Unfunded Entitlement (Medicare + Social Security) + Underfunded

Unfunded Entitlement (Medicare + Social Security) + Underfunded Entitlement Expenditures (Medicaid) = Among Largest Long-Term Liabilities on USA Inc.'s Balance Sheet USA Balance Sheet Liabilities Composition, F2010 Unfunded Medicaid* Medicare $35.3T Unfunded $22.8T All se Veteran Federal Social Other Benente Benefits Debt Security $7.9T $1.6T $2.1T $3.7T $9.1T 2 ®@ lL Note: Medicaid funding is appropriated by Congress (from general tax revenue) on an as-needed basis every year, therefore, there is no need to maintain a contingency reserve, and, unlike Medicare, the “financial status” of the program is not in question from an actuarial perspective. Here we estimated the net present value of future Medicaid spending through 2085E, assuming a i 3% discount rate. Data source: Dept. of Treasury, Dept. of Health & Human Services Center for Medicare & Medicaid Services. www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 247 USA Inc.’s Financial Disconnect The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. That fundamental disconnect will have to be addressed in some way if the budget is to be placed on a sustainable course. - Douglas Elmendorf, Director of U.S. Congressional Budget Office, 11/10/2009 KP www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 248 HOUSE_OVERSIGHT_020965