What Does Privatization of Medicare and Social Security Mean?

Jump to: Privatization of Social Security

Medicare coverage card. Privatization of medicarePrivatization of Medicare means changing Medicare from a guaranteed benefits program for seniors into a premium assistance program (a voucher or coupon) to help seniors buy their own health insurance from a private health insurance company. There would no longer a guarantee that senior citizens have health care, because it shifts the negotiating power the open market – to insurance companies – where profits of the insurance companies are required or else those insurance companies go out of business. Medicare create the leverage necessary to keep costs of services low because it “negotiates” lower rates using the power of the millions of people who are on it – like a union for medical care. Take that power away, and every senior citizen loses that leverage and rates go up. That’s why Medicare was created in the first place: because the costs to insure seniors are very, very high (it’s not a bad thing, it’s just what is) and health insurance providers cannot profit from policies where they have to pay out a lot in health care costs.

Private insurance companies don’t have to give comprehensive coverage if they don’t want to. What happens if Medicare is privatized is a gamble: just because a senior is holding a voucher from the government 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 with out of pocket costs and deductibles that a person on a fixed income can manage. The number of uninsured seniors in America will skyrocket if Medicare is privatized: because health insurance companies are not required to cover all services at low deducible rates. 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 costs10 times that amount – so the end result of privatizing Medicare is millions of uninsured and underinsured people in America. Privatizing Medicare is a terrible idea… it’s will no longer be Medicare because seniors no longer have guaranteed care.

Medicare is basically a single payer system: the US government, and people are guaranteed certain medical services. Since it’s not about profit, the focus is on health care and reducing costs, not profits and and dividends of insurance companies. Single payer allows a country to focus on what it should be: health care, rather than health insurance.

Privatization of Medicare means seniors have to buy their health insurance on the open market – just like any other person who does not get coverage through their employer. Privatization gives a voucher (a coupon) to help seniors with the cost of buy a policy from a private health insurance company. How easy is it, you think, for an 80 year old person to get an insurance policy from a private insurance company? What happens to that senior when their insurance policy reaches its maximum?

Privatization also means billions and billions of dollars for the health insurance companies, so it’s easy to see why they support it.

Privatization plans mention vouchers, so that people have a “choice” of health insurance providers. Americans like the word ‘choice”, so its deliberately used by politicians. Yes, seniors will have a choice, but that doesn’t mean the Private Healthcare companies will accept them – we all see that point every day with health insurance companies denying coverage and claims to thousands of people.

Having a little money to buy health insurance coverage, or get health care services does NOT guarantee ongoing health care… especially for senior citizens who have higher health care costs. That’s why privatization won’t work: it’s not profitable for companies to cover senior citizens. That’s why Medicare was created in the first place!

Vouchers and “choice” might work for 20-year olds who have low risk and low cost, but they do NOT work for older people in a society. No health insurance provider will take on that risk… that’s why Medicare was created in the first place! The people who are “younger workers” now… will get old… what happens then? Republican spin is very thin as usual.

Health insurance coverage is too expensive for a lot of people and small businesses… we all know that. For people NOT on Medicare, the current U.S. health insurance system IS privatized: bought on our own from health insurance companies… and we all agree it’s too expensive… so why in the world would we want to privatize Medicare as well, which will make the overall health care problem worse in the U.S.? The open, private health insurance market has already proven that privatization of health care does not work.

Let’s get the major new lie out of the way first: the 700 Billion dollar cut in medicare that Republicans are claiming the Obama plan will do.


  1. BOTH the Romney / Ryan plan AND the Obama plan cut, buy means of progressively reducing funding over time by around 700 billion dollars from Medicare HOWEVER;
  2. Obama takes that 700 billion and puts it into the Affordable Care Act (Obamacare), as well as reduces cost by reducing waste, so that even MORE people get healthcare, including services provided to senior citizens, people on medicare, so that there is an INCREASE in health care services, not a decrease.
  3. Romney / Ryan plan cuts 700 billion from Medicare because it has to in order to pay for even more tax cuts for the rich, and even more defense spending, which results in a massive decrease in healthcare, more spending on military at levels we had when fighting two different wars, and a net decrease in revenue for the federal government… which we need for things like, say, fires, floods, and droughts when things happen that are out of our control… but with the Romney-Ryan budget… we don’t have that ability anymore.
  4. Romney / Ryan’s medicare cuts impact seniors immediately, NOT just people under 55-years old. The age threshold has to do with, primarily, when it changes from medicare as we know it to a voucher system. However, IMMEDIATELY, the Romney / Ryan medicare plan reduces assistance for prescription drugs and preventative care, which means senior citizens have to pay more out of pocket – to compensate for the tax cuts for the rich that are also in the Romney / Ryan / Republican budget plan.

Medicare as a privatized voucher system:

With a voucher system (privatized health care like Romney, Ryan, and the Republicans have been pushing), the government is giving money, but the difference is its finite: it ends at a set value. Say, they give $700 a year for an 80 year old to buy their own health care from a private health insurance provider: a company like Blue Cross / Blue Shield, or any of the others.
For those of you who have paid for health care coverage (especially small business owners), you know there is no way that an 80 year old can get decent health care coverage, if any, for $700.00.

More importantly: combine the voucher system with the Republican Party‘s oath the REPEAL OBAMACARE, and that means that health care coverage costs will go UP (all the studies prove it). Health insurance is even MORE expensive under Romney / Ryan / Republican plan… so add privatized, restricted medicare to the mix that they want, then there is a limit on how much a senior citizen can spend to purchase that health insurance.

Medicare as it was designed to not have a limit on the care someone can receive – THAT is how it’s possible for an 80 year old person to get health care coverage, whereas it is not possible for that same person to get affordable coverage on the open market where companies are striving for making a profit, not providing payments on the insurance coverage.

There is no way that a business, who has a motive of profit, would even insure a senior citizen to the extent that is needed in today’s health care system. It will never happen. So if you privatize healthcare, you kill medicare (guaranteed coverage), and… well… you can figure it out from there.

Privatization of medicare means hundreds of thousands of senior citizens will not get the health care coverage they have been promised and counting on for decades.

How’s the British NHS look now? Imagine free hip replacements and cancer treatments for all… not just seniors… everyone. You don’t have to be John Lennon to imagine the possibilities of a public, single payer, profit-free health care system.

What about privatization of Social Security?

Similar to privatizing Mediare: privatizing Social Security means you would work directly with the private markets (stock market), which eliminates the government guarantee… the guarantee that literally is Social Security, so in truth privatization isn’t Social Security anymore… it’s just putting that money into a stock-based retirement fund as if it’s an IRA.

The money that is currently taken from your check for the Social Security “pool” would instead get invested with Wall Street in your own account – the stock market is not a guarantee. Anyone else out there lost their pants on a few stocks at any point? Anyone else notice those crashes the market tends to have? Imagine if that loss inside the crazy stock market was  actually tied to your Social Security benefits… which then also would go down the drain: THAT’S what happens if Social Security is privatized.

Can you potentially get huge profits? Yes, if you’re a savvy investor (and if you have enough money for certain types of investments, most people don’t have enough cash to “get in” on the “high potential reward” investments, those all require a large lump sum to invest). Moreover… if the banks lose billions of dollars regularly (and they’re supposed to be the smart ones), why would you risk your entire retirement on something as volatile as the stock market? Assuming you’re not a millionaire who can diversify enough for safety… you’ll want parts of your retirement income derived from the stock market, like having IRAs to supplement your guaranteed Social Security benefits, but not ALL of it, which is what privatization would do.

And you can imaging that Wall Street LOVES privatizing Social Security because they’d make billions in fees (and billions in general profits from all the extra cash in the stock market… having so many “untrained” people putting their money into the market whom they can exploit. It’s very, very risky to the individual to privatize Social Security – avoiding risk in retirement is exactly why Social Security was created in the first place.

Why is this a bad idea: because it’s a gamble. The whole point of Social Security is that it’s a guaranteed safety net. We all know from watching the stock market in the last decade that its not a safe bet unless you ***really*** know what you’re doing… and are on the inside…. and have a few hundred million to invest so that you get in all the good deals, not just buying Apple shares on e-trade.

Currently, Social Security functions so that as you pay in with every pay check it goes into a pool, and based on how much you put in, you are guaranteed a certain monthly payment once you qualify for social security benefits.

Privatization of Social Security puts money into, basically, a pool of 1: you, rather than a pool of 300+ million. We all have learned from having Mitt Romney as a presidential candidate that when you have a lot of money, it’s easier to make even more money: by investments. So working with all U.S. citizens, pooling the resources into Social Security, makes it possible to get a much larger return on our investment… we’re all in this boat together. Breaking that contract… making it personal and privatized loses that group power of investment AND it adds much more risk. Instead of guaranteed payments from the government… you have to gamble with the stock market. Sure… you can put it into a savings account where you know you won’t lose money… but if you do that, you won’t even beat inflation, so basically you’re screwed. The only way to get enough money, beat inflation, AND guarantee rather than gamble, is to pool the money put into Social Security. With baby boomers we do have a problem insofar as having enough, but privatizing it destroys everything and is therefore not the answer.

The ONLY thing privatizing Social Security and Medicare does is make ENORMOUS amounts of money for health insurance companies and for Wall Street. That’s it. It hurts everyone who actually need (and paid into) the programs.

Tags: , , , | Category: Politics
Published: by | Updated: 07-31-2016 06:52:00