The Gathering Storm

The Economy Is Weak

State Budgets are a Disaster
Federal Deficits are Back to Stay
Health Spending is Soaring
 Payrolls Aren't Growing
133
132
131
Jobs in Millions

130
129
128
127
126
125
124
1998 1999 2000 2001 2002

Source: Bureau of Labor Statistics.

 Financial Markets Still Stink
1500

1250
S&P 500 Index

1000

750

500
1998 1999 2000 2001 2002
Source: Economy.com
Surplus or Deficit (-) in BillionsBillions Federal Deficits are Back to Stay
300
200
100
0
-100
-200
-300
-400
-500
-600
1980 1990 2000 2010
Source: Progressive Policy Institute.
 Actual vs. Structural Deficit
300
Surplus (+) or Deficit (-) in Billions

200
Actual
100

-100
Structural
-200 (controls for
-300 booms,
recessions)
-400
1990 1992 1994 1996 1998 2000 2002
Source: Congressional Budget Office.
Note: 2003 estimated by Progressive Policy Institute.
 State Budgets are in T errible Shape
80
Surplus or Deficit (-) in Billions

60
40
20
0
-20
-40
-60
-80
1990 1995 2000
Source: National Income and Product Accounts.
 Employer-Based Health Premiums
20

15
Percent Change

10

0
1988 1990 1992 1994 1996 1998 2000 2002
Sources: Kaiser Family Foundation/HRET and KPMG surveys.
Unrealistic or Wrongheaded
Visions

Medicare for All

Single-Payer Run by States
Employer Mandates
Individual Tax Credits Alone
 Realistic Division of
Responsibilities
Federal Money: Tax Credits and Grants
State Operations: Insurance Systems, Pools
and Backstops
Employment Focus: Enrollment, Outreach
Bookkeeping
Federal Performance Tracking
Individual Mandates
 Transitional to Universal?
Step 1. (Enacted but not implemented)
COBRA/Tax Credit system for workers
displaced by trade
Step 2. Expand to all displaced workers
Step 3. Clarify how credit follows workers to
new job if no employer health insurance or
waiting period
Step 4. Allow credit to follow LOW-WAGE
workers indefinitely
 Medicare Reform
Low Income
Zero-Premium Catastrophic
New Supplemental and Comprehensive
Plans
Compstat Performance Basis
 House Medicare Bill
$500 in Spending -$200 in Net Benefit
$1000 in Spending $200 in Net Benefit
$4,8000 in Spending $700 Net Benefit

This is not good, especially if it disrupts

Employer-based Retiree coverage
 What About Costs?

Anti-Trust Enforcement (Especially Hospital)

Thoughtful Hatch-Waxman Update
Quality, Liability, Disclosure
Disease Management and Chronic Care
Consumer Empowerment, Comparative
Information, Choice
 What About Revenues?

Unsubsidized Health
Insurance Doesnt Work