Privatization Does Not Mean "Greater Freedom from Want and Fear"

Feb 7, 2005

George Bush loves to wax poetic about the benefits of private enterprise. In his recent inaugural address he declared, "By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal." Just as he talks about "democracy" to mask the U.S. war on the Iraqi people, he talks here about "freedom from want" to hide the attack he is preparing on Social Security.

There are other countries that have already instituted plans similar to Bush’s proposal for privatizing Social Security, and people there could tell you all about how much "freedom from want and fear" they have received. People in Chile and Britain, which privatized their social security systems over 20 years ago, get lower benefits than before–even while their privatized social security systems cost their governments much more. Many more people in those countries now have to keep working past retirement age.

Supporters of privatization will tell you that this is the United States and everything will be different here. If you want to see a shining example of the benefits of a private system in the U.S., just look at the health care system.

Forty-five million people in the U.S. have no health insurance–82 million if you count everyone who went without insurance for at least one month over a recent two year period.

That doesn’t happen in other industrialized countries. But then the U.S. is the only industrialized country that doesn’t have some form of a socialized health care system.

And yet, the U.S. spends nearly two trillion dollars on health care each year–more per person than any other country. What does all that spending buy? U.S. life expectancy is lower than in at least two dozen countries, including countries that are much poorer than the U.S., such as Spain, Ireland, Italy, New Zealand, Greece, and Belgium. As for infant mortality rates, 41 countries have better rates than here. Infant mortality rates in Singapore, Sweden, Japan and Iceland are less than half what they are in the U.S.

People like Bush claim the government is bureaucratic, and that is true. But the bureaucracy that has been created to run the private health care system makes the government’s bureaucracy look like child’s play. Just compare Medicare, which costs about 5% to administer, to private insurance, which takes 25 or 30%.

Or compare the administrative costs of the U.S. health system with that of neighboring Canada, which is a single payer system. In 2003, the private bureaucracy that administers health care in the U.S. was estimated to consume 400 billion dollars, or $1,400 for each person in this country. If the U.S. streamlined its administration to Canadian levels (which themselves are still certainly bureaucratic), it would have saved 300 billion dollars in administrative costs, or about $1,000 per person.

Private health care costs more, not less than government administered health care. The same will be true of a privatized Social Security system. That hardly means "greater freedom from want and fear." It means less. A lot less.