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Home Publications Blogs Beat the Press January Spending Was Driven by Health Care

January Spending Was Driven by Health Care

Monday, 03 March 2014 22:03

There was a larger than normal jump in spending on consumer services reported for January. The Reuters article attributed this to weather driven increases in spending on heating.

Actually the biggest rise in spending on services in January was for health care. The Commerce Department showed the annual rate of spending increased by $30.5 billion in January. This amounted to a 1.6 percent increase in spending compared with December. This is an extraordinary rate of increase, especially considering the slow growth in health care costs over the last five years.

Most likely the increase was due to one time factors associated with the Affordable Care Act. It will matter hugely to the success of the program and the budget and the economy if this increase turns out not to be a one time increase.

Comments (3)Add Comment
written by skeptonomist, March 04, 2014 8:29
If the ACA succeeds in making health care available for a substantial fraction of the nearly 50 million who have not had insurance, why wouldn't spending go up, and why would it be a one-time thing? Of course costs to the federal government should go up as well because of Medicaid expansion and subsidies to private insurance. So far the ACA has made only a small dent in the number without insurance.
Was the spending for health care, or for health insurance?
written by Bill H, March 06, 2014 8:42
I suspect it was for health insurance, and since these are monthly premiums, how count it not "turn out not to be a one time increase." Of course it will be a regular increase in spending, which will thrill economists, but I question how valuable it will actually be since it is money going into the pockets of insurance companies. We'll have to wait and see how much it enriches the lives of consumers; certainly not as much as if they'd spent it directly on health care.
where do we find such details?
written by rjs, March 06, 2014 1:11
i've been looking at the BEA Incomes and Outlays pdf and the accompanying Excel file and cant find anyplace therein where spending for services is broken down in components...since i'm writing about the report myself, a cite would be helpful...

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.