Tilted, how does privatizing SS and Medicare work?
I'd rather just keep that money myself. $400/month is a lot of money.
It really depends on what plan to 'privatize' you are talking about. That's a fairly generic term that doesn't necessarily have an exact meaning in this context. Generally speaking though, the tricky aspect of such plans or proposals would be the transition between the current system and the (partially) privatized system.
If you are referring to the budget resolution that is the topic of this thread, it doesn't really propose anything specific with regard to Social Security, other than a trigger mechanism that would require the President and Congress to come up with plans to address its lack of sustainability. As for Medicare, this resolution is a little short on details (as it is in general - perhaps there's a more detailed release to come). But, the basic idea seems to be that people who are more than ten years from retirement wouldn't get Medicare coverage as it exists now, they would instead get a Medicare payment that went toward whichever coverage plan they chose from among a number of available options. I get the sense that those plans would be from private entities, but would have to meet certain requirements. Those with lower incomes or greater health risks would get more assistance (e.g., I assume, paying for the plan and/or uncovered expenses).
People within 10 years of retirement or already retired would continue to receive Medicare coverage just as they would or do now. They would, however, be able to choose the Medicare payment option instead.
I think everyone would continue to pay into the system (i.e. pay FICA taxes) just as they do now. But, again, this resolution is a little short on details (and I haven't read all of it anyway), so I'm not sure about that.