Dive Brief:

• NPR's Jay Hancock points out an intriguing and seemingly paradoxical trend in healthcare spending: while many hospital systems are seeing their bottom lines swell thanks to the Affordable Care Act's insurance expansion, overall medical inflation has remained quite modest. 
• Medical inflation has been at its lowest rate in a half century, ranging anywhere from 2.8% to 4% in recent years. The most complete data from 2012 indicated about 3.7% inflation that year.
• It is unclear if either the overall health spending slowdown, or the higher utilization rates by newly insured consumers, will persist into the future.

Dive Insight:

As Healthcare Dive has previously reported, a number of hospital chains including LifePoint Hospitals and Universal Health Services (UHS) have recently posted significant Q2 revenue gains that the providers partially attribute to the Affordable Care Act's Medicaid expansion. LifePoint saw a significant reduction in overall self-pay patients as well as emergency room self-pay patients—a higher share of revenue from contracted private insurers. Other provider and insurer chains including HCA Holdings,Tenet Healthcare and WellPoint reported similar trends.

It's possible that many of the newly-insured are rushing to receive medical services that they previously could not afford out-of-pocket, thus inflating utilization rates and provider revenues in the short-term. Alternatively, the healthcare sector may be headed for a systemic shift wherein an influx of newly insured customers will continue to bolster hospital revenues, insurer spending and overall healthcare spending—a more likely scenario considering that tens of millions of more people are expected to gain ACA or Medicaid expansion coverage over the next five years, and Americans are more likely to use more health services as the economy keeps picking up steam.

That's not necessarily all bad news considering that the spending is largely subsidized through various Obamacare fees, taxes and cuts to other federal healthcare programs. Furthermore, it is possible that higher utilization rates today may foretell future savings if patients wind up more effectively managing their medical conditions. But data clearly demonstrating that sort of trend will take years, if not decades, to present itself.