Another Ponzi Scheme

Many have noticed that the Social Security system is essentially a Ponzi scheme, a pyramid that depends on the entry of increasing numbers of people. People who entered the system early profited immensely. People entering it when I did are fated to receive poor returns, assuming the system survives. People entering it now—that means YOU, graduates!—are going to lose big.

John Hinderaker notes that the same is true of government health care in general, and health insurance mandates in particular. I once attended a workshop at a San Diego hotel which was also the site of a conference on health care. I rode to the airport with a speaker from that conference. He focused on the problem of affordability. I pointed out exactly what Hinderaker says:

…many millions of Americans have no good reason to buy health insurance. This is especially true of single young people, above all single men. They rarely become seriously ill, and they know that if they are unlucky enough to be in an accident or contract a serious illness, they will be treated anyway. So, quite properly, they see no reason to pay for health insurance or–the same thing–place a high value on health insurance as an employment benefit.

Our driver, who was about twenty-five, nodded. That was exactly his situation. It wasn’t that he couldn’t afford health insurance; it was that he didn’t want to spend his money on insurance he didn’t need.

Hinderaker concludes:

There is an analogy between the compulsory aspects of the candidates’ health care proposals and Social Security. A young man or woman would be crazy to participate in the Social Security system if he or she had any choice. If anyone saved 12.4% of his earnings over a lifetime, he would not only have far more money in retirement than Social Security can provide, it would, equally important, be his money, to invest and dispose of as he sees fit. But the government needs young people’s money to support their grandparents’ retirements, so Social Security is forced upon them. The same thing, in essence, will happen with health care if any comprehensive “reform” plan is adopted.

Young people ought to be more concerned than they are that health insurance mandates and government health insurance in general are ways of shifting the cost of health care from the old to the young. Since older people tend to earn more, and have much more wealth, than younger people, this is not only bad for the young but bound to increase inequality. Social Security and health care mandates are inverse Robin Hood schemes; they take from the (relatively) poor to give to the (relatively) rich.

3 thoughts on “Another Ponzi Scheme

  1. People are sheep who can be led to pay whatever they have “just in case.” Politicians are nothing more than snake oil salesmen with D or R after their names.

    As PT said, “There is a sucker born every minute.”

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