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Dramatic Increase in Healthcare Spending for Q1 in 2014

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By Phil Cohen

Preliminary economic reports indicate that despite slow overall growth during the first quarter, healthcare spending increased by 9.9 percent – the highest level since 1980.

The Bureau of Economic Analysis (BEA) based its report on Affordable Care Act enrollments, Medicaid benefits and increased spending for hospital visits, long-term and palliative care, and a variety of other healthcare services. Higher patient spending, in turn, reflects greater patient access to healthcare options among previously uninsured or underinsured populations.

At the same time, preliminary healthcare spending figures largely outstrip job growth figures in the healthcare sector. The disparity suggests a possible uptick in the sector’s productivity, but is more likely because enrollment figures do not equate to actual spending. For example, many enrollees in ACA marketplace policies received subsidies to offset the cost of their policies and did not actually “spend” the entire premium amount.

More complete data to be released in June may offer a revised growth figure to account for actual dollars spent during the quarter. Regardless of the cause or underlying factors, however, the increase in healthcare spending had an indisputably positive impact on the nation’s economic growth in the first few months of this year and will likely continue in subsequent quarters.

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Phil Cohen

About the author

Philip Cohen is the founder and President of PRN Funding, LLC. PRN Funding is an extraordinarily focused niche player in healthcare funding. With years of…... Read More

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