Health Spending Sprung in Spring, But Not As Much as Expected

Health revenues increased steadily in the second quarter of 2014, yet the rise did not meet expectations of increased expenditures after the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The numbers indicating a steady rise in services provided and payments collected by providers were based on data gathered as part of the U.S. Census Bureau’s latest Quarterly Service Report for the second quarter of 2014.

Census Report

The U.S. Census Bureau report contained quarterly estimates for selected service industries for the second quarter of 2014. Included in the selected industries was data for health care and social assistance. Specifically, the report concluded that, “the estimate for U.S. health care and social assistance revenue for the second quarter of 2014, not adjusted for seasonal variation, or price changes, was $565.6 billion, an increase of 3.0 percent…from the first quarter of 2014 and up 3.7 percent…from the second quarter of 2013.” Notably, it was recorded that while some sectors of the health industry saw significant growth, such as the increase of hospital revenue by 4.9 percent, other areas barely experienced any growth at all. For instance, the revenue increase in physician’s offices from the second quarter of 2014 compared to the second quarter of 2013 was just 0.6 percent.

Previous Projections

While the increases in revenue recorded by the Census Bureau were thought to describe an overall positive change in the health care spending arena, according to some projections the data was disappointing. A Kaiser Family Foundation article noted that increases were lower than what CMS and at least one non-profit health care spending organization expected. Indeed, earlier this month on September 3, 2014, CMS announced that it expected health care spending growth to “accelerate” and for 2014, it was estimated that the growth percentage rate would be 5.6 percent as 9 million more Americans will likely gain insurance through the expansion of Medicaid and by coverage through enrollment in the Health Insurance Marketplace.