Gee, cutting spending and lowering taxes is just too difficult to contemplate...
The size of the nation's long-term imbalances is too great to allow for only cuts in discretionary spending. Indeed, virtually all discretionary spending, including the Defense budget, would need to be eliminated to have a chance to cover the nation's long-term imbalances.
Fiscal sustainability will require a combination of discretionary spending reductions, mandatory spending reform, and tax hikes. The combination of significant discretionary spending cuts and mandatory spending reform (including fundamental health care reform) would assure that any tax hikes could be relatively modest.
IMO, the biggest problem with the recent health care law is not what the legislation contained, but that it failed to address the chronic excessive growth in national health expenditures. Such expenditures have been rising at a multiple of GDP for a prolonged period of time and such excessive growth is expected to continue. That path is not sustainable in the longer-term. Indeed, one can argue that the recent health legislation worked around the problem by expanding coverage without addressing the fundamental issue that has been a leading driver of the high incidence of uninsured persons.
There's no way around it. The U.S. health care system as it is currently designed is unsustainable. Its performance shortcomings in certain categories of care, the incidence of uninsured persons, etc., are symptoms of its fundamental problems. It is that situation that is fueling the imbalances in Medicare and Medicaid. In its most recent long-term budget outlook, the CBO declared, "Slowing the growth rate of outlays for Medicare and Medicaid is the central long-term challenge for federal fiscal policy."
Far-reaching reform is needed. The sooner such reform happens, the easier the transition will be.
In the absence of such reform, Medicare and Medicaid will impose a growing burden on the nation's public finances and rising health costs, in general, will impose a growing burden on employers and individuals, alike. The employer-centered private model will implode, as that model would begin to fundamentally undermine the competitiveness of U.S. firms vis-a-vis their international rivals. Even with the individual mandate and health exchanges, a growing number of individuals would find coverage prohibitively costly. Under such a scenario, the incidence of uninsured persons would increase in the longer-term following whatever reductions might occur from the recently-enacted health care law (CBO projections point to reductions in the number of uninsured persons over the next 10 years).
I suspect that the fundamental challenges facing the nation's health care system were ignored largely due to the political difficulty involved with reducing benefit growth. Indeed, some political leaders even complained about modest reductions in growth in Medicare spending.
Needless to say, fundamental health care reform will require very difficult decisions. Those decisions will include a dramatic restructuring the health care industry (particularly the hospital sector where much of the excessive cost growth has been occurring per medical inflation data), regularly reporting on health industry productivity (no BLS reporting is done on that issue), opening all sectors of health care to international competition, eliminating interstate barriers to competition, legal/jedical malpractice reform, and closing rules that prevent price arbitrage e.g., the current ban on drug reimporation, etc. Nonetheless, difficult as such choices might be, policy makers cannot continue to punt the proverbial health care football indefinitely. Acting as cheerleaders for a system that is failing badly, once the basic issue of excessive cost growth is considered, is not helpful, as it only nurtures an environment that makes far-reaching reform more difficult.