Commentary

Social Insurance Programs

Clearly, social insurance programs are complicated, expensive, limited, and politically sensitive entities. They are also beloved by constituents, debated fiercely by pundits, economists and providers, and many times the difference between catastrophic financial loss and financial security for average families. Nothing about these programs is simple.

Most people think of social insurance as the retirement benefit known as Social Security. But Social Security as a retirement benefit is only part of the safety net of social insurance programs. In terms of wealth protection, there is also disability insurance, payments to surviving spouses and dependents of deceased workers, unemployment insurance and certain worker's compensation protections. Additionally, Medicare in all of its parts exists to give some financial security to elderly and disabled citizens by providing financial assistance for healthcare.

It is important to understand that these types of programs are not unique in the United States—most, if not all, modern societies offer social insurance programs, and these take on many forms and are funded in many ways. But why would a government provide these benefit programs? The reasons are simple, but complex in their execution. Part of it is certainly a moral imperative around relieving and preventing suffering of the most vulnerable. Part of it is about citizens feeling cared for and part of their government, therefore supporting national security and stability aims (think of countries that are unstable—generally their people's basic needs are not being met). And part of it is motivated by the need to keep an economy moving forward. People who have no money do not contribute to the economy, and workers who are worried about their loved ones are less productive. In a microcosm, these are similar reasons to why a company would offer things like medical benefits and 401(k) plans to their employees.

Medicare

The most complicated piece of the U.S. social insurance programs is Medicare. In the text you will read about the current four parts of Medicare—basically, they are hospital care, medical/doctor care, the right to purchase Medicare from a private provider, and a prescription drug plan. Each was created for different reasons, has different aims and eligibility and is funded in different ways. The thing to remember is that Medicare is really not about healthcare—it is about funding healthcare for certain populations as equitably as possible. It is about attempting to ensure that certain vulnerable populations, that is, people over 65 and the disabled, have financial access to appropriate, affordable healthcare. This is done through various schemes, mostly through payroll deductions from those in the workforce, or through taxes for the self-employed. Medicare isn't meant to cover every medical need, rather, it is meant to prevent catastrophic financial loss. However, even with the support of Medicare many people still struggle with affording their basic healthcare and turn to their families and states for assistance.

As many pundits and politicians will tell you, Medicare is not perfect. Some of its limitations include lack of coverage for vulnerable populations other than the elderly (children, for example, have access to healthcare through a hodgepodge of programs at the federal and state level, and the working poor or the chronically unemployed may not have access to health insurance at all), gaps in coverage, limited access to providers who accept Medicare and continued issues with funding it. The Obama administration has made healthcare, inclusive of Medicare, a top priority because it affects an increasingly large segment of the population, and therefore an increasingly large share of social costs.

Most social insurance programs discussed here are federal plans and as such are governed by federal law and are administered by the federal government. As a result, there are other, not as obvious groups of people that are ineligible for certain benefits. Non-traditional families are not eligible for social security survivor benefits, where benefit eligibility is determined on marital status and legally dependent children (which dis-includes domestic partners, state-recognized same sex spouses, or blended families with dependent step children, in many circumstances). In terms of worker's compensation, each state is given discretion as to how its plan is administered, so eligibility requirements and payment schemes can vary from state to state. Many states have additional benefit schemes to support other population groups such as paid disability plans for pregnant women, and health coverage for children that attempt to cover populations that federal social insurance programs do not.