If healthcare usage is surging, where are the healthcare jobs?

President Obama: Still measuring the surge in ACA enrollments.

You may have thought the headline number from last week’s report on the U.S. economy was its weak overall growth in the first quarter of this year (0.1% at an annual rate).

But for health economists, the big news was the huge surge in household healthcare spending. That popped at an annual rate of 9.9%, the sharpest growth since 1980.

It makes obvious sense to attribute the surge to the Affordable Care Act, which kicked into full gear in the January-March period measured by the Bureau of Economic Analysis figures. Yet healthcare experts are pondering the figure with suspicion and perplexity.

Among the questions they’re asking is: If healthcare spending is rising so fast, why is healthcare job growth flat? As Austin Frakt of Boston University puts it, the data “suggest that Americans recently poured a lot more of the national economy into health care without moving the needle on the rate of growth in real, human resources (jobs) devoted to delivering care.” How can that be?


There are a few possibilities. One, raised by Peter Orszag, former Obama Administration budget director, is that productivity in the healthcare field has surged to unprecedented levels, allowing more services to be delivered by the same cadre of healthcare professionals. But Orszag raises the possibility only to knock it down as implausible, at least not in that magnitude. Nor does the spending result from higher healthcare prices -- those are still coming down.

The more likely explanations involve the inherent murkiness of preliminary quarterly statistics in general, and the especially murky basis for the BEA’s health spending figure. Quarterly numbers almost always get revised as new statistics come in -- that’s why this first run is always billed as “preliminary.”

As it turns out, the BEA didn’t actually have solid figures for households’ out-of-pocket health spending at all. The agency used a proxy -- Medicaid and individual insurance enrollments under the Affordable Care Act. It’s assuming that the cost of every enrollment is the equivalent of actual spending, which plainly isn’t the case. Those did surge in the first quarter, as ACA enrollments became effective, but they don’t translate precisely into actual spending.

That means the healthcare spending figure is almost certain to be revised downward when the next GDP data for the first quarter are released in June. Timothy McBride of Washington University in St. Louis expects the real annual growth to be more in the 5%-7% range. But even his lower figures suggest that enrollment via the ACA has been “fairly robust,” supporting other statistics that show a dramatic reduction in America’s uninsured population, including these brand-new figures from Gallup.


They may also hint at pent-up demand for services from the previously uninsured, who ran out to get long-delayed treatment as soon as they had coverage; or even a sign of “adverse selection” among new enrollees, meaning that sicker consumers with more serious healthcare needs signed up soonest. But such trends can’t be fully detected until new data come out next month.

All that’s clear in the meantime is that healthcare spending is strong, that it helped prop up economic growth in the first quarter and that the fuel is coming from Obamacare. The only people who could think these are bad trends are those who believe that not everybody should have health coverage.