Should Social Security and Medicare Be More Market-Based?
78 Pages Posted: 28 Nov 2012 Last revised: 17 Jan 2013
Date Written: December 1, 2012
Contemporary political debate about Social Security and Medicare often conflates the issue of the programs’ long-term fiscal sustainability with that of whether their design should be made more market-based, such as by transforming Social Security into a private accounts program and Medicare into a voucher-based program. In fact, the sustainability and design issues are fundamentally separate.
This article assesses the case for making the programs more market-based by using two main conceptual vehicles: (1) the model for understanding the programs’ substantive features and rationales that I offered in my books, Making Sense of Social Security Reform and Who Should Pay for Medicare?, and (2) Paul Samuelson’s classic description of Social Security as providing what we would now call an implicit financial instrument that reflects an intergenerational compact. In the end, it reaches largely skeptical conclusions about altering the programs to use either private accounts or vouchers.
Keywords: Social Security, Medicare, private accounts, Ryan Medicare plan
JEL Classification: H1, H2, H4, H5, I1
Suggested Citation: Suggested Citation