Health economists have anticipated a jump in health spending in 2014 due to expanded insurance coverage under the Affordable Care Act (ACA) and, to a lesser extent, recovery from the severe recession of 2008 and 2009. For example, projections just released by the Centers for Medicare and Medicaid Services (CMS) predict 5.6% growth in 2014, as compared with 3.6% in 2013, with the increase attributed primarily to expanded coverage but also to the improving economy.2
Viewed from this perspective, the initial BEA estimate of 6.3% first-quarter growth was roughly consistent with expectations. That’s not surprising, since BEA analysts had few hard data on how expanded coverage was affecting first-quarter health spending when they developed their initial estimate. The revised estimate of 3.5% growth incorporated data from the Quarterly Services Survey (QSS) released in June. Although that second estimate should be the more accurate of the two, it is also the more surprising. Why should the growth rate in health spending remain flat when millions of people are gaining health insurance and when the economic expansion is approaching its sixth year?