OK

Physician working on a laptop with stethescope on desk.
The GDP news out Wednesday is sobering, with the worst contraction since the first quarter of 2009. But there's a silver lining to that GDP shrinkage—a good part of it comes from less health spending.
The [Bureau of Economic Analysi] initially estimated that health care spending climbed 9.1 percent in the first quarter of 2014—a potentially worrisome increase. The agency released their second revision of that number today: now they believe that health care spending has fallen by 1.4 percent.

That means health care spending went down while the number of Americans with insurance may have gone up.

"Overall, the health care news is phenomenally good." said Peter Orszag, former director of the Congressional Budget Office and Office of Management and Budget. "The supposed acceleration in health spending has been shown to be false."

This means that the slowing in healthcare spending continues, a counterintuitive finding with the huge influx of newly insured people into the system. The BEA's data shows, though, that health spending declined in the first three months of this year, while newly insured people were getting into the system. The next quarterly report, when all of the new eight million enrollees are actually using their insurance might show a change in this trend.

The slowdown in healthcare growth has been steady over several quarters now, so it's not just statistical noise at this point, but real cost cutting. Exactly why it's happening isn't clear. The recession played a part—people spent less on everything, including healthcare, but with the recession easing we should have seen more of a rebound there. Obamacare is probably playing a part, though it's too soon to say how much of one. The whiff of reform has hospitals and providers paying more attention to implementing programs to cut waste and make their operations more efficient. This is good. Today's numbers look bleak, but there's reason for some cheer in them.

Originally posted to Joan McCarter on Wed Jun 25, 2014 at 09:51 AM PDT.

Also republished by Daily Kos.

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