ECONOMIC REPORT OF THE PRESIDENT

individuals among individuals 65 and older has declined, placing significant
downward pressure on growth in Medicare spending per beneficiary. As
reported in Figure 4-38, after having had little net effect on per beneficiary
Medicare spending growth over the decade preceding the ACA, demographic
changes have subtracted around 0.3 percentage point per year during
the post-ACA period. As with the effects reported above, this effect is
not trivial but still relatively small in relation to the overall slowdown in the
growth of Medicare spending.
Changes in Enrollee Cost Sharing
Changes in cost sharing obligations, such as coinsurance, copayments,
and deductibles, are another possible explanation for the slower growth
in health care spending since the ACA became law. It is well-established
that higher cost sharing causes individuals to use less care (for example,
Newhouse et al. 1993), so if cost sharing obligations had grown more rapidly
during the post-ACA period than during the pre-ACA period, this could
account for slower growth in health spending after the ACA’s passage. In
fact, there is no evidence that this has occurred.
Focusing first on individuals who get coverage through an employer,
Figure 4-39 plots out-of-pocket spending as a share of total spending in
employer coverage over time derived from three different data sets: the
Household Component of the Medical Expenditure Panel Survey (MEPS)
and two different databases of health insurance claims.27 The MEPS estimates
suggest that the out-of-pocket share has been declining steadily since
at least 2000 with, if anything, a faster pace of decline after 2010 than before
2010. The estimates from the two claims databases suggest that the outof-pocket
share has been relatively flat, with small increases in the out-ofpocket
share in the years before 2010 and little net change after 2010. Thus,
there is no evidence that cost sharing obligations have grown more quickly
after 2010 and, therefore, no evidence that faster growth in cost sharing can
explain slower growth in health care spending. If anything, these data suggest
that cost sharing trends may have worked slightly against the slowdown
in health care spending growth observed in recent years.28
27 Each of these data series has strengths and weaknesses. The MEPS is nationally
representative, whereas the claims databases are not. On the other hand, the claims databases
offer larger sample sizes. They also offer more accurate information on each individual
transaction since they contain the actual transaction records.
28 This conclusion is even stronger if consumers’ decisions on whether to access care depend
on the dollar amounts they pay when they access care rather than the share of total spending
they pay. The absolute dollar amount of cost sharing has grown more slowly in the post-ACA
period than the pre-ACA period due to the combination of sharply lower overall spending
growth and the relatively steady trend in the out-of-pocket share.
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