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02/13/2005

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Nicholas

I think that this discussion is rather academic in nature, but not because I think there is no problem. The reality of the situation is that Medicare isn't going anywhere. Why? Simple, most young people do not vote and most seniors do. Seniors, in general, do not like the idea of Medicare privatization, which can be seen in virtually every poll out ther. In fact, there *actually* was an attempt to make a step towards privatization of Medicare in the late 80's. It's kinda funny, but the result was a veritable insurgancy of old folks, taking to the streets, armed with canes, umbrellas, and pocketbooks when the representatives next returned to their home districts. Needless to say, that law was reversed as soon as congress next met. So, looking at it from a purely political perspective, any politician worth their salt isn't going to touch privatization with a 10 foot pole. This can be easily seen in the already growing rebellion within the Republican party regarding SS privatization. Clearly, they see the writing on the wall. Despite the last election being as contentious as it has been in at least 30 years, the youth vote was still terribly lacking while the senior vote was strong as ever. Since there are no term limits, it is generally favorable for the incumbant to do what he/she needs to do to retain their seats. So rather then debating as to whether it should be privatized, we need to start trying to think of how to fix it within the context of the current arrangement.

Chesthairshire

Mr. Posner writes:
"Economists are puzzled by the very low deductibles in Medicare (including the prescription-drug benefitthe annual deductible is only $250)".................

My understanding is that the low deductible is a political response to Congress' desire to achieve large buy-in. The premium cost is $420 for Part D and congress wanted as many Medicare recipients as possible to pay the premium. If the deductible is too high, they risk adverse selection - only the really sick enroll in Part D, they benefit immensely and the economics of the plan are even worse on a per user basis.

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