ECONOMIC REPORT OF THE PRESIDENT

suggests that changes in the health care delivery system have played the
predominant role in recent years’ slow health care spending growth. The
next section discusses the important role that the ACA’s changes in medical
provider payment have played in slowing health care spending growth, but
the fact that health care spending had started slowing prior to the ACA’s
passage, as documented in Figure 4-31, suggests that the ACA is not the
only reason that health care spending growth has been slower during the
post-ACA period than in the past. A pair of such factors is discussed below.
The slower growth under the ACA relative to the preceding decade
may, in part, reflect the removal of factors that put upward pressure on
spending growth during years preceding the ACA, particularly during the
early 2000s. The late 1990s and early 2000s saw a number of states pass
laws that restricted the ability of private insurers to use a range of so-called
“managed care” strategies, strategies that appear to have contributed to
slower health care spending growth during the 1990s (Cutler, McClellan,
and Newhouse 2000; Glied 2000). Recent economic research examining
these state laws has concluded that they put substantial, but temporary
upward pressure on health care spending in the years after they took effect
(Pinkovskiy 2014). This may partially explain why health care spending
growth under the ACA has been so much slower than the first half of the
2000s, though it cannot explain why spending growth has been slower under
the ACA than during the second half of the 2000s.
Another possible explanation for why health care spending has grown
more slowly in recent years is that the pace at which new medical technologies
are being introduced has slowed. As noted earlier in this section,
economists generally believe that the development of resource-intensive
new medical technologies has been the main driver of the rapid growth in
health care spending over the long term (Newhouse 1992; Cutler 2004). If
these types of technologies are arriving at a slower pace than in the past, then
that could explain why health care spending has grown at a slower pace.
The trajectory of medical technology likely can account for much of
the recent swings in prescription drug spending growth. As illustrated in
Figure 4-41, per enrollee prescription drug spending in private insurance
grew very slowly in the years both immediately before and after passage of
the ACA after having grown quite rapidly in the early 2000s.29 Slow growth
during this period appears to have resulted from a slew of patent expirations
for blockbuster drugs that allowed less expensive generic versions of these
29 Figure 4-41 focuses on private insurance because Medicare generally did not cover
prescription drugs before 2006 and because, as noted previously, trends in per enrollee
Medicaid spending are more difficult to interpret due to changes in the composition of
program enrollment.
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