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Medical Spending Surges With Health Law Sign-Ups

Health care spending surged 9.9 percent during the first quarter of 2014 as people who gained insurance coverage under the health care law apparently began using more medical services, the government said today.

The jump in health spending was in contrast to government estimates that the economy as a whole grew just 0.1 percent at an annual rate during the first quarter, after economists anticipated growth of about 1.2 percent.

The Bureau of Economic Analysis advance estimate found health care prices during the first three months of the year grew at an annual rate of 0.5 percent.

Obama administration officials cautioned that the main survey the Bureau of Economic Analysis uses to track health spending won’t be available for the first quarter until June, meaning there could still be significant revisions. However, Jason Furman, chairman of the Council of Economic Advisers, said the preliminary results tracked with expectations as the health law rollout continues.

“The sharp increase in estimated utilization appears to have been driven by greater use of health care services by people who gained insurance coverage during the first quarter because of the Affordable Care Act … this increase in utilization is neither a surprise, nor a cause for concern,” Furman wrote in a blog post. “Furthermore, any upward pressure on health care spending growth from expanding insurance coverage will cease once coverage stabilizes at its new, higher level, so it does not affect the longer-term outlook for spending growth.”

Furman added consumers are being helped by slow growth in health care prices, which are partly attributed to changes brought by the health law (PL 111-148, 111-152).

“Slower growth in health care prices drives slower growth in families’ out-of-pocket costs and insurance premiums and has been an important contributor to the overall slow growth in health care spending seen over the last few years,” Furman wrote.

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