Privatization of Medicare: Toward Disentitlement and Betrayal of a Social Contract

Abstract

An intense political battle is being waged over the future of U.S. Medicare. The 40-year social contract established with the nation's elderly and disabled is seriously threatened. The basic issue is whether Medicare will remain a universal entitlement program or be privatized and dismantled as an obligation of government. Faced with the growing costs of the Medicare program, changing demographics of an aging population, and long-term federal deficits, conservative interests are promoting further privatization of the program under the guise of increasing beneficiaries' choice and the claimed efficiency of the private marketplace. Following a historical overview of past efforts to privatize Medicare, this article reviews the track record of private Medicare plans over the last 20 years with regard to choice, reliability, cost containment, benefits, quality of care, efficiency, public satisfaction, and fraud. In all of these areas, privatized Medicare has performed less well than original Medicare. Based on the evidence, one has to conclude that privatization of Medicare is detrimental to the elderly and disabled, the most vulnerable groups in our society, and that the only winners in that transformation are private market interests.