3 basic factors can be attributed to this decline and poor performance.
1) USA athletes often first start playing the game in their early 20’s after their career in other sports have ended. While a simple game in principle, mastering the finer techniques of the game can take years. The USA has always been at a technical disadvantage against top sides.
2) The National Teams have been less successful in recruiting top, natural athletes since the 1996 Olympics. This is, of course, an opinion, but most long term observers of USA Team Handball would generally agree with this statement.
3) Other nations in the Pan-American region have improved their programs substantially. Brazil, and to a lesser extent, Argentina, have dramatically improved their programs from top to bottom. In the 80’s and 90’s a team of great, raw talent athletes could be recruited, assembled, taught the game and have a reasonable expectation that they could beat the other Pan-American Teams that used the same model. As recent results would attest, this is no longer possible.
Note: The USA Men have become more competitive the past few years thanks mostly due to a golden generation of mostly dual citizen Americans.