What does it mean to privatize Medicare?
Privatization of Medicare means changing Medicare from a guaranteed benefits program for seniors into a premium assistance program: a voucher or coupon an individual uses to buy insurance on the open market. The coupon has a fixed value – there’s no guarantee a person can get the level of coverage they need, nor the monthly premiums or deductibles that are affordable on a fixed income. A $500 coupon is useless if the product the person needs to buy costs $5000 a month.
Privatized Medicare means there would no longer be a guarantee that senior citizens have health insurance coverage for hospital visits (Medicare Part A that usually has no monthly premium). It also means higher costs for doctor visits and prescription drugs (Medicare Parts B and D, both of which already require monthly premiums for most retirees). Increases would happen because privatizing Medicare shifts the negotiating power away from the government and onto the individual against the open market. All retirees on Medicare are basically a giant insurance “group”, and the government uses those millions of members as leverage when negotiating rates. Privatizing puts you – alone – against the insurance companies; buying your own private health insurance policy.
Medicare creates the negotiating leverage and the guarantee for hospital visit coverage. Medicare is a single payer system: the US government. Medicare is socialized health care – but only for older citizens. The negotiating leverage of millions of people is necessary to keep costs of medical services low. If Paul Ryan and the GOP take that leverage away by privatizing Medicare – rates go up.
That’s why Medicare was created in the first place: because the costs to insure seniors are very high. The only way to control those costs while also guaranteeing the most basic coverage is to socialize it so that the leverage and financial resources exist.
Private insurance companies also don’t have to give comprehensive coverage. Privatizing Medicare is gambling. But it’s a gamble for the individual, not the insurance companies. Insurance companies can deny coverage as much as they want – especially if the GOP lives up to its long-time promise of repealing Obamacare, which would eliminate the pre-existing condition protections. Just because a person is holding a coupon worth X amount of dollars to buy private insurance does not mean an insurance company will actually sell them a policy that covers all their needs – let alone a policy that has out-of-pocket costs and deductibles that a person on a fixed income can manage without starving or losing their home.
The number of uninsured, and more notably, under-insured seniors in America will skyrocket if Medicare is privatized simply because insuring seniors is not profitable. Even if a private health insurance company will sell a policy, they will most likely do so at a very high cost that the voucher doesn’t cover. For example, a senior might have a privatized medicare voucher for $2500 – but the total cost of a comprehensive policy for someone over 65 costs 10 times that amount. The end result of privatizing Medicare is millions of uninsured and under-insured people in America. It destroys America’s safety net. It breaks the meager Social Contract that we have in America.
Privatization of Medicare means seniors must buy their health insurance on the open market – just like any other person who doesn’t get coverage through their employer. Privatization gives a voucher to offset the cost of buying a policy. How easy is it, do you think, for an 80-year old person to get an insurance policy from a private insurance company? What happens to that person when their insurance policy reaches its maximum? If Medicare is privatized… that person is out of luck.
Privatizing Medicare Means More Choice… For Insurance Companies
Privatization also means billions of dollars for the health insurance companies, so it’s easy to see why they support it. Proponents of privatizing Medicare like to spin the perceived benefits by saying over and over again that, “The American people will have a choice of health insurance providers”. Yes, that’s not untrue. But they leave out the other half: it also means health insurance providers have the choice about you. They don’t have to give you a policy, and they don’t have to pay for certain services.
Again: this is why Medicare was created in the first place!
All political ideologies agree on one thing: health insurance coverage is too expensive for most people. Given that fact, why do so many people seem to forget that the current U.S. health insurance system is privatized: individuals buying their own policies from health insurance companies. We all agree that method is too expensive… so why would we want to do the same thing with Medicare? It’s simple: those pushing to privatize Medicare are doing so because it means higher profits. They all hope that constantly saying “The American people will have more choices” while demonizing anything with the word “social” in it will hide the facts from enough voters to win control of Washington… too bad it worked.
Privatization of Social Security
There is no such thing as Privatized Social Security. Wall Street and politicians who want to eliminate the social safety net call it “Privatized Social Security” in hopes of making it sound palatable to the general population. Social Security is a socialized program that guarantees income to retirees – it’s impossible to privatize that system. They are trying to do something new and very different that eliminates the guarantee.
Similar to the Medicare scheme, “privatizing Social Security” means each individual would work directly with the private markets. Most likely giant investment firms will offer “social security investment packages” that appear as though they are somehow government sponsored and safer than “regular” investments. No matter how they package it, privatizing totally eliminates the guarantee. It eliminates the promise this county made to its people. It eliminates the safety net… retiree’s income goes from guaranteed to “good luck”.
Let’s keep focussed on that word: guarantee. Social Security is a guarantee of a certain amount of money each month. It’s taken from the Social Security “pool” into which everyone pays while they are employed, and requires what we’ll call “multi-generational commitment”:
The amount of your Social Security check is based on how much you paid in, but it’s not like a savings account where “your money” sits and waits until you retire. While employed, what a person pays into Social Security goes to current retiree Social Security payments. Later when that person retires, they are then supported by the next generation of people still in the work force. Generations of working citizens supporting the retired generation is a key part of the American Social Contract: Social Security. Citizens paying into the Social Security pool, rather than making individual stock market investments creates the financial resources, the stability, and the guarantee.
That guarantee and socialized “paying it forward” is Social Security. It cannot be privatized. Privatization of retirement income – putting your own money into the stock market rather than into the Social Security pool – is completely different. Privatization is nothing more than putting your own money into a market-based retirement fund just like an IRA or 401k – which can be destroyed by market crashes.
Imagine if stock market fluctuations were directly tied to your Social Security benefits – that’s what happens if Social Security ends and the Republican Party creates a privatized scheme instead. One big downturn and retirees would literally find themselves broke and possibly one step away from the street.
“Privatizing Social Security” Means Billions Of New Dollars In The Stock Market
Can a person reap huge profits from the stock market? Yes. If they’re a savvy investor, and have enough capital to work with. But if banks lose billions of dollars regularly, so likely will we. Assuming you are not a millionaire – a safe bet considering 69% of American’s have less than $1000 in a savings – privatization of retirement income and the elimination of Social Security will be the biggest gamble of your life.
Banks, large-scale investors, and investment firms love the idea of moving the billions of dollars of retirement money that’s in Social Security into their stock markets – because they get the extra fees, as well as astonishing profit potential from having more novices in the market. Who do you think has been pushing this new retirement income scheme onto the GOP for so long?
U.S. citizens pooling resources into Social Security makes it possible to have a stable, reliable income for retirees that won’t get obliterated by a single stock market swing. We’re all in this boat together. It’s called a county and we are its citizens. Breaking the Social Contract – eliminating Social Security and replacing it with millions of post-retirement citizens gambling their livelihood on the stock market – is just about the most irresponsible move our county could make.