Wednesday, February 4, 2009

New paper: The Forgotten Entitlements

My AEI colleagues Henry Olsen and Jon Flugstad have a new article out in Policy Review on what they call "The Forgotten Entitlements," Social Security disability insurance and Medicaid long-term care. Both programs are rising in cost and both, Olsen and Flugstad argue, are in need of structural reform.

When politicians and policy wonks use the phrase "the looming entitlement crisis," most listeners know exactly what that means: Social Security and Medicare. Spending on these programs is rampant, nearly $1 trillion in fiscal 2006, and is projected to grow exponentially over the coming decades. By 2082, due to the aging of baby boomers, rises in health-care expenses, and expected lower fertility rates, Social Security and Medicare are projected to cost nearly 18 percent of gdp--roughly what the entire federal government costs today. It is now common, if as yet unacted upon, wisdom in the Beltway that if the price of these programs is not reined in, Americans will have to suffer either substantial tax increases, unsustainable budget cuts, or both.

But the bad news does not end there. It turns out that Social Security and Medicare are not the only out-of-control federal entitlements. Two little known entitlement programs, Social Security Disability Insurance (SSDI) and Medicaid Long Term Care (LTC), are also increasing at unsustainable rates. Call these the forgotten entitlements…

To read the whole paper, click here.

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