The Wall Street Journal: Health-care rebounds as Obamacare provides a boost

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The sprawling U.S. health-care industry saw revenue rebound last quarter, a sign that stronger spending at hospitals and medical offices could help boost U.S. economic growth to its highest level in eight years.

Total revenue at health-care and social-assistance firms rose 3% in the second quarter from the first three months of the year, the Commerce Department said Thursday in its Quarterly Services Survey. Hospital revenue rose 2.8% from the first quarter and revenue at physician offices jumped 4.1%.

Thursdays report showed modest acceleration in health spending in the second quarter, driven likely by both more people insured under the Affordable Care Act and the recovering economy putting some upward pressure on health-care costs, said Larry Levitt, a senior vice president at the Kaiser Family Foundation.

Economists have predicted the rollout of the Affordable Care Act this year will lead to higher health-care spending as millions of Americans obtain insurance coverage and begin using it. The Centers for Medicare and Medicaid Services last week projected health-care spending would grow 5.6% this year, up from an estimated 3.6% in 2013.

But that spending surge didnt materialize in the first quarter, when revenue at health-care and social-assistance firms fell 2% from the fourth quarter. U.S. spending on health-care services, adjusted for inflation, fell at a 1.4% pace and dragged down overall economic growth, the Commerce Department estimated.

Consumer spending generates more than two-thirds of U.S. economic output, and stronger spending on health care and other services should bolster overall growth. The Commerce Department last month said gross domestic product expanded at a 4.2% seasonally adjusted annual rate in the second quarter, rebounding from an unexpected first-quarter contraction.

An expanded version of this report appears at WSJ.com.

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The Wall Street Journal: Health-care rebounds as Obamacare provides a boost

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