Social security

Social security, government programs for protecting people from hardship due to loss of income through old age, disability, unemployment, injury, sickness, etc. State social security systems developed in Europe after 1883, when Germany started a compulsory health insurance scheme. In 1911 Great Britain adopted an unemployment insurance program. In the United States in the Depression, the Social Security Act (1935) established a federal program of old-age insurance and a federal-state program of unemployment insurance. It also provided federal grants for public assistance, public health, and child welfare services. The federal plan has become compulsory, except for railway and government workers, who have their own schemes, and special types of workers who are not regularly employed.

The plan is financed by equal employer and employee contributions. Old-age and survivor benefits are paid to retired workers and their dependents or to survivors of workers who have died. The amount people receive is related to their average monthly earnings over a number of years. The aging of the U.S. population has recently threatened the solvency of this system. The social security tax has become a heavy burden for workers as the ratio of retirees to taxpayers has increased in favor of the former.

In the early 1980s the Reagan administration considered alternatives for reforming the system: reducing benefits, raising the retirement age, or funding the social security program from general revenues.

Disability benefits are paid to workers and dependents in the event of disability lasting over a year. Health insurance for the aged was added in 1965. Those over 65 are automatically helped with payment for hospital and post-hospital care; a supplementary medical insurance scheme, at an extra voluntary premium, covers 80% of doctors' and some other bills.

A claimant of unemployment insurance is usually eligible for about half his earnings. Public assistance, which in some states predates 1935, differs in being financed through federal grants (largely) and state revenues, rather than individual contributions. It goes to the care of the elderly, disabled, the blind, and their dependents. Workmen's compensation, dating from the early 1990s and varying widely between states, aids those employees injured at work or with industrial disease. A few states administer sickness insurance plans. Government social insurance schemes are more comprehensive in most western European and Communist countries. In the United States private insurance companies play a more prominent role.