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Home Publications Blogs Beat the Press The Drop In Health Care Spending in First Quarter Followed Surge in Fourth Quarter of 2013

The Drop In Health Care Spending in First Quarter Followed Surge in Fourth Quarter of 2013

Thursday, 26 June 2014 04:49

The NYT noted that a sharp drop in health care spending reduced the first quarter growth rate by 0.16 percentage points. It is important to recognize that this drop followed a surge in health care spending reported for the fourth quarter of 2013 that added 0.62 percentage points to growth in quarter. That compares to an average of 0.28 percentage points for the prior four quarters. It is likely that the data overstated the actual increase in spending in the fourth quarter and therefore also overstated the drop in the first quarter. The average impact of health care spending on growth for the two quarters taken together is almost the same as over the prior four quarters.

Comments (3)Add Comment
Medicaid Expansion?
written by Larry Signor, June 26, 2014 6:03
Perhaps the 24 states that have not expanded medicaid coverage have left a hole in demand and disrupted supply inefficiencies. This is also an employment constraining policy.

written by Ellis, June 26, 2014 9:31
In other words, the economy is not shrinking... just stagnating.
written by JDM, June 26, 2014 10:55
I hadn't read that anyway else yet. Certainly not in regular news media, and not on blogs (which often give better analysis of news). Thank you, Dean, for continuing to point these things out.

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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.