Groundwork Reveals the Hidden Cost of AI

Groundwork Reveals the Hidden Cost of AI

While tech companies profit, working families pay

Today, Groundwork Collaborative and Reset Tech released a new report, “The Hidden Costs of AI for American Households,” which exposes how AI is already increasing costs for every American in nearly every line of the budget – and how that toll will only grow.

Artificial intelligence (AI) is already increasing prices for American families, with electronics and electricity bills on the rise due to the AI data center buildout, to groceries and other retail purchases plagued by AI-powered pricing abuses. AI is also making online scams easier to carry out and harder to detect, adding to the estimated $119 billion per year that Americans lose to internet-based scams and cybercrime. The report reveals how corporations are prioritizing profits over affordability. Delta’s CEO bragged that AI will increase his airline’s profitability by as much as 50%. Tech companies are allowing AI to worsen mental health, which already costs our economy an estimated $282 billion a year. And health insurers are using AI to review claims, leading 60% of doctors to be concerned about increasing denials.

As Americans grapple with a raging affordability crisis, the report outlines concrete actions policymakers can take to reduce the cost of AI that stands to pile on, including banning surveillance pricing, prohibiting insurers from using AI to deny health care, implementing Groundwork’s plan to freeze household electricity rates, and adopting stronger liability frameworks that hold AI companies accountable.

Janelle Jones, Senior Fellow at Groundwork Collaborative, and co-author of the report, said:

“As working people face an affordability crisis, higher prices caused by AI are the last thing they need. It’s another attack on household budgets that add up, and which working people certainly shouldn’t be on the hook for.”

Rishi Bharwani, U.S. Director of Reset Tech, and co-author of the report, said:

“AI could be lowering costs for American families but instead it’s become a hidden tax on households – paid through online scams, surveillance pricing, higher electric bills, denied health claims and rising premiums. Families feel it every day, even if they can’t see it. Lawmakers need to act now to stop greedy corporations from using AI to squeeze consumers.”

BACKGROUND

• AI is fueling a new wave of online scams, and it’s costing consumers billions. AI is making online fraud easier to scale and harder to detect, allowing scammers to clone voices, create deepfakes, and impersonate trusted people. Internet-based scams and cybercrime cost Americans $119 billion in 2024. However, the true financial burden is likely substantially higher because for every reported crime, six go unreported.
• AI is increasing the mental health risks of social media use and adding to families’ health care costs. One study found that adults who use AI daily are 30% more likely to experience at least moderate depression than adults who do not use AI at all, and nearly half of U.S. teenagers say social media is mostly harmful to people their age. Out-of-pocket spending on pediatric behavioral health reached $2.9 billion in 2022, an increase of about 38% over the previous 11 years.
• Health insurance companies are using AI in ways that drive up costs for patients. Insurers use AI to review claims and prior authorizations, and 60% of physicians say they are concerned that AI is increasing denials. When claims are denied or delayed, patients may have to pay out of pocket, appeal the decision, or postpone care.
• AI-driven pricing systems are spreading rapidly across the economy. Companies are deploying AI systems to analyze consumer data and tailor prices to the individual. For example, an investigation of Instacart pricing by Groundwork Collaborative, Consumer Reports, and More Perfect Union found nearly three-quarters of grocery items were offered to shoppers at multiple price points, prices were up to 23% higher for some shoppers on the exact same items, and these practices could translate into a swing of about $1,200 a year for a family of four.
• AI is giving insurers new ways to charge drivers more. Insurers are using increasingly detailed data about how, when, and where people drive to assess risk and set personalized premiums. Companies such as LexisNexis Risk Solutions and Verisk aggregate driving behavior data and sell it to insurers, and LexisNexis products were used in 86% of new U.S. auto insurance policies issued in 2023.
• AI-driven pricing is making travel more expensive by allowing airlines, hotels, and booking platforms to tailor prices based on consumer data and online behavior. Delta’s CEO has said AI could increase the airline’s profitability by as much as 50% as airlines and other travel companies use sophisticated tech and robust customer data profiles to set prices.
• The rapid expansion of AI data centers is pushing more of the cost of the AI buildout onto household electricity bills. Data centers’ share of U.S. electricity use could nearly triple from 4.4% in 2023 to about 12% by 2030, and residential electricity rates could climb 15% to 40% above 2025 levels by 2030.
• Surging demand from AI data centers is making everyday electronics more expensive for consumers. AI data centers and consumer electronics manufacturers rely on many of the same chips and memory and must compete for a limited supply. Since the start of 2026, Apple has raised prices on some of its most popular laptops by $200 to $300 and on every iPhone by at least $100, and Microsoft has increased Xbox console prices by $100 to $150.