Obamacare crashes the economy

The dance between the Affordable Care Act and the nation’s economic output is a delicate one: We spend more per capita on health care than any developed nation and want that number to go down. But health care spending is a major part of the U.S. economy, and when it goes down so does our Gross Domestic Product.

Economists have known this was an issue since the passage of the ACA, but the general assumption was that any slowdown in health spending would be offset in the near term by the addition of millions of people receiving health insurance for the first time. Even if per capita spending falls, the thinking was, the total consumption of health care would rise, particularly in the first year of implementation, as newly insured people took advantage of the coverage to get treatment they had been putting off.

Those projections had led the Bureau of Economic Analysis to estimate in April that growing health care spending had boosted GDP growth in the first quarter of the year by 1.1 percentage points, which at the time looked to be the difference between an economy that was growing slowly and one that shrank over the first months of the year.

As it turns out, those early estimates were…off. GDP growth for the first quarter, which had already been revised from an initial reading of anemic 0.1 percent growth to a contraction of 1 percent, was revised again Wednesday, to a much more dramatic contraction of 2.9 percent — the worst quarter since 2009, and a number that Michael Feroli, chief U.S. economist with J.P. Morgan called “shocking.”

And?

Most analysts seemed cautiously optimistic that second quarter numbers would show a healthy rebound.

The same people who said:

Obamacare Boosted Health Care Spending — and GDP