reducing administrative burden and improving decision accuracy across claims and care management.
- Modernization Follows: 27% prioritize modernizing or consolidating core administrative systems, recognizing that outdated, siloed systems are a major cost driver themselves.
- Digital Engagement: 26% are focusing on increasing the use of digital tools to engage members and providers, helping to scale human resources and reduce operational costs.
This focus on leveraging AI effectively and safely (30% of technology budgets) has replaced data security as the top technology investment priority, signaling a forced pivot toward solutions that deliver speed, cost reduction, and real-time insight.
Regulatory Stress and the ‘One Big Beautiful Bill Act’
Regulatory pressures, alongside growth and competitive concerns, have surged to the top of the challenge list this year. The recently passed One Big Beautiful Bill Act (OBBBA) has amplified compliance challenges by introducing real-time eligibility requirements and stricter accountability standards.
- Impact on Costs: A whopping 85% of leaders say regulatory pressures are moderately or significantly impacting their costs and margins.
- The Interoperability Squeeze: Payers must secure the ability to seamlessly exchange real-time clinical and operational data to meet new mandates, including the Advancing Interoperability & Prior Authorization Final Rule.
- Response: 51% of payers are applying AI to help automate more approvals, and 46% are implementing real-time or automated authorization tools.
- Data Fragmentation: The top challenge for achieving interoperability is equally split between a lack of technology infrastructure (29%) and involvement with compliance (29%).
The 25-Point Perception Gap in Member Experience
Despite the urgency to modernize, the survey reveals a stark disconnect between payer aspirations and member reality.
- The Aspiration: 76% of payers believe their members view them as “partners in care”.
- The Reality: Only 51% of members actually share that view, seeing their health plan as a partner rather than solely a “payer of claims”.
This 25-point discrepancy is a “stark warning” that comes at a critical time, with 27% of consumers likely to switch health plans in the new year. To close this gap, payers are accelerating investments in digital engagement and automation:
- Top Investments: Increasing auto-adjudication rates for faster claims (39%), increasing personalization through data integration (38%), and enhancing member service centers (35%).
- Digital Adoption: Over half of payers report having already deployed mobile applications (53%) and personalized health/wellness recommendations (57%).
The Next Era: BPaaS and the Autonomous Enterprise
The path to sustainable cost efficiency demands a structural shift beyond incremental savings. The research points to next-generation operating models, such as Business Processes as a Service (BPaaS), which are underpinned by AI and offer a blueprint for radically improving agility, scalability, and precision.
By embedding intelligence into the foundation of administrative processes, payers can move beyond automating tasks to reengineering entire workflows.
The market is rapidly approaching this inflection point:
- AI Adoption Status: 94% of payers are either live with or actively adopting AI.
- Widespread Use: 47% of leaders report either widespread adoption or active departmental use.
- Governance Gap: Despite rapid adoption, only 31% report having fully defined AI governance models and controls, highlighting a critical risk for future compliance and ethical deployment.
The next wave of transformation will be defined by BPaaS models with AI at their core, enabling intelligent systems to not only analyze data but also act on it autonomously across claims, care coordination, and member communication.
