Short Takes On News & Events

Obamacare Health Spending Surge? Not So Fast

By Jay Hancock

June 12th, 2014, 6:50 AM

A growing economy and an Obamacare spending surge, many suspected, had ended five years of moderate health-spending growth.

Early government figures showed medical-cost acceleration at the beginning of the year. “Health care spending rose at the fastest pace since 1980 in the first quarter as the new health insurance law prompted many more Americans to visit doctors and hospitals,” reported USA Today among others a month ago.

Not really.

The preliminary estimates that prompted the story were off. Hospital revenue fell in 2014′s first quarter compared with the final three months of 2013, the Census Bureau estimated Wednesday. So did revenue for medical labs and outpatient care.

Fees and insurance reimbursements collected by doctor offices — which some thought would be swamped by patients newly covered under the Affordable Care Act — fell by 6 percent from the fourth quarter to the first. (Those numbers aren’t adjusted for normal seasonal fluctuations, but total first-quarter health spending fell even after accounting for seasonal differences, JPMorgan Chase economist Dan Silver calculated in a note to clients.)

Even for a full year — from the first quarter of 2013 to the first quarter of 2014 — revenue for health care and social assistance rose only 2.9 percent.

“That’s just surprisingly low,” says Charles Roerhig, director of the Altarum Institute’s Center for Sustainable Health Spending. “This confirms the skepticism that has been expressed about the acceleration” suggested in earlier data.

Health spending, which has pressured taxpayers, consumers and employers by growing faster than the economy for decades, had slowed to a little less than 4 percent annual growth starting in 2009. Some thought it might pop to 6 percent this year, Roerhig said.

There’s still no guarantee that it won’t, even though many suspect that increasingly higher out-of-pocket expenses for consumers and the health law’s cost-control measures will help “bend the cost curve” for medicine over the longer term.

After all, Wednesday’s Census figures don’t include prescription drugs, some of which have put sharp pressure on government and insurance budgets in recent months.

May’s jobs report showed an uptick in health employment, which tends to track health spending. Especially bad winter weather probably had more than a little to do with revenue declines for doctors and hospitals in the first quarter. Wednesday’s data aren’t final.

And many people buying new plans under the health law didn’t enroll until the first quarter was almost over. Subsidized insurance sold through online exchanges was available starting Jan. 1, but millions didn’t sign up until just before (and a little after) the March 31 deadline.

That hardly allowed time to line up at the clinic.

Says Larry Levitt, Kaiser Family Foundation senior vice president: “Given the timing of when people are getting covered, I wouldn’t expect any bump until the second quarter.”

Let the debate continue.

Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.

8 Responses to “Obamacare Health Spending Surge? Not So Fast”

  1. stan says:

    Republicans caught in “another” Obamacare lie? Oh well, just add it to the list!

    1. Republicans claimed there’d be death panels as a result of Obamacare.
    2. Republicans claimed Obamacare would cause rationing.
    3. Republicans claimed certain religious groups would be exempt from the law as a result of Obamacare.
    4. Republicans claimed there’d be a huge IRS database created that would not be secure as a result of Obamacare.
    5. Republicans claimed Congress would be exempt from the new Obamacare law.
    6. Republicans claimed multiplied millions of Americans would lose access to their doctor as a result of Obamacare.
    7. Republicans claimed Obamacare would be a huge government takeover.
    8. Republicans claimed non-citizens would get free healthcare as a result of Obamacare.
    9. Republicans claimed that 75 percent of businesses would be forced to fire employees or reduce their hours as a result of Obamacare.
    10. Republicans claimed seniors on Medicare would lose coverage as a result of Obamacare.
    11. Republicans claimed there’d be a 3.8 percent across the board sales tax increase as a result of Obamacare.
    12. Republicans claimed Obamacare would cause the largest tax increase in history.
    13. Republicans claimed there’d be tax increase on sporting goods as a result of Obamacare.
    14. Republicans claimed your sex life would be questioned as a result of Obamacare.
    15. Republicans claimed there’d be forced home inspections as a result of Obamacare.

    These are the insane claims that Republicans made and that never came true.

    Obamacare Health Spending surge?

    Just another stupid Republican claim that’s not gonna come true.

  2. deeman says:

    If the gov’t's data showed an early uptick in healthcare spending and USA Today and others reported it, where is Kaiser’s support that its figures on a decrease in spending are more reputable and valid than the others? I want to know not just that Kaiser thinks differently, but how USA Today among others and the US gov’t got their figures wrong, if indeed they did.

    Secondly, with all the supposed decrease in costs in healthcare, why are providers in Indiana raising their Obamacare premiums in average over 10% next year? Don’t tell me that when the weather, new regulations, whatever cause revenue to decline, the providers jack up the premiums and make the insured pay through the nose. Just because revenue declines doesn’t mean Obamacare is going to cost us less, is the take-away from all that.

    Obamacare is a mess. The insurance companies like it that way. I wonder how their stock prices have fared during this first quarter.

  3. deeman says:

    Kaiser Permanente itself is a private company, but it did pay its CEO George Halvorson 9 million a year and made 2.1 billion in profit for 2011. Not bad for a non-profit who is at the same time cutting pensions and insurance benefits to employees.

  4. deeman says:

    I looked up Aetna and Humana …

    Aetna’s stock is up 33%, from $60 to $80, for the year and Humana is up over 50%, $80 to $127. Crazy as this sounds, I think they are going to make even more next year because of Obamacare.

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  6. harry says:

    “Obamacare is a mess. The insurance companies like it that way. I wonder how their stock prices have fared during this first quarter.”

    Yeah, right!

    Add it to Stan’s list.

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