How Do You See Medicare and Social Security Being Changed to Accommodate Future Generations?
Question/Comment: What is the future of Social Security and Medicare in the next 20-years and how do you see it being changed to accommodate future generations?
Paul Solman: Medicare is a much bigger problem than Social Security. I think Medicare will be extended to all Americans at some point.
Nobel laureate economist George Akerlof convinced me, some years ago, that universal health insurance is inevitable because with genome testing, either you know that you’re likely to have a serious disease but your insurance company doesn’t, so you load up on insurance OR your company demands the test results and refuses you if the odds are bad. Either way, it’s the death knell for a private insurance system; everyone has to be in the same UNIVERSAL risk pool.
But when that happens, and probably even before, Medicare will almost surely be changed in basic ways to further limit the procedures and pills it pays for. That’s because the main reason health care costs will continue to rise steeply, as best I can tell, is technology. See my very personal take on this argument.
As for Social Security, I’d bet (not very much) on some combination of two “reforms”: A rise in the income ceiling on Social Security (“payroll”) taxes, $102,000 for 2008; another extension of the eligible age for benefits, in line with increased longevity, as was last done in the early ’80s.
There may be other changes in the wings as well, but these seem the most likely to succeed. See our 2005 pieces on these issues for further exploration: