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Health care spending sees biggest jump since 1980

The increase, attributed the Affordable Care Act and Medicaid expansion, had a big impact on the nation's first-quarter GDP.

By Money Staff Apr 30, 2014 1:02PM

This post comes from Brett LoGiurato at partner site Business Insider.

Business Insider on MSN MoneySpending on health care grew an astounding 9.9 percent in the Bureau of Economic Analysis' advance estimate of first-quarter GDP.

It's the biggest percent change in health-care spending since 1980, when health-care spending jumped 10 percent in the third quarter. Analysts said it's primarily due to a consumption boost from the implementation of the Affordable Care Act. Adjusted for inflation, America is spending more on health care than ever before.

Personal consumption grew by 3.0 percent, about half of which was due to the growth in health-care spending, said Ian Shepherdson, chief economist for Pantheon Macroeconomics.

Pills and a $100 bill © SuperStock

"If health-care spending had been unchanged, the headline GDP growth number would have been -1.0 percent," Shepherdson said.

A BEA representative said the uptick "reflects additional spending associated with the implementation of the Affordable Care Act."

The first-quarter advance estimate reflects spending from January through March, the first three months when millions of people who gained insurance by signing up on exchanges established by the law or by qualifying for Medicaid coverage under the program's expansion.

Jared Bernstein, the former chief economist to U.S. Vice President Joe Biden and now a senior fellow at the Center on Budget and Policy Priorities, speculated that the growth was more likely associated with the Medicaid expansion at this point.

Sign-ups through the exchanges exploded in March, the last month of the first open enrollment period. Of the more than 8 million people who eventually enrolled in insurance plans, nearly half signed up in March or in a special two-week extended period in April. This means the uptick in health-care spending could be even bigger next quarter.

The detailed consumption data in the advance GDP report displays that spending on doctors and hospital services began to rise rapidly last fall, when the law known as Obamacare was implemented.

"Both are now running at more than twice their pre-Obamacare trend, indicating that pent-up/hidden demand for healthcare was huge," Shepherdson said.

"Next question: How long will it last?"

Here's a chart from Pantheon that shows the growth over the past year in spending on doctor and hospital services, the two factors that dominate the health-care portion of GDP:

Courtesy of Business InsiderMore from Business Insider

Apr 30, 2014 1:42PM
I'm confused...wasn't Obamacare supposed to reduce our country's spending on health care in this country ... which was already pretty high?
Apr 30, 2014 1:44PM
Weren't we promised better healthcare for less money?  Instead, we're spending more than ever!  Thanks a lot, Barack.
Apr 30, 2014 1:46PM
Who but the left wing faithful and the abject naive expected this thing would actually save the tax payer money?  If history tells us anything it is that whenever the federal government gets involved in something it is going to end up costing multiples of what was originally projected and far more than the same thing would cost in the private sector.
Apr 30, 2014 1:28PM
Why would we expect anyone to be able to truthfully explain this? No one will even tell the tax payers how many of the people signed up paid their premium.
Apr 30, 2014 2:04PM
Who is going to pay for all of those shysters, derelicts, and free loading democrats health costs? ...that's right pal... me and you.  It is zero sum. If somebody is getting something for nothing, the provider is not doing it for nothing. Somebody has to pay. The working tax paying guy will have to pay for the free and subsidized healthcare that the free loaders are enjoying for nothing.
Apr 30, 2014 2:28PM

I'll respect you in the morning.

The check is in the mail.
I'm from the government, I'm here to help.
If you like your health insurance you can keep your health insurance.

Apr 30, 2014 1:45PM
Great now that everyone has insurance how about we start looking at the cost of giving actual health care. Why does it cost so much?
Apr 30, 2014 2:08PM
A friend of mine who finances insurance deductibles says his business is going through the roof!  For most of us, that isn't a good thing!
Apr 30, 2014 2:53PM
Does this mean that I'm not going to see my healthcare costs reduced by $2,500 dollars?
If you like your constitution, you can keep your constitution, period.
Every lawmaker that voted for this disaster has to go.
What a joke America is now!

Apr 30, 2014 2:17PM

Who really cares about health care cost in the aggregate?  It should be a personal responsibility and you should worry about what it costs you the individual.  Did your healthcare costs go up?  Why? Was it because of a change in government policy? 


Most of the government policies regarding healthcare insurance and a majority of other things not mandated in the Constitution are just social engineering programs primarily concerned with redistribution of wealth.


We need to return to a "fee for service" model and get third parties, and especially the centralized federal government, out of the health insurance business.

Apr 30, 2014 2:33PM
And people called me stupid when I predicted this.

I always said you cannot use a socialized healthcare system using the Free Market to set prices. They contradict each other. It's like mixing gas with fire.
Hmmm, I seem to remember a hopeful (and changey) presidential candidate LIE about this too, the lie must have been the change, huh!
Apr 30, 2014 3:04PM

So, we already spent more than twice as Europe, per person, and Obamacare increased that by 10%.

Can we just get politicians out of everything. They suck at everything they do.

Everything the government does to make life "better and more fair" for one person makes it worse for other people.

It doesn't matter if they're republicans, or democrats. They're all incompetent morons. A law degree in no way prepares you to deal with the complex social issues of a nation.

Apr 30, 2014 2:50PM

Premiums for SOME may be less but higher deductibles and co-pays,  restrictive doctor and hospital networks, requiring everyone to pay for lactate services, prenatal care, etc. is RAISING COSTS NOW and IN THE FUTURE. PERIOD.

I am trying to figure out how to spend my $2,500 in premium savings this year.  Oh, my wife said it is being spent on groceries.

HEALTHCARE.GOV website - We still do not have a secure website.  If your personal information is stolen, the government has ZERO liability.  In fact they don't even have to tell you your information has been compromised.

Where is that GILLIGAN ISLAND? 

OK - everyone go back to texting and smoking your marijuana.

Apr 30, 2014 2:24PM
Healthcare up "9.9%"?  Now that's supposed to make it more "affordable"?

I am glad to see that some people who really need healthcare insurance might (and, I say, "might") actually be getting healthcare; however, the whole "healthcare" issue as it stands, is creating its own firestorm.  As a result, what may be good about it is lost somewhere in the morass of bumbling and bickering over it.  Unfortunately, I fear it will get much worse before it gets better!!! 

Apr 30, 2014 3:47PM
Let me get this straight...... we're going to be "gifted" with a health insurance care plan we are  FORCED  to purchase and FINED  if we don't, which purportedly covers at least  ten million more people WITHOUT adding a single new doctor, but provide for THOUSANDS of new IRS agents, written by a committee whose chairman says he DOESN'T understand it,  PASSED by a congress that DIDN'T read it.......BUT EXEMPTED themselves and a select few companies from it. Signed by a president who smokes with funding administered by a treasury chief who DIDN'T pay his taxes, for which we'll be taxed for years before any benefits take effect, by a government which has ALREADY bankrupted SS and Medicare all to be overseen by a surgeon general who is obese and financed by a country that is going broke......WHAT THE HELL COULD POSSIBLY GO WRONG.

author unknown
Apr 30, 2014 3:29PM
So.... it turns out  Barry's  " The average family of 4 will save $2500/yr"  is as big a lie if not bigger than the "If you like your insurance you can keep your insurance"  lie. 

BarryCare is one big lie put upon the American People. 
Apr 30, 2014 3:07PM
Here is what will happen. After a steep increase in use, the use will drop off sharply combined with many dropping their policies once people understand that they are paying their premiums through the nose to get a few freebies that are MUCH cheaper to buy outright on their own. I fully expect that we will see numbers come out also, that put the number of enrollees that have actually PAID to be near 50% of the total signups. This is due in part to the Socialist operatives of the Democratic Party having signed up many times under alias's with no intention of ever paying a premium, just so Obama could claim a larger than realistic number of signups.
Apr 30, 2014 3:26PM
I am in the healthcare field. I have a specialized degree in Radiology. In 2009, I worked in a mid sized hospital and was making $90,000 per year. 2010 and Obamacare. The hospital had their first lay-offs in their history... mostly Mid-management. I now make about $50,000 and my healthcare costs have gone from $400/mo to $800/mo. Thanks to Obama, net loss of about $4500/mo. The funny thing is... I still don't "pay my fair share". It's tough for me to pay for even more entitlements, say for "undocumented democrats"?
Apr 30, 2014 3:20PM
dont worry people they will delay the actual numbers until after the midterms this november.  it is the only way they can even save one seat.  either way the conservatives will gain more seats in the house and will take over the senate. the we can at lease have some hope that we can stop this idiot some call president.  if the posted the numbers before the elections there would be a super majority in the house and senate for the conservatives and the whole law wold finally be repealed
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