A new report out there suggests that spending on ObamaCare was about the only thing preventing our economy from showing negative economic growth for the first quarter of 2014.
Check this out from Reuters:
As the U.S. economy teetered on the brink of contraction in the first quarter, one thing stood out. Healthcare spending increased at its fastest pace in more than three decades.
That surge is attributed to the implementation of President Barack Obama’s signature healthcare law, the Affordable Care Act, also known as Obamacare. Because of Obamacare, the nation narrowly avoided its first decline in output in three years.
“GDP growth would have … been negative were it not for healthcare spending,” said Harm Bandholz, chief economist at UniCredit Research in New York.
Healthcare spending increased at a 9.9 percent annual rate, the quickest since the third quarter of 1980, and it contributed 1.1 percentage points to GDP growth.
The economy expanded at only a 0.1 percent rate in the first quarter, held back by a drop in exports and business investment, which economists attributed to a harsh winter. A sharp slowdown in the pace of inventory accumulation was also a drag.
Obamacare provides coverage for residents who previously did not have health insurance, as well as subsidies to those who cannot afford monthly premiums. These transfers are helping to free-up income and more people are making visits to hospitals.
Economists said both the subsidies and hospital visits were contributing to the surge in healthcare spending.
Government transfers, including health insurance premium subsidies, boosted personal income in the first-quarter.
The National Memo also tossed in its two cents:
[…] The 0.1 percent growth came as a shock to many economists and the Commerce Department — which projected a more robust 1.2 percent increase – and this year’s Q1 numbers mark the lowest margin of growth since Q4, 2012. Health care spending , however, skyrocketed 9.9 percent, marking the largest leap in sector spending since 1980.
The Affordable Care Act was the primary catalyst behind GDP growth this quarter, singlehandedly contributing 1.1 percent of overall growth. This would suggest that without the law, the economy would have actually slowed by at least one percentage point.
Economists attribute Q1?s sluggish progress to insignificant automotive sales, a decline in average weekly hours worked, slowing retail and foodservice sales, and decreased capital goods shipments. However, with 8 million Americans signed up for Obamacare, previously uninsured Americans are now paying health care premiums. Additionally, other Americans seem to be buying more expansive coverage, resulting in the health care sector’s significant contribution to spending.[…]
The folks at ZeroHedge also raised a good point:
[…] It’s curious how the weather impacted (or rather is used as an excuse to explain) everything but government-mandated healthcare spending in the first quarter.[…]
These people in government are flushing our nation — and its future down the toilet. We get a lot of moaning and gnashing of teeth about how ObamaCare can’t be repealed and spending can’t be cut. If you managed a private company the way these people have managed our national affairs, you’d be fired. Unbelievably, in May and November, we’re going to renew the contract for about 99 percent of them.