What is Social Health Insurance?
Social Health Insurance (SHI) is a concept in which the government participates in the health insurance industry to ensure that the citizens are sufficiently covered or protected against the risk of a medical emergency that could lead to financial hardships. This is an initiative where individual claims are partially dependent on their contributions. This sum can be assumed as an insurance premium to create a common fund from which individuals can be paid benefits.
Some of the major social health insurance (SHI) initiatives by the US government include:
- Medicare or Medicaid
- Unemployment insurance
- Social security
Features of Social Health Insurance
Social health insurance is often defined as an initiative that transfers the risks to the government organization which is legally required to provide the citizens with certain benefits.
Some of the major features of a conventional social health insurance program include:
- The individual contributes a minimal amount as a premium and this sum never goes beyond their means.
- The benefits, eligibility criteria and other factors of the program are clearly defined in a statute.
- Specific provisions are made for income and expenses, usually through a trust fund.
- This initiative is funded by premiums paid by, or on behalf of, participants, or paid by taxes.
- The initiative is aimed at specified demography of the population, hence the participation is either heavily subsidized, or even mandatory in some places, so that majority of individuals can benefit from the social health insurance program.
Some of the major social health insurance programs available for citizens in the United States include:
- Social Security
- Pension Benefit Guaranty Corporation
- Railroad Retirement Board
- Unemployment insurance programs
According to the World Bank’s 2019 World Development Report, titled “The Changing Nature of Work” defines the need for social insurance models that are dependent on steady wage employment. These programs are usually founded for significantly large informal industrial sectors in developing countries to remedy the decline in standard employer-employee relationships in the countries.
Advantages of Social Health Insurance
Social health insurance is a public insurance initiative that offers to protect participants against economic risk in light of a medical emergency. Participation in social health insurance plans is compulsory in most cases. This type of insurance is classified as a form of social security measures adopted by the relevant government.
There are several significant differences between social insurance and public support. One of the most glaring differences that define SHI is that participant’s claims under this type of insurance are treated partly according to their contributions. This can also be termed as an insurance premium. If the recipient is awarded insurance cover which is proportional to their individual contribution, then the social health insurance initiative can be considered as “production activity” as opposed to distribution.
At times, there are some individuals who receive benefits greater than their contribution, in which case the government needs to consider redistribution in the government social health insurance program. Old-Age Survivors and Disability Insurance (OASDI) Program is the largest social health insurance initiative by the US federal government and provides an income not only for retirees but also to their survivors, especially in the case of widows and widowers, as well as to people with disabilities.
Workers’ compensation programs are also one of the largest social insurance programs run by the US federal government. Under this initiative, the program provides compensation to workers who have suffered an injury at work, unemployment insurance which offers temporary benefits in case of job loss along Medicare.
The Medicare program provides medical services in old age (such as Medicaid). This program has swiftly become the second largest social health insurance program by the US government since its launch.
The majority of beneficiaries under social security and Medicare belong to the middle class, and hence these types of insurance plans are often called middle-class programs. However, in reality, these programs cater to individuals who fulfill several different forms of criteria, such as old age, or disability.
Why is there a need for Social Health Insurance program?
Social health insurance is initiated to remedy the lack of equitable distribution of resources, or benefits, in a competitive economy. There are provisions in such programs that allow participants to choose a better-suited health insurance plan. This form of health insurance allows participants to take risks while being part of economic activities with the assurance that in case of a medical or health emergency, they will be provided monetary compensation through the accumulated funds. Social justice and social stability are two main pillars of the concept of social health insurance programs.
Social health insurance programs are extremely helpful for the unemployed, including seniors, retirees and disabled individuals. This initiative is excellent to ensure that every citizen of the country is covered with comprehensive health insurance which can benefit them in case of a medical emergency.