Republicans talk about privatizing Medicare. What this means is that instead of the government running Medicare a private insurance company runs health care for seniors. They don’t want to do this of course because seniors are expensive to insure. So it will never happen. But the main thing Medicare does is it is able to negotiate lower drug prices because of its size, and that makes it cheaper than private insurance. Medicare spends all of the money it gets every year. It is not a savings plan. It is an insurance program run by the government. Because of its size it has the ability to push prices down.
Social Security OASI is completely different. You put money in when you work, you take money out when you retire. It’s a state mandated maximum benefit plan. It had a surplus until recently, though the reserves will be depleted to 0 over the next 20 years. OASI does not need to negotiate with any big company, it just gives money back to the people who participated.
Here are the similarities between OASI and Medicare. They are both managed through the Social Security Administration.
That’s it. Even some young people can access Medicare if they are disabled enough. Besides both being managed by the Social Security Administration, these programs have nothing in common.
So if someone were to make Medicare like the rest of American health care, it would be an absolutely terrible idea. The very large benefits of Medicare (in the form of universal health coverage for seniors and saving us billions of dollars a year) would be lost. We should actually expand Medicare to cover everyone if we won’t do a public option. It would save us billions of dollars a year. I don’t care either way if we go with a German or a French system, just do it soon.
Privatizing OASI on the other hand would be moving to an index fund system and allowing people to control their retirement savings and get all of the benefits, not just up to a fixed amount. It’s the system Australia uses. Some people might lose money, but the vast majority would be better off. Anyone who drops below the poverty line in retirement could still get assistance from other programs. The biggest benefit is that your benefits couldn’t be reduced via executive order anymore.
The basic TLDR is that privatizing Medicare is not like giving people the option to put their OASI taxes into an IRA. They have really nothing in common. I wish more people would understand the difference.
OASI is not insurance. It’s a maximum benefit pension. Medicare is an insurance program. OASI pays out monthly like any other pension which isn’t in default. Medicare only pays out when you see a doctor. Totally different.