Social insurance
Social insurance is a system of financial support designed to assist individuals who are unable to work due to various circumstances, such as retirement, unemployment, or health-related issues. This support varies by country and may include medical benefits accessible to all or targeted groups. Typically funded through social pooling, individuals contribute to a fund, often via taxes, that provides these benefits when needed. The purpose of social insurance programs is to offer financial security, reflecting a long-standing tradition that dates back to ancient societies, which recognized the need to support individuals during times of vulnerability.
Historically, forms of social insurance have evolved from charitable practices and community support systems, such as guilds in medieval Europe, to more structured governmental programs in the modern era. In the 20th century, significant developments occurred, particularly in response to economic crises and changes in workforce dynamics, leading to the establishment of programs like Social Security in the United States. Today, social insurance encompasses a wide array of benefits, from retirement and unemployment assistance to health care and maternity leave, with ongoing debates about the extent and funding of these benefits across different nations.
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Subject Terms
Social insurance
Social insurance refers to any of several types of financial support paid to those who are unable to work for certain specific reasons. The types of social insurance available vary from country to country but can include payments to the retired, the unemployed, and those who become hurt or sick because of their jobs. Social insurance also includes medical benefits, which are available either to everyone or to specific populations. Social insurances are generally funded by social pooling, in which many people pay into a fund that is drawn on when specific benefits are needed. In some countries, this social pooling payment takes the form of a tax. Payments are made to those who meet specific requirements, which can be based on need or the amount the individual contributed toward the benefits prior to drawing on them.
Background
The intent of any social insurance program is to provide financial security for the people of a state or country. Versions of these programs have existed for centuries. For instance, a tablet from the ancient Sumerian kingdom of Ur dating to 2050 BCE mentioned payments to be made to workers who were injured on the job. The Code of Hammurabi, written in 1750 BCE, also included such payments. Payments were also made to workers in at least some of the fiefdoms in feudal Europe during the Middle Ages in an early form of the insurance known in contemporary times as workers' compensation. These payments to those who became unable to work because of a job-related illness or injury slowly became law in industrialized countries during the nineteenth and twentieth centuries.
Initially, those who were unable to work because of advanced age, job loss, or pregnancy were limited to the resources provided by family and friends or through charities, often religious in nature. Occasionally there were other sources as well. For instance, the Bible includes instructions for those growing crops to leave some unharvested on the edges of their fields so that widows, orphans, and others in need could glean, or pick what was left behind, and have some food (Leviticus 19:9–10). This and other forms of charity would continue to be the main way for those in need to survive for centuries. Those without financial resources to pay for food, shelter, or medical care might also barter for what they needed.
During the sixteenth through the twentieth centuries, other more formal forms of social insurance came into existence. These included guilds for tradesmen that helped care for others of the same trade, and friendly societies, the forerunners of fraternal organizations, such as the Loyal Order of Moose, that also helped their membership. For instance, Great Britain had a patchwork of "poor laws" that helped those in need during the late sixteenth and early seventeenth centuries. Many of these were incorporated into the laws in the American colonies and, later, into the laws of the new United States of America. This included aid for food, state-funded medical care, and other subsidies.
The funds for these programs often came from taxes levied on all citizens who were able to pay them. During the twentieth century, this began to shift to insurances that people bought or funded for themselves through taxes. These included Social Security (retirement benefits) in the United States and paid health insurance.
Some of this was necessitated by the change in how people worked; instead of farming land or working at businesses they owned, people began working for others. Where many previously would have a business or other asset that could be passed to family members, who could then help support a person who was too old, injured, or ill to earn his or her own living, people would reach these stages of life with no work-related assets to pass on. Often this would mean they would not have all the resources they needed to live. In addition, as medical care became more sophisticated and expensive, it became more difficult for people to pay directly for the care they needed. This led to the development of insurance to help offset the costs.
Overview
One of the earliest appeals for social insurance came from Thomas Paine. The author of Common Sense, the 1776 pamphlet that helped spark the American Revolution (1765–1783), Paine also wrote a pamphlet entitled Agrarian Justice. Published in 1797, this pamphlet called for a 10 percent tax on all inherited property. The fund created with this tax would be used to give everyone fifteen pounds of sterling at the age of twenty-one to help them get a start in life, and ten pounds a year to every person over the age of fifty to help them as they became unable to work. The plan was not implemented, but it created the idea of social insurance programs.
Some of the largest social insurance programs came in the aftermath of the American Civil War (1861–1865). The war left many widows, orphans, and disabled men with little means of earning a living. War veterans had been eligible for a pension since 1776; this was now expanded to cover those left without incomes because of the war.
Before the end of the nineteenth century, employers would begin offering pension plans for their workers. Often funded by contributions from both the workers and the employers, these funds allow workers to accumulate a sum of money that could help support them when they could no longer work. Other resources for workers came at times of economic depression, including the Great Depression that began in 1929, that left countless people unable to find work to support their families. In the United States, this resulted in the establishment during the 1930s of unemployment benefits and Social Security to provide benefits for the retired and disabled. In the days after World War II (1939–1945), government regulations on wages made it difficult for companies to attract workers. Employer-paid health insurance became an increasingly common benefit used to attract and keep employees.
In the twenty-first century, there is a wide range of social insurance benefits. Many countries offer some form of workers' compensation, unemployment, and retirement benefits. Some countries offer universal health insurance, which is funded by taxpayers and available to all who meet the qualifications of residency. Many countries also offer maternity benefits to new mothers, and some are beginning to offer similar benefits to new fathers. In other countries, the debate continues as to what benefits should be provided by society and which are the responsibility of the individual; in these countries, the debate often centers on how the benefits will be funded.
Bibliography
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