With millions of Americans gaining coverage through President Obama's health care law, health care spending spiked by a staggering 9.9 percent in the first quarter of 2014 -- the fastest rate since 1980 - according to data released Wednesday by the Bureau of Economic Analysis.
Obamacare was pitched as a plan to reduce health care spending, and formally titled the "Patient Protection and Affordable Care Act." In 2009, Obama called the status quo - in which health care spending was accelerating toward becoming one-fifth of the economy - "unsustainable."
For several years, Obama and his allies had been crediting a slowdown in the rate of growth for health care to payment reforms imposed by the law. But other analysts predicted that spending would pick up as the economy improved and people started loosening the family purse strings.
As I reported earlier this month, there were already signs of growing health care spending in the fourth quarter of 2013, when it jumped 5.6 percent, which had been the fastest clip since 2004.
But the 9.9 percent jump (on an annualized basis) came in the quarter from January through March, which was the first three months in which individuals who gaining coverage through the law were able to use it. That was the fastest rate recorded since health care spending grew at a 10 percent rate in the third quarter of 1980.
The data released on Wednesday, as part of the government’s report on gross domestic product, is preliminary and subject to revision in the coming months.
UPDATE: Were it not for the rise in health care spending, the economy would have contracted by 1 percent in the quarter, instead of growing at a meager 0.1 percent, according to Ian Shepherdson, the chief economist at Pantheon Macroeconomics, as quoted by Business Insider. The article also quotes a BEA spokesperson as saying the spike in spending, "reflects additional spending associated with the implementation of the Affordable Care Act."