Abstract
This article examines the long-term fiscal context for Medicare, Medicaid, and Social Security. It first considers their current and projected fiscal status under current policies and explicates the causes and consequences of the serious financing problems faced by the Social Security and Medicare trust funds. It then documents the tremendous pressure that the three programs, especially Medicare, will begin placing on overall federal finances with the retirement of the baby boom generation and discusses why neither continued growth of the economy nor new sources of revenues and reductions in other federal program spending by themselves can easily accommodate the large projected increases in the costs of these entitlements, as they have done in the past. Thus, the new Medicare prescription drug benefit notwithstanding, policy changes that on balance restrain, not further increase, the projected growth of Medicare, Medicaid, and Social Security may soon be the order of the day.