Health care spending actually shrunk 1.4 percent during the first quarter of the year, the Bureau of Economic Analysis now says, after previously saying it soared 9.1 percent -- a massive revision that will shake up the debate over how President Obama's health care law is affecting medical spending.
To give an idea of the magnitude of the swing, the 9.1 percent growth rate would have been the fastest growth in health spending since 1980, and now the BEA says it actually shrunk more than any quarter since the first quarter of 1982 -- or 32 years.
When the initial data came in, it actually showed an even higher 9.9 percent growth rate.
The downward revision helps explain why BEA now says GDP contracted by 2.9 percent during the quarter, rather than 1 percent, as previously estimated.
Based on the early data, I had argued that it was another bit of evidence that after years of growing at a historically slow pace, health care spending was back on the rise as millions gained access to health insurance through Obamacare, thus undermining Obama's cost containment claims.
The revised data suggest medical spending slowed despite the expansion of coverage.
So what explains the revision? The short and easy answer is that BEA gained access to more data.
But here's the more detailed explanation from BEA:
The revision to health care services reflected the incorporation of newly available Census Bureau quarterly services survey (QSS) data for the first quarter. The QSS data reflect the revenues of for-profit and nonprofit hospitals, physician offices, nursing homes, and other health care providers and the expenses of nonprofit hospitals and other nonprofit health care providers. Prior to receiving the Census QSS data, BEA used information on Medicaid benefits and on Affordable Care Act insurance exchange enrollments to prepare the previously published estimates of health services.
Though I did caution that earlier data was subject to revision, I never would have guessed there would have been this wild of a swing.