Politicians win with privatization

The unspoken agenda of this coming presidential election is the privatization of Medicare and Social Security for future senior citizens. The potential profits for banks, investment firms and insurance companies are worth billions of dollars.

A Congressional Budget Office study in 2011 found that government Medicare overhead costs are less than 2 percent for Plan B. Private insurers charge 11 percent to 12 percent for overhead in their management of Part D plans. Government charges 0.9 percent for collection, administration and distribution of Social Security funds. Privately run 401(k) plans typically charge 1.23 percent for administration overhead and an additional 1.1 percent to 1.4 percent fee to liquidate assets, for total costs of 2.3 percent to 2.7 percent.

Yes, these trust funds need to be financially fixed. The above data show government management of these trust funds is the lowest-cost alternative. Third-party, for-profit management reduces benefits to senior citizens. Yet, some politicians are intent on replacing government management of these trust funds with private, for-profit management.

Could it be that politicians supporting privatization are anticipating larger re-election campaign donations in the future from winning contractors? It is politicians, not future senior citizens, who benefit from privatization.

George Thomas Clark

Deer Park