Healthcare spending spiked in first quarter

The U.S. Department of Commerce Bureau of Economic Analysis (BEA) found that healthcare spending surged at a 9.9 percent annual rate in the first quarter largely driven by the expansion of insurance coverage under the Affordable Care Act.

This was the largest increase in consumer healthcare spending in 30 years. Meanwhile, healthcare price increases continued to grow slowly at an annual rate of 0.5 percent.

In a blog post, the administration was quick to put these two statistics into context. It noted that the main survey the BEA uses to track healthcare spending will not report first-quarter estimates until June, therefore the 9.9 percent healthcare spending growth figure could change considerably as more data becomes available.

The White House also noted that increased spending without a corresponding jump in healthcare prices was a good trend for consumers and payors. In addition, it did not expect near double digit growth in healthcare spending to continue indefinitely.

“Upward pressure on health care spending growth from expanding insurance coverage will cease once coverage stabilizes at its new, higher level, so it does not affect the longer-term outlook for spending growth,” the administration stated.

The increase in healthcare spending came at a key moment for the administration because without it and increases in spending on heating because of the unusually severe winter weather this year, gross domestic product (GDP) for the U.S. economy would have shrunk in the first quarter. Instead, it expanded by 0.1 percent.

“If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%,” Ian Shepherdson, chief economist at Pantheon Macroeconomics told the Wall Street Journal.