Social Insurance 1

SOCIAL INSURANCE 1. Purpose and meaning of social insurance. 4 2. Increasing need of social insurance. 3. The new era of social insurance. § 4. tures of social insurance. I 5. Historical roots of accident insurance.

6 Development of compensation for accidents. f 7. The compen sation plan in America. § 8. Standards for a compensation law. § 9. Old-age and invalidity pensions. § 10. Life insurance for wage-earners. f 11. Historical roots of health insurance. I 12. Need of health in surance in America. § 13. Unemployment insurance. 4 14. Need of ideals in social insurance. 4 15. Insurance rather than penalty. 4 16. The compulsory principle. § 17. State insurance and a unified system.

18. The contributory principle.

§ 1. Purpose and meaning of social insurance.

In im portance surpassing at present any one of the various meas ures on behalf of the wage-earning class that have thus far been considered is the remarkable development now under way of plans and agencies to provide insurance for the "com mon man." Insurance means making some kind of provision out of present means, so as to reduce the injury and suffering that would result from a future mishap. Usually, likewise, it implies uniting with others to distribute the expense fairly over all in the group. Social insurance is the term most frequently applied to the various institutions and plans provided, more or less under the regulation of law, for the protection of the lower paid workers in most modern countries. The terms in dustrial insurance and workingmen's insurance are likewise used. The principal types of events for which social insurance in its various branches provides are (1) accident ; (2) in capacitation (either by old age or by permanent failure of health within the normal working years) ; (3) death ; (4) 398 sickness; and (5) unemployment. The five types of insurance to provide indemnity in these cases are usually known as (1) accident insurance, (2) old-age and invalidity pensions, (3) life insurance, (4) health insurance, and (5) unemploy ment insurance or out-of-work benefits.

The direct aim of social insurance is not to prevent these mishaps (though that may be an indirect result), but it is to provide some financial indemnity for the economic loss and ex pense involved in the mishap. The principal kinds of losses are two : first, medical expense, occasioned directly in caring for the sick or injured person, the expense of medical atten tion, nursing, hospital care, drugs, and special apparatus such as crutches and glasses, and burial expenses; second, wages, the loss of income because of inability to work as a result of injury, of illness, or of permanent disability, or (in the case of life insurance) of the death of the bread-winner, or of want of employment.

§ 2. Increasing need of social insurance. In various con nections we have observed how the changes that have been oc curring in modern times have increased the uncertainties of the industrial life and of the earning power of the mass of the It should be further observed that in city condi tions a working family does not have, as in agricultural con ditions, the supplementary sources of income from garden, field, forest, and stream, and it is not so possible to use the earning power of children, of old people, and of the partially disabled. The faster working pace of factories, the increase of power-driven machinery, the rapid fluctuations of employment with changing fashions, inventions, shifts of population, and waves of industrial prosperity and depression, all have introduced new risks and problems into the worker's life. The increasing payment of wages in money, and the more temporary nature of employipent of men in many kinds of factory work, have added to the problem. With these changes have come belatedly a growing interest in 1 See ch. 10, I 7; ch. 21, I 1; ch. 23, § 10-19; and ch. 33, 14.

the welfare of the mass of the workers and a growing sense of responsibility on the part of the public.