Medicaid Expansion Caused Most of the Economic “Growth” in January and February
We’ve already noted that health spending last quarter climbed at the highest rate in ten years, according to the Bureau of Economic Analysis’ latest quarterly GDP report.
Ben Casselman of FiveThirtyEight puts that spending spurt in another context. Examining the BEA’s February income report, he concludes that Medicaid expansion explains most of the growth:
The government’s definition of income includes not just salaries and other cash payments but also non-cash benefits such as employer-paid health insurance premiums and government programs such as Medicare and Medicaid. The health law has a particularly big impact on that last category because it made millions more people eligible for Medicaid. As a result, Medicaid payments increased $11.4 billion in February, representing 24 percent of the total increase in income. In January, Medicaid benefits represented an even bigger 47 percent of the increase in income.
In other words, the Bureau of Economic Analysis does not take into account whether people earned their income, or whether it was a welfare payment.
That is why we should introduce net income. The government apparently wants to use health expenditure to polish the economic data.
This post is making very clear something that is widely known in this day and age, government statistics are not useful the majority of the time. Because the government is one of the best sources for information, when they report misleading information, there will be misleading reports about the effects of these results. I think that this post puts into perspective the reality and gives us more information about the impacts of Obamacare.
And the future of the country. Welfare state anyone?
This paints a drearier outlook to our economy. If growth was led primarily by the expenses on healthcare, it suggests that this is not going to be a sustainable growth. We still have a weak economy and we are far from full recovery.
I would say that the problem is not so much spending on health care, but spending by people who received their income by government transfer, instead of earning it.
In health care, of course, those two are easily muddled.
Correct. Wealth is not being created, it is just transferred. The government gifts money to certain people to spend it on healthcare, which they do. When the healthcare industry receives the money, they have to pay it back to the government in taxes. Basically we are trapped in a loop, reason why the growth has been so insignificant.
People will get rich off of government transfers rather than working to make more actual income.
The government is trying to formulate people’s behavior by implementing some mandatory social programs like ACA.
Numbers are that “high” because the government is inflating them. That is disappointing; it signals that we are heading into a much bigger government that will have more influence in the overall economic environment. How can this country keep its status of most important economy, when the government runs an unpayable deficit and has become a determinant force in the economic growth?
Because it’s America.
If government transfers are indicated as income, then everyone in Medicaid expansion states just got much better off.
So economic growth is now spending tons of money for states’ Medicaid expansion while the federal government foots the bill and increases our national deficit? I had economic growth wrong all along.
Its okay. It’s too big to fail.
And yet, they won’t use government transfers as income when declaring inequality our nation’s greatest crisis…