ECONOMIC REPORT OF THE PRESIDENT

The six years since the ACA became law have seen very encouraging
trends in both health care costs and health care quality. Prices of health care
goods and services have grown at a slower rate under the ACA than during
any period of the same length since these data began in 1959. Recent years
have also seen exceptionally slow growth in per enrollee spending in both
public programs and private insurance. In parallel, there have been promising
indications that quality of care is improving. The rate at which patients
are harmed while seeking hospital care has fallen by 21 percent since 2010,
which is estimated to have led to approximately 125,000 avoided deaths
cumulatively through 2015. Medicare beneficiaries’ risk of returning to the
hospital soon after discharge has also declined substantially, corresponding
to an estimated 565,000 avoided readmissions from April 2010 through May
2015.
A considerable body of research has aimed to understand the causes of
these encouraging trends. The Great Recession does not appear to have been
an important driver of the slow growth in health care costs in recent years.
The recession had little effect on Medicare spending, and, while the Great
Recession did dampen private sector spending growth in the years during
and immediately after the downturn, its ability to explain slow growth over
the last few years is limited. Similarly, neither demographic changes nor
changes in cost sharing appear to explain much of the slow growth in health
care costs under the ACA.
It therefore appears that recent years’ favorable trends in health care
costs and quality primarily reflect structural changes in the health care
delivery system. While multiple factors are likely playing a role, payment
reforms introduced in the ACA have made substantial, quantifiable contributions
to slowing the growth of health care costs in both Medicare and
private insurance. Congressional Budget Office (CBO) estimates imply that
the ACA has reduced the growth rate of per beneficiary Medicare spending
by 1.3 percentage points a year from 2010 through 2016. “Spillover” effects
of the ACA’s Medicare reforms on the prices that private insurers pay for
care have likely subtracted between 0.6 and 0.9 percentage point a year from
the growth rate of per enrollee private insurance spending over the same
period. Moreover, there is reason to believe that the ACA has had systemic
effects on trends in health care costs and quality that go beyond what can be
directly quantified.
Recent positive developments in the health care delivery system
are generating major benefits to families and the economy. The average
premium for people who hold employer-based family coverage was nearly
$3,600 lower in 2016 than if premium growth since the ACA became law had
matched the preceding decade, savings families will receive directly in the
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