Healthcare spending weakness spills over into Q2

Following the reported decline in first-quarter hospital revenues in the Quarterly Services Survey, we had anticipated that last week's GDP revision would show the economy contracted much more severely than previously believed. But that doesn't mean the new estimate showing that healthcare consumption actually contracted in the first quarter makes any sense. Not when employment in healthcare increased, the income figures show a surge in Medicaid payments to households and the ACA expansion resulted in a large drop in the number of uninsured.