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Budget Crisis, Entitlement Crisis, Health Care Financing Problem—Which Is It?

Henry J. Aaron

Abstract

Many budget analysts allege that growing expenditures on entitlements will necessitate a reexamination of all public spending and taxes. In fact, anticipated budget problems are fully explained by projected growth of Medicare and Medicaid. But the same forces driving public-sector health care spending are also driving private spending. Sensible reforms of publicly financed health care require a systemwide approach. Apart from health care, currently legislated federal revenues suffice to cover all currently projected spending, including all Social Security and other entitlements. The United States confronts a public and private health care spending problem, not an entitlement crisis.

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