Chronic Deficit:

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Chronic Deficit Entitlement Crisis? or Health
Financing Problem? Henry J. Aaron Bruce and
Virginia MacLaury Senior Fellow The Brookings
Institution
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The prevailing expert view
A monster at the door. Robert Samuelson
A fiscal cancer, massive entitlement programs
we can no longer afford, exacerbated by a
demographic glitch that began more than 60 years
ago David Walker
...a government in desperate trouble. Its
raising taxes sky high, drastically cutting
retirement and health benefits, slashing
defense, education, and other critical spending,
and borrowing far beyond its capacity to
repay. Laurence Kotlikoff and Scott Burns
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What Projections Really Show (1)
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What Projections Really Show (2)
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The message
the fiscal problem is entirely a health
care financing problem
since taxes are assumed to remain a
constant share of GDP, projections show no other
long-term budget problem
because public and private health care spending
move together, there is also a private health
care financing problem
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• ? The morals of this story
• There is a long term fiscal problem all of it is
  health care

2. There is no entitlement crisis other than
health care
3. There is an equally urgent private budget
problem also stemming from increasing health
care spending
4. These problems are important for three
reasons fiscal balance, consumption growth,
and health care access and affordability

• There is no practical way to deal with public
  health care
• spending other than by general health care
  financing reform