Consumer spending is rising with consumer income, and both trends are traceable to the ACA. The WSJ reports on the latest government report on rising consumer spending:
The increase was driven by a 0.9% surge in spending on services—the largest since October 2001—due to greater consumption of health care and utilities […]The report showed Americans’ incomes climbed 0.3% in January. About three-quarters of that gain was due to new provisions of the Affordable Care Act, including expanded Medicaid benefits and health insurance subsidies that count as income in the official tally. In turn, newly insured Americans likely scheduled doctors’ appointments they may have postponed before, some analysts said.“Consumer spending is going to be including more health-care spending than in the past,” said RBS Securities economist Guy Berger.
This is consistent with all the evidence we have gotten so far from studies on health care utilization, especially from the two studies on Oregon’s Medicaid program. Those studies found, in brief, that Medicaid users consume more health care relative to the uninsured. They do not, however, show better health outcomes from that added consumption. Obamacare effectively functions as an income supplement program providing lower-earning families with more financial security as they consume more care.This aspect of the law contributes to its unpopularity. The ACA was originally sold as a way of doing everything from lowering national health care costs to reducing ER usage, but it doesn’t do any of that. Its overall positive effects are much more modest than promised, and it seems like an awfully convoluted way to put a bit of extra money into Americans’ pockets.This spending report also explains why Americans don’t want to return to the pre-Obamacare situation. The public is unlikely to get behind any measures that would take away extra income in a time when many households are feeling financially squeezed.