ECONOMIC REPORT OF THE PRESIDENT

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distribution, holding fixed both spending and coverage patterns.26 Consistent with the steady increase in the average age of the full population depicted in Figure 4-37, demographic changes have consistently added to aggregate health care spending growth in recent years. Over the decade preceding the ACA, these demographic factors added an average of 0.5 percentage point per year to growth of per capita health care spending in the full population. Those effects have been slightly larger in the years following passage of the ACA, averaging around 0.6 percentage point per year from 2010 through 2016. Thus, at the level of the population as a whole, demographic changes cannot explain why growth has slowed. On the other hand, demographic changes can explain a small portion of the slowdown in the growth of per enrollee spending in private insurance and Medicare. As illustrated in Figure 4-37, the aging of the baby boomers drove a steady increase in the average age of the under 65 population during the decade that preceded the ACA, which essentially stopped when the first cohort of baby boomers reached age 65 in 2012. At that time, demographic factors abruptly began placing less upward pressure on per enrollee spending growth in private insurance, as illustrated in Figure 4-38. Whereas demographic changes added an average of 0.6 percentage point per year to private spending growth from 2000 through 2010, they have added an average of just 0.2 percentage point per year since 2010. Thus, demographics can explain a non-zero, but small portion of the decline in private health insurance spending growth. Demographic changes have had a related effect in Medicare. As the early cohorts of baby boomers have turned 65, the average age among 26 The first step in producing these estimates was to allocate the population across private coverage, public coverage, and uninsurance in each year, holding the age-specific propensity to be enrolled in each type of coverage fixed, but allowing population demographics to change over time. Age-specific enrollment propensities for private insurance, public coverage, and uninsurance were set at the 2000-2015 average for each age, as estimated using the National Health Interview Survey for those years. Data on the population by age and sex in each year were obtained from various Census Bureau population estimates and projections. The second step was to obtain data on spending by age and coverage type. Yamamoto (2013) reports data on relative spending by single year of age for commercial coverage and traditional Medicare coverage. Because Yamamoto (2013) reports relative spending by age within commercial and traditional Medicare coverage, additional information is required to put the commercial and traditional Medicare spending curves on the same absolute scale. To do so, CEA relied upon an estimate from Wallace and Song (2016) that spending falls by 34 percent, on average, for individuals converting from commercial coverage to traditional Medicare at age 65. The commercial age curve was used for all individuals with private coverage, while the traditional Medicare age curve was used for all Medicare enrollees. For individuals under age 65 with public coverage, spending was assumed to reflect the commercial age curve scaled down by 20 percent. For individuals under age 65 who were uninsured, spending was assumed to reflect the commercial age curve scaled down by 50 percent. The results are not particularly sensitive to the approach used for these groups. Reforming the Health Care System | 275
Average Age 40 Figure 4-37 Average Age in Population, 2000–2016 Average Age 80 38 Total Population (Left Axis) 2016 78 36 65+ Population (Right Axis) 76 34 74 32 Under 65 Population (Left Axis) 72 30 70 2000 2002 2004 2006 2008 2010 2012 2014 2016 Note: Age was top-coded at 100 years in the data used to calculate these averages. Source: Census Bureau; CEA calculations. Effect on Percent Annual Growth 1.0 Private Insurance Spending 0.8 Per Enrollee 0.6 Figure 4-38 Effects of Changes in the Age Distribution on Health Care Spending Growth, by Payer, 2001–2016 Full Population Per Capita Spending 2016 0.4 0.2 0.0 -0.2 -0.4 Medicare Spending Per Beneficiary -0.6 -0.8 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: Census Bureau; Yamamoto (2013); Wallace and Song (2016); National Health Interview Survey; CEA calculations. 276 | Chapter 4
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ECONOMIC REPORT OF THE PRESIDENT To
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C O N T E N T S ECONOMIC REPORT OF
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economic report of the president To
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eforms in history. Banks have sharp
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the annual report of the council of
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C O N T E N T S CHAPTER 1: EIGHT YE
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. THE ECONOMIC RATIONALE FOR FEDERA
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2.4. Government Purchases as Share
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4.iii. Premium for the Benchmark Pl
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6.18. Systemic Risk (SRISK) 2005-20
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C H A P T E R 1 EIGHT YEARS OF RECO
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Figure 1-1 Actual and Consensus For
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Figure 1-3 Real Hourly Wage Growth
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Figure 1-4 Real GDP per Capita: Eur
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Figure 1-6 Household Net Worth in t
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Figure 1-8 Global Trade Flows in th
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Subsequent revisions to fourth-quar
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Percent 6 Figure 1-9 Fiscal Expansi
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substantial costs to the Federal Go
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worked to promote innovation and in
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expansion, a period of low producti
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The 2017 Economic Report of the Pre
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Chapter 4: Reforming the Health Car
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to the ACA and other factors. The A
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than 98 percent of Americans should
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Figure 1-13 Borrowers in Income Dri
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success of the financial rescue and
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einforced U.S. leadership in the ru
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Partnership (OGP), a global partner
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Figure 1-16 Labor Productivity Grow
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Labor Force Participation Household
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number of steps to ensure that econ
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C H A P T E R 2 THE YEAR IN REVIEW
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Percent 11 Figure 2-1 Unemployment
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allowing for additional investments
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Percentage Point 0.6 0.4 Figure 2-3
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public, largely highway constructio
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The size of the Federal Reserve’s
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Figure 2-5 Private-Sector Payroll E
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fell 80 percent from September 2014
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Figure 2-8 Rates of Part-Time Work,
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Figure 2-v Prime-Age Male Labor For
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Output Real GDP grew 1.6 percent ov
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Figure 2-11 Compensation and Consum
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Table 2-i Optimal Weighting for Hou
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esults suggest that, to a first app
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Figure 2-viii Real GDP, Average and
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Figure 2-13 Consumer Sentiment and
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Figure 2-xi Household Debt Service,
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Ratio to Annual DPI 1.10 1.05 Figur
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Figure 2-17 National House Price In
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Index 220 Figure 2-19 Housing Affor
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Figure 2-21 Composition of Growth i
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Figure 2-23 Capital Services per Un
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Box 2-7: Explanations for the Recen
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Figure 2-xv Business Fixed Investme
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Figure 2-26 Foreign Real GDP and U.
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somewhat generalizable (Box 2-8), b
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prices weakened and the global econ
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inadequate demand has contributed t
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Figure 2-31 Nominal Wage Inflation
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Figure 2-33 Real Hourly Wage Growth
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Index 6 Figure 2-36 Financial Condi
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Percent 4.0 Figure 2-38 Nominal Lon
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Dollars per Barrel 80 Figure 2-40 B
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Figure 2-41 IMF World Real GDP Grow
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against the Mexican peso, the Chine
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United Kingdom It has been a turbul
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for example, Japan has grown almost
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Figure 2-45 Credit to Nonfinancial
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Meanwhile, core inflation (excludin
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kept rates low across a wide range
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Investments in surface transportati
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Table 2-2 Supply-Side Components of
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Conclusion The economy continued to
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not increased from 1973 to 2013, in
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developments; individual behavior;
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action affecting income inequality
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have occurred. In doing so, these p
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Percent 24 21 18 15 12 9 6 African
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without the policy response.5 These
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Box 3-2: Income Inequality and the
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unable to obtain insurance at any p
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Figure 3-7B Percent 50 Uninsured Ra
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and have not expanded Medicaid foun
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Box 3-3: Safety Net Policies as Ins
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Millions of People 18 Figure 3-8 Im
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Figure 3-9 Effective Tax Rates for
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Box 3-4: Additional Actions to Make
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$294 million in newly appropriated
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15 10 5 0 -5 -10 -15 Figure 3-12 Pe
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Administration with those of previo
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as a share of potential GDP by Pres
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Figure 3-17 Changes in the Distribu
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30 25 20 15 10 5 0 Single Source: C
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ate on capital gains and dividends
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C H A P T E R 4 REFORMING THE HEALT
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eneficiaries have received cumulati
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form of lower premium costs and ind
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Percent 25 20 Creation of Medicare
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Figure 4-3 Health Insurance Coverag
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90 80 70 60 50 40 30 20 10 0 25 55
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Percent Uninsured 25 CHIP Created 2
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Legislative actions subsequent to C
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Percent Uninsured 40 35 Figure 4-7
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ecause of the ACA’s provision all
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Box 4-2: Dynamics in the Individual
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projected during the debate over th
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whelming majority of Marketplace en
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Figure 4-v Change in Benchmark Prem
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20 Figure 4-10 Share of Workers in
Page 230 and 231: percent during the decade preceding
Page 232 and 233: Panel A: Share with a Personal Doct
Page 234 and 235: Box 4-3: Interpreting Results from
Page 236 and 237: Fortunately, the OHIE is not the on
Page 238 and 239: Figure 4-14 Uncompensated Care as a
Page 240 and 241: Figure 4-15 Uninsured Rate by Popul
Page 242 and 243: Figure 4-17 Monthly Gain in Private
Page 244 and 245: Change in Working-Age Employment to
Page 246 and 247: this cross-sectional relationship b
Page 248 and 249: ecent discussions of macroeconomic
Page 250 and 251: Figure 4-23 Life Expectancy at Birt
Page 252 and 253: Figure 4-24 Mortality Rate vs. Medi
Page 254 and 255: more to cover Medicare patients tha
Page 256 and 257: example, through CMMI, the Administ
Page 258 and 259: orient payment around the entirety
Page 260 and 261: Percent of Payments 60 Figure 4-26
Page 262 and 263: covered under ACO contracts at the
Page 264 and 265: Additional Steps to Reform the Heal
Page 266 and 267: legislation that overrides the reco
Page 268 and 269: Figure 4-28 Health Care Price Infla
Page 270 and 271: Figure 4-30 Trends in Real Prices f
Page 272 and 273: average growth rate of real per enr
Page 274 and 275: Figure 4-34 Growth in Real Costs fo
Page 276 and 277: made a large, readily quantifiable
Page 278 and 279: in states experiencing weaker and s
Page 282 and 283: individuals among individuals 65 an
Page 284 and 285: Figure 4-40 Average Real Deductible
Page 286 and 287: Figure 4-41 Real Per-Enrollee Presc
Page 288 and 289: educe the growth rate of Medicare s
Page 290 and 291: improvements will strengthen ACOs
Page 292 and 293: -5 0 -2 Figure 4-42 Cumulative Perc
Page 294 and 295: Woolhandler 2015). These analysts a
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Page 298 and 299: Figure 4-46 Premiums and Cost Shari
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Page 304 and 305: C H A P T E R 5 INVESTING IN HIGHER
Page 306 and 307: Gainful Employment regulations. To
Page 308 and 309: Thousands of 2015 Dollars 900 800 7
Page 310 and 311: externalities, credit constraints,
Page 312 and 313: Figure 5-4 Earnings by Age and Educ
Page 314 and 315: Figure 5-5 Variation in Earnings by
Page 316 and 317: Box 5-1: Anti-Poverty Efforts and E
Page 318 and 319: careers. Some of the effects of the
Page 320 and 321: eligibility cutoff likewise finds s
Page 322 and 323: Box 5-2: Federal Investments in K-1
Page 324 and 325: Evaluations of early local Promise
Page 326 and 327: America’s College Promise Playboo
Page 328 and 329: Dollars 45,000 40,000 35,000 30,000
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pre-payment penalty. Second, by tyi
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equirements, pushed efforts associa
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Figure 5-16 Size of Outstanding Loa
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Figure 5-17 Average Monthly Payment
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Figure 5-18 Distribution of Key Out
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Figure 5-20 Earnings by Family Inco
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to student needs and improve test s
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Box 5-5: Making Sure Students Enter
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prior, the early FAFSA reform helps
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Figure 5-ii Number of Institutions
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Figure 5-23 Gainful Employment Earn
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Additionally, Pell Grants can be be
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C H A P T E R 6 STRENGTHENING THE F
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with no easy way to get the funds f
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public has limited information, run
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value added of the sector has gradu
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managers. Thus, after fees, savers
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Too Many Resources in Finance? Beyo
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of the firm after the purchase affe
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Percent 100 Figure 6-2 Mortgage Ori
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Figure 6-4 Case-Shiller Home Price
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Figure 6-7 Global OTC Derivative Ma
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consumer and investor protections.
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Figure 6-iv Top 5 Banks as Share of
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cult to replace with services from
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Are U.S. Banks Too Big? The questio
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The three federal banking agencies
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Risk Taking The Dodd-Frank Act took
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Box 6-3: The Performance of Communi
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Figure 6-ix Return on Assets of Ban
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egulators can take a more holistic
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Figure 6-13 Repo and Reverse Repo,
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Figure 6-15 Private Funds Reporting
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Days 60 Figure 6-16 Weighted-Averag
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Figure 6-18 Systemic Risk (SRISK),
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In the absence of another financial
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lower funding costs in 2007-09, “
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through the Dodd-Frank Act and othe
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Prior to the financial crisis, one
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asis.24 One of the advantages of ce
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findings from the NRSRO examination
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Prior to the crisis, enforcement of
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Box 6-5: Addressing the Problem of
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Table 6-i Sources of Investment Adv
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financial system and the systems of
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Box 6-6: The JOBS Act While it was
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Figure 6-23 S&P 500, 2003-2016 Inde
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Figure 6-27 Mortgage Delinquency an
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It created the FSOC to consider ris
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energy efficient and lower greenhou
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of domestic actions to reduce green
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people and vegetation (U.S. Global
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investment are much higher than the
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Delaying Action on Climate Change I
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uses and land management activities
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Carbon Pollution Standards for Powe
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a projected range of $16 billion to
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these resulted in insignificant cha
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Figure 7-4 Corporate Average Fuel E
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diesel fuel and jet fuel. The Vehic
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Box 7-3: Building Resilience to Cur
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sources in the oil and gas sector,
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emissions and total greenhouse gas
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Figure 7-7 Energy Intensity of Real
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Figure 7-10 U.S. Petroleum Consumpt
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Figure 7-12 Energy Intensity Transp
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Figure 7-14c Energy Intensity Comme
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Figure 7-16 U.S. Energy Consumption
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2008 to 7 percent in 2015. Figure 7
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Index, 2008 =0 0.1 0.0 -0.1 Figure
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Figure 7-23 Decomposition of Emissi
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three determinants of emissions? If
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Percent 100 80 Figure 7-26 Sectoral
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characteristics, and management tre
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oil and gas sector) were subsequent
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while creating new jobs and raising
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such as using similar methodologies
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Box 7-4: Supporting Increased Penet
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sector, the fee would incentivize p
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to be used to decompose emissions i
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Reinvestment Act.” NBER Working P
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D’Amico, Stefania, et al. 2012.
Page 495 and 496:
______. 2016. “Chapter 3: Develop
Page 497 and 498:
Chetty, Raj, et al. 2014. “Where
Page 499 and 500:
NBER Working Paper 22170. Cambridge
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American Hospital Association and H
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Cantor, Joel C., et al. 2012. “Ea
Page 505 and 506:
______. 2012a. “Direct Spending a
Page 507 and 508:
Dranove, David, Craig Garthwaite, a
Page 509 and 510:
Wars: Global Solutions for Developi
Page 511 and 512:
Huang, Jidong, and Frank J. Chaloup
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McWilliams, J. Michael. 2016. “Ch
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Pinkovskiy, Maxim. 2014. “The Imp
Page 517 and 518:
______. 2016. “Certification of M
Page 519 and 520:
Arcidiacono, Peter, V. Joseph Hotz,
Page 521 and 522:
Bulman, George, and Caroline Hoxby.
Page 523 and 524:
______. 2015a. “Economic Costs of
Page 525 and 526:
Dobbie, Will, and Roland G. Fryer J
Page 527 and 528:
Committee on Health, Education, Lab
Page 529 and 530:
Jepsen, Christopher, Kenneth Troske
Page 531 and 532:
Marcotte, Dave E., et al. 2005. “
Page 533 and 534:
Reynolds, Arthur J., et al. 2011.
Page 535 and 536:
Chapter 6 Acharya, Viral. V., Deniz
Page 537 and 538:
Fama, Eugene F., and Kenneth R. Fre
Page 539 and 540:
Wheelock, David C., and Paul W. Wil
Page 541 and 542:
______. 2016a. “The Economics of
Page 543 and 544:
______. 2016c. Short Term Energy Ou
Page 545 and 546:
Interagency Working Group on the So
Page 547 and 548:
Office of Management and Budget (OM
Page 550:
A P P E N D I X A REPORT TO THE PRE
Page 553 and 554:
Council Members and Their Dates of
Page 556 and 557:
Report to the President on the Acti
Page 558 and 559:
consulting with a wide variety of o
Page 560 and 561:
In October, the Council released a
Page 562 and 563:
Research Economists David Boddy . .
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A P P E N D I X B STATISTICAL TABLE
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GOVERNMENT FINANCE, INTEREST RATES,
Page 569 and 570:
Year or quarter Table B-1. Percent
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Table B-2. Gross domestic product,
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Table B-3. Quantity and price index
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Table B-5. Real exports and imports
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Year Total Table B-7. Real farm inc
Page 579 and 580:
Table B-9. Median money income (in
Page 581 and 582:
Labor Market Indicators Table B-11.
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Year or month Table B-12. Civilian
Page 585 and 586:
Table B-14. Employees on nonagricul
Page 587 and 588:
Year or month Table B-15. Hours and
Page 589 and 590:
Government Finance, Interest Rates,
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Table B-19. Federal receipts and ou
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Table B-21. Federal and State and l
Page 595 and 596:
Table B-23. U.S. Treasury securitie
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Year and month Bills (at auction) 1
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Year and month Table B-26. Money st
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