I appreciate Jim's point of view, although SS is in much better shape than Medicare. Furthermore fixing SS is much easier since there are lots of ways to do so.
Medicare is a problem for lots of reasons. First, people have gotten back much more in benefits than they have paid in. Second, insurance companies are not going to sell a lot of health care policies to old people because old people get sick-the problem of adverse selection really applies to old people. But Medicare's fundamental problem is that health care costs are rising so fast. Americans pay for health care for the most part through third parties (insurance companies or the government), so since the price for a particular procedure paid by an individual is so much less than the price received by the health care provider (hospital or doctor or whomever), we don't have much of an incentive to get providers to keep down costs. Seriously, if we knew we'd have to pay the full price for heart bypass surgery, we'd eat better and exercise more or have fewer bypass surgeries. Finally, if Medicare is cut, are you really going to let your parents or grandparents go without the best medical care you can afford? Not likely. So if the government doesn't pay the medical care of old people, the people's families will. So old single guys like me are the only people really at risk if Medicare is cut, which will make it difficult politically to cut Medicare. So solving the problem of Medicare really involves getting health care costs under control. One thing i think we need to figure out is how to pay for health care output (what you get) as opposed to inputs (how much time is used by doctors, nurses, etc,) so that health care providers would have more incentives to control costs. I know if I eat at In-N-Out I pay for the burger, not how much time was spent making it. If In-N-Out doesn't control the costs of making a burger, we'd have to go to Micky D's and that is really a sickening thought!