ECONOMIC REPORT OF THE PRESIDENT

eneficiaries have received cumulative savings on prescription drugs averaging
more than $2,100 a person as of the middle of 2016.
Turning next to the health care delivery system, the United States
devoted roughly a sixth of its gross domestic product (GDP) to health care
when President Obama took office, a far larger share than peer nations. Yet
health outcomes in the United States were, at best, no better. At the same
time, health care spending and health outcomes varied widely across regions
of the United States, with no evidence that higher-spending areas achieved
better outcomes. This and other evidence showed that there were major
opportunities to reform the health care delivery system in ways that could
reduce the burden that health care spending placed on the U.S. economy,
while improving health outcomes.
The ACA and related legislation have implemented comprehensive
reforms to make the health care delivery system more efficient and improve
the quality of care. The ACA achieved significant near-term savings by better
aligning payments to medical providers and private insurers in Medicare
with the costs of providing services. The law also set in motion a long-term
effort to develop and deploy alternative payment models (APMs) that
reward providers who deliver efficient, high-quality care, unlike existing feefor-service
payment systems, which base payment chiefly on the quantity of
services delivered. Using the tools provided by the ACA, the Administration
has made considerable progress in deploying APMs, including accountable
care, bundled payment, and medical home models. As of early 2016, more
than 30 percent of traditional Medicare payments were estimated to be
associated with APMs, up from virtually none in 2010. The tools provided by
the ACA, which were enhanced by the bipartisan physician payment reform
legislation enacted in 2015, will drive further progress in the years ahead.
Changes in Medicare’s payment systems appear to be catalyzing
similar changes by private payers. Indeed, at the beginning of 2016, 17
million—or roughly one in ten—private insurance enrollees are estimated
to have been covered under payment arrangements similar to the accountable
care contracts being deployed in Medicare, up from virtually none as
recently as 2011. Similarly, one large survey found that around a quarter of
provider payments made by private insurers were associated with APMs in
2015. The Administration has also taken several steps to accelerate the diffusion
of APMs in the private sector by directly engaging private payers in
payment reform efforts in Medicare and Medicaid, facilitating information
sharing across payers, and fostering the development of common standards.
The ACA’s excise tax on high-cost employer-sponsored coverage, scheduled
to take effect in 2020, will provide an additional impetus for private sector
plans to engage in payment reform efforts over the coming years.
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