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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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Comment Preferences

  •  Tip Jar (12+ / 0-)

    "The NSA’s capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything. [...] There would be no place to hide."--Frank Church

    by Joan McCarter on Wed Jun 25, 2014 at 09:51:10 AM PDT

  •  people just concentrate on who got insured for how (3+ / 0-)
    Recommended by:
    karmsy, Cedwyn, True North

    much and what's covered. Making much fewer headlines are the cost cutting and efficiency features hammered out in the long drawn out process in the senate while people cursed Baucus. Our system is so bloated I'd expect costs to continue to go down for a long time.

    “Conservation… is a positive exercise of skill and insight, not merely a negative exercise of abstinence and caution…” Aldo Leopold

    by ban nock on Wed Jun 25, 2014 at 10:41:13 AM PDT

  •  I'd call it uncertain news. (6+ / 0-)

    One of the things that nurses are seeing here in California is a worrisome trend and a distortion of the intention of the ACA.  One of the goals of the ACA is to reduce "unneeded" hospitalization.  The intent was to provide better primary care that would reduce the need for hospitalization, to provide better discharge planning that would reduce re-admissions, and so on.  What many provider groups - most especially Kaiser - seem to be starting to do instead is put up barriers to hospitalization - making it harder to get in, discharging earlier, providing more services in less regulated outpatient settings, etc.  Also, a lot of us covered under the ACA have policies with quite high deductibles - high enough to be a substantial barrier to accessing care.  And, paradoxically some folks who used to come to the ER as charity cases now have high deductible insurance that may actually make them worse off, since in the past the hospitals might write them off as charity cases, and now the insurers effectively forbid the hospitals from writing off the deductible or co-pay.
    Bottom line: It's too soon to tell whether the reduction in spending is good or not - good if it results from more effective and efficient delivery, bad if it results from new barriers to people getting the care they need.  

    "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verité et de la dire" Jean Jaures

    by Chico David RN on Wed Jun 25, 2014 at 11:02:52 AM PDT

    •  The info you post re: Kaiser (0+ / 0-)

      prompts me to ask:  Are you an RN in the Kaiser system, and/or are you a Kaiser member?  Kaiser Medicare for the last few years has received the highest grade for care out of many HMO's graded by Consumer's Report.

      Knowing something about the ACA and Kaiser Permanente, the outcomes of medical treatment is a factor in the overall success.  Prevention is key, as well as treating  conditions early so  hospitalization may not be necessary.  

      I am questioning your statement that they are putting up "barriers" to hospitalization, making it harder to "get in," and discharging earlier, etc.  This is not the ACA protocol.

      •  Prevention is key, no doubt, and always better ... (1+ / 0-)
        Recommended by:
        Chico David RN

        Prevention is key, no doubt, and always better than hospitalization, if possible. But even those who have had insurance for years might wait to the last minute to see a doctor for preventative care for any number of reasons. They have to take off of work

        for doctor visits (may not be possible), arrange child care (may not be possible), maybe they have no transportation or now with smaller networks, the doctor is too far away, maybe they can't afford co pays or deductibles....or it could be just reasons like they hate doctors or hate going period. So basically, just getting insurance does not always mean people will use it properly.

        In my family, we have had good insurance for years and my husband simply refuses to go for yearly check ups or anything else like that. If he is to be treated for anything, I know for a fact that it would be serious enough to land him in the ER first. He would never go ahead of time for anything. He won't take off of work, he feels fine, he hates doctors or any number of other excuses he will give for not going. I wish he would think about preventative care but he just doesn't see it. I am sure he is not the only one.

        •  My anecdote on guys and health care (2+ / 0-)
          Recommended by:
          Bailey2001, Shaylors Provence

          I do patient education with cardiac patients.  When I go into the room for the first time, I often ask the patient to tell me about what happened to bring them to the hospital.  If the patient is a married male, about 80% of the time, somewhere in the narrative he will say something like "my wife made me come to the hospital" or " my wife called the ambulance".  This, at least partially, explains why married men live significantly longer than single men.

          "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verité et de la dire" Jean Jaures

          by Chico David RN on Wed Jun 25, 2014 at 12:51:56 PM PDT

          [ Parent ]

      •  It's what I'm hearing from Kaiser RNs (1+ / 0-)
        Recommended by:
        Shaylors Provence

        I'm on the board of the union that represents the RNs at Kaiser.  And close to half of our board is Kaiser RNs from around the state and those are the folks I'm hearing this from.  So, it's admittedly anecdotal and the sum of a lot of impressions rather than data.  The ACA, as I understand it, focuses not so much on methods as on results - the intent, clearly, was to reduce the need for hospitalization.  But there seems to be not enough safeguard to prevent providers from taking the alternate route.  Kaiser, more than most, has the opportunity to do that.  If you are having a problem, you call an advice nurse who steers you to the proper level of care - which can be anything from "come to the ER right now" to "watch this video to learn more about your problem"

        "Wouldn't you rather vote for what you want and not get it than vote for what you don't want - and get it?" Eugene Debs. "Le courage, c'est de chercher la verité et de la dire" Jean Jaures

        by Chico David RN on Wed Jun 25, 2014 at 12:47:51 PM PDT

        [ Parent ]

        •  Thanks, Chico David, I appreciate (0+ / 0-)

          your response.

          Members of my family, as well as my own, have been Kaiser members for 30+ years.  We have seen it grow and evolve to, IMHO, a medical health organization I can recommend without reservation.  I, BTW, retired from Kaiser Permanente, working in an allied health field.

          The ACA is a monumental achievement.  This is the first time our country has faced the task of addressing the blatant flaws in our health insurance accessibility.  It is a start and if our lawmakers decide to support reform, work to fix the problems that exist and others that will surface most probably as time goes by, we will finally have joined the 21st century.

          Yes, it's true that being a Kaiser member there are many "on board," who can steer you in the right direction from calling the "advice nurse," to going to Urgent Care rather than the ER, emailing your doctor or a pharmacist, and the great member web site where you can look up all your past visits, tests, and order your meds online.

          I have been aware of so much suffering and heartbreak from individuals and families when insurance was out of reach for so many. The majority of bankruptcies in this country were due to medical bills that overwhelmed families; outrageous in a country like the U.S.

          I have support the ACA since its inception.  I know its shortcomings and all the controversy.  It will take at least a decade until we get this right; patience is not one of our strong suits.

    •  Any system rooted in profit will not benefit (0+ / 0-)

      the end user.  No matter what the ACA omtrmfd/

      "The opposite of a profound truth may well be another profound truth.”" -- Paul Dirac

      by Rikon Snow on Wed Jun 25, 2014 at 11:46:53 AM PDT

      [ Parent ]

  •  Need to look at healthcare spending in Q1 deeply (2+ / 0-)
    Recommended by:
    leu2500, Shaylors Provence

    What was the nature of the lower spending?  Watching what happens in Q2 is important to gaining insight.

    To what extent were prices lower than expected?  This could happen from a general price decline, as well as people having insurance the reduced prices providers receive.

    Did fewer people go to receive healthcare services because of the weather in Q1?

    As deductibles have risen significantly in recent years and ACA continues that trend, were people putting off receiving healthcare services?

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Wed Jun 25, 2014 at 11:40:17 AM PDT

  •  Of course, what if the economic slowdown (0+ / 0-)

    was * because * of the decrease healthcare spending?

    I don't really get why this is a good thing. To me, spending $$s on healthcare is better than most of the alternatives out there (with the possible exception of alcohol and pornography).

    •  Spending goes down (0+ / 0-)

      if costs go down.

      If medical costs go down you have more money for beer and porn.

      Thank you Obama!

      Republican tax policies have led to financial conditions which have caused Republicans to demand cuts to programs they have always opposed.

      by AppleP on Wed Jun 25, 2014 at 05:40:18 PM PDT

      [ Parent ]

    •  Because GDP, and the economy in general, is abo... (0+ / 0-)

      Because GDP, and the economy in general, is about the flow of money. When you overspend on health care, a lot of that money goes to big providers and drug companies, who make investors and executives money. But investors and executives don't tend to spend enough of that money. If, instead of spending on health care, you spend at restaurants and tip the waiters, or at stores that need more cashiers and employees, and so on, you improve the economy, because those people spend the money you gave them, plowing it right back into the economy.

      This is also why food stamps are a better strategy for helping the economy, beyond the human cost- food stamps get spent, while tax cuts often get saved (and also why, if you're going to cut taxes, adjusting the withholding tables to spread the cut to each paycheck rather than giving a lump sum is a good idea).

  •  Early treatment saves money and lives (1+ / 0-)
    Recommended by:
    True North

    When the uninsured wait until they are very sick to get care everyone pays more and more people die. This is not paradoxical.

    As usual, Republicans are dead wrong.

    “Industry does everything they can and gets away with it almost all the time, whether it’s the coal industry, not the subject of this hearing, or water or whatever. They will cut corners, and they will get away with it. " Sen. Jay Rockefeller, D, WVa

    by FishOutofWater on Wed Jun 25, 2014 at 11:50:29 AM PDT

  •  High deductibles are definitely an issue that n... (2+ / 0-)
    Recommended by:
    leu2500, Shaylors Provence

    High deductibles are definitely an issue that needs to be addressed and soon. If people can't afford to get health care because they have to pay so much before getting it then that's a problem. I do like the fact that there is a cap on out of pocket expenses but if that cap is several thousand dollars and someone needs to go into a hospital today, they might not have several thousand lying around to pay it.

  •  This negative growth number seems peculiar (1+ / 0-)
    Recommended by:
    Bailey2001

    though happily so.  

    Since this tracks all medical spending, and the cost of providing health care for the formerly uninsured at the highest Emergency Department rates may be a factor, it seems too early for one significant cost impact to have taken hold, and that is the tremendous cost savings accruing to preventative care.

    Of course we did hear all those initially false Koch driven tall tales about how some tea party person's health insurance cost skyrocketed, and then with some digging, for the most part, we found that they actually REDUCED their actual out of pocket costs for health care due to Obamacare.  So perhaps this is a factor?  

    But the numbers remain curious.  I look forward to someone's detailed data dive.  I found BEA's website to be a bit too inscrutable for my non-statistical arts background.

    "Out of Many, One Nation." This is the great promise of these United States of America -9.75 -6.87

    by Uncle Moji on Wed Jun 25, 2014 at 12:13:03 PM PDT

  •  "Delighted with my insurance." (1+ / 0-)
    Recommended by:
    Shaylors Provence

    In various on line news articles, Kos Diaries, and other sources, I've read about people who signed up for the ACA and are so very happy with their new insurance.  Considering that insurance tends to be complicated, and what you see may not be what you get, when I read that someone is delighted to have insurance at last, I do wonder if they have actually used it yet and if they were still delighted when then got the bill from the clinic after the insurance paid their part.

    Hey, I'm not saying that insurance should pay everything, or that if we pay less we should get the same coverage as someone who pays more, but I wonder if, when the rubber hits the road, if people will be so happy with what they owe.

    My own personal example:  in 2014 I've had a number of eye doctor visits due to corneal ulcers, as well as some clinic visits to get, finally, properly diagnosed for an ongoing problem.  There was a pre-op physical, which included lots of tests, and then the major, four hour surgery.  My insurance was billed $63065.82 and paid $47937.76.  What I've owed is about $4000.  I'm disputing a non-payment of about $400.  [The insurance company actually tells me that it is a covered service, but the clinic won't submit it properly.]  During 2012 and 2013 I've owed about $4000 each year after the insurance has paid.  [Turns out that Maximum Out of Pocket is NOT A LITERAL TERM, although that isn't explained as such on the insurance website.]

    For this insurance, I'm paying personally $503/month.  It isn't ACA, but COBRA.  The ACA policies I looked at were in the same range, but didn't pay as well on lab and xray.    I'm extremely glad I have the insurance, but I do wonder about many people's lack of ability to pay for the deductibles, etc.

    My daughter just told me that even though they finally have insurance, they are looking at about $4000 - $6000 of bills after their baby is born.  That's a lot of money for most young couples these days.

  •  I work in hospitals across the country (1+ / 0-)
    Recommended by:
    jfdunphy

    and the late winter/early spring saw most of them running way below budget on medical discharges.  WAY below budget.

    For starters, there was no flu season.  Pneumonia was also way below normal.  We are doing a much better job of vaccinating seniors, and maybe the vaccine hit really well this year.

    We saw the same outcome in Texas, Ohio, Iowa and Vermont.  Heard the same from other providers  at conventions.  

    Most of them are back on budget this summer (but summer budgets are always lower).  We'll see what next winter brings.  We are seeing utilization declines in a lot of markets, across most demographics.  This winter was a cliff, not just a decline, but the trend is definitely down recently.

    We will see what next winter brings.  

  •  And if Medicare cracks down on (0+ / 0-)

    Medicare fraud, the costs will be even lower. Latest available numbers in congressional testimony today are that medicare fraud amounts to about $60 billion, our of a Medicare spending total of about $602 billion. It seems to take a long time between when Medicare is notified of fraud, and when it gets addressed. See house testimony of House Commerce Committee, which has oversight. $60 billion is about half of the US trade deficit in recent years.

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