Last Updated on October 18, 2023 by Lori Pace
Social Health Insurance (SHI) is an example of how the government can participate in the insurance industry. In short, it is a government-sponsored program that covers citizens against financial hardships or medical emergencies. Individual claims are dependent partially on individual contributions. So, you can use this amount as an insurance premium to create a common fund that can provide benefits for individuals.
The following are some of the most important social insurance (SHI), initiatives taken by the US government:
- Medicare or Medicaid
- Unemployment insurance
- Social security
Features of Social Health Insurance
A social insurance policy is an initiative that transfers risks to the government agency. This is because the law requires them to provide certain benefits to citizens. The traditional social insurance program offers several key features:
- Firstly, as a premium, the individual pays a small amount, which never exceeds their means.
- A statute clearly defines the benefits and eligibility criteria for the program.
- A trust fund will make specific provisions for income and expenses in most cases.
- Premiums paid by participants or their representatives and taxes fund the initiative.
- And last, it targets a specific demographic of the population. Therefore, participation is heavily subsidised or mandatory in certain places. This is to ensure that all individuals access the social insurance program.
Some Major Social Insurance Programs available for the US citizens
- Social Security
- Medicaid
- Medicare
- Pension Benefit Guaranty Corporation
- Railroad Retirement Board
- Unemployment insurance programs
The 2019 World Development Report by the World Bank, entitled “The Changing Nature Of Work”, identifies the need for social insurance models that are dependent upon steady wage employment. Besides, hese programs are often established for large informal industries in developing countries to address the decline in traditional employer-employee relations.
Advantages of Social Health Insurance
The public insurance program known as social health insurance offers protection against economic risk due to a medical emergency. In most cases, participation in social insurance plans is mandatory. This type of insurance is a social security measure by the relevant government.
There are many differences between public support and social insurance. And, ne of the most striking differences in SHI is that participants’ claims under this type of insurance are partially treated according to their contributions. This is also known as an insurance premium. So, production activity is when the insurance coverage is proportional to the recipient’s contributions.
Sometimes, individuals receive benefits that exceed their contributions. In these cases, the government should consider redistribution within the government’s social insurance program. The Old-Age Survivors and Disability Insurance Program (OASDI) is the largest US social insurance program. In short, t provides income for both retirees and their survivors, particularly widows and widowers.
The most extensive social insurance program the US federal government runs is workers’ compensation. In short, this program offers workers compensation for injuries sustained at work and unemployment insurance that provides temporary benefits in job loss.
Social security and Medicare beneficiaries make up the majority of the middle class. These insurance plans are middle-class programs because they serve people who meet multiple criteria such as age or disability.
Why is there a need for a Social Health Insurance program?
Social insurance helps address the inequitable distribution of resources and benefits in a competitive market. These programs allow the participants to select a more suitable health insurance plan to take risks and still be part of the economy. So, they must know that the funds will be available if they need financial assistance. The concept of social insurance programs is based on two core principles: social justice and social stability.
Conclusion
Social insurance programs can benefit the disabled, seniors, and the unemployed. This is a great initiative to make sure that everyone in the country has comprehensive health insurance, which could benefit them in case they have to go into an emergency.
