Thursday, May 1, 2014

US 1Q GDP Growth Would Have Been Negative (-1%) Without Obamacare Spending and Heating

If you listen to NPR, you wouldn't know that.

And never mind that Obamacare simply "takes money out of one person’s pocket and transfers it to another person’s, potentially crimping the spending of the person or company bearing the higher cost burden".

And never mind that it's very hard to find doctors who do take Obamacare insurance...

From Wall Street Journal (4/30/2014; emphasis is mine):

Health Care, Heating Prevent First-Quarter Contraction in U.S. GDP

The U.S. economy might have shrunk in the first quarter if not for the Affordable Care Act and spending to keep out the cold.

U.S. gross domestic product expanded a paltry 0.1% in the first three months of the year, dragged down by falling inventories and weaker exports. Spending on housing and utilities, meanwhile, contributed 0.73 percentage point to the change in GDP while spending on health care added a hefty 1.1 percentage points, the highest figure on record.

If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Outlays on utilities are clearly a double-edged sword. First, the severe winter weather chilled activity in other areas of the economy. Second, households have limited budgets and might well have spent money buying other goods or services had they not been forced to boost their thermostats.

“Looking ahead, we expect consumption growth to remain stronger than in 2013, but we expect the contribution from goods consumption to rise and the temporary support from utilities and health care to gradually wane,” said Michael Gapen, an economist at Barclays Capital.

The strong increase in health-care spending reflects that Americans — some of whom are newly insured — are visiting doctors and purchasing more medical products, said Jason Furman, chairman of the White House’s Council of Economic Advisers.

Prices for health-care services rose more slowly than overall inflation in the first quarter, compared to a year earlier. That indicates utilization — not price gains — is driving the increased spending, he said.

“People who didn’t have insurance before can now go to the hospital and the doctor,” Mr. Furman said in an interview. “That’s good for the economy.”

The spending figure includes amounts spent on purchasing insurance as well as drugs, exams and other care.

The Affordable Care Act required most Americans to carry health coverage, expanded eligibility for Medicaid and created new health-insurance exchanges offering subsidized policies for many. Enrollment for private health insurance through federal and state exchanges has swelled to about 8 million, the White House said.

So far this year, that has increased incomes and encouraged more spending on health-care services. (The Commerce Department cautions that its figures may be heavily revised. Its latest estimate is based on Medicaid benefits and ACA insurance exchange enrollments; more complete information is expected before the final first-quarter GDP release on June 25.)

Clearly, though, the vast pool of Americans with new access to health care have been visiting doctors and hospitals in rising numbers. “That pent-up/hidden demand for healthcare was huge,” Mr. Shepherdson said. “Next question: How long will it last?”

The White House’s Mr. Furman said the Affordable Care Act should provide a “tailwind” to the economy for “the next year or two,” as more Americans gain health coverage.

The deadline to enroll in exchanges was March 31. Though it’s been extended for individuals who had trouble completing applications, some economists say the economic impact of the health-care law may well fade—at least until the next enrollment period.

The law could have negative consequences as well. The Congressional Budget Office said in February the law would reduce the total number of hours Americans work by the equivalent of 2.3 million full-time jobs in 2021.

Another factor to consider: The Affordable Care Act, like all government spending, is funded either via taxes or borrowing. So it takes money out of one person’s pocket and transfers it to another person’s, potentially crimping the spending of the person or company bearing the higher cost burden.

Finally, one main goal of the law is to help contain health-care costs over the long term, allowing more resources to flow to other sectors of the economy. Much more data — and time — is needed to see if it’s successful on that front.


Anonymous said...

Just a kind word- this kind of coverage isn't going to help you increase views on your site.

In the US, this is a very right-wing point of view, and right-wingers do not give a damn about your nuclear crisis.

Thank you for your coverage of Fukushima.

arevamirpal::laprimavera said...

Thank you for your kind word, but this is still my personal blog and increasing views on my site is not on the top of my list.

Anonymous said...

So... does that mean Zero Hedge is right-wing? Or Naked Capitalism?

Anonymous said...

To the contrary- it is very important to increase views to your site. This crisis is barely mentioned in US media.

You are one of a very small group of bloggers that translates updates into English without interference. For that, I am truly grateful.

sangell said...

As much as I was fascinated by the disaster at Fukushima ( and MH-370 for that matter) there comes a point in time when there is no new developments to report. I trust this website to honestly report any stories about Fukushima that are factual and not simply pander to alarmists and kooks who actually hope for bad news about radiation leaking from the plant.

Anonymous said...

Zero Hedge is "nut wing".

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