Social Insurance

Social insurance is characterized in a sense that its benefits are acquired through the means of eligibility (requirements such as tax rates or premium contributions) which a public program must first apply through, and thus serves public programs with benefits, coverage, and premium that may initially be limited -- stated through the rules and regulations provided by the social insurance program. It is funded by either taxes or premiums paid by the participants under this program, but may resort to other means of funding as well if these original sources are not enough. The benefits of government funding include a wide pooling of risks and the benefits provided (stated within the program). Also, social programs are not fully funded, which is generally viewed as economically desirable. Yet, there are drawbacks that exist as well. Emphasis is placed upon the social benefits for all groups versus an individual program, therefore not catering to the needs of an individual public program but more so in the overall needs of all programs. Unemployment insurance is a great exampe of this -- individuals are given compensation (which is generall an average given to most members of this insurance). Participation within these government programs are mandated, whereas in private insurance enterprises, public programs can voluntarily choose their choice of insurers. This is exhibited in Medicare, where individuals are given an initial premium, but have the right to pay more by adding other optional choices of plans (Plan B, C, and D). The rights within government funding of social insurance programs includes statutory rights, rather than contractual rights with a private program. Worker's compensation identifies with this fact -- they are provided with insurance in exchange for mandatory relinquishment of their right to sue the company. The adverse financial effects of life cycle events and conditions (e.g., disability, health, unemployment, longevity) are provided for by a...