Importance of Social Insurance Programs

Social insurance programs are paid programs aimed at maintaining the financial stand of an individual when there is an occurrence of a peril that is insured. The primary funding for social programs such as Medicaid and Medicare include federal grants, privately-funded premiums, and public and private corporate stakeholders (Han, Luo & Ku, 2017). Members of the social welfare programs may have to co-pay or fully-fund medical services they receive. Social insurance programs have been the most effective programs in running the compensation to the beneficially of the schemes. The insurance programs contain a mutual agreement between the insured and the insurer. Both parties outline and understand the agreement based on legal policies, including the premium payments, program maturity, and the amount of benefits for the insured acquires after eventualities (Han, Luo & Ku, 2017). The social insurance programs follow the rules in the occurrence of the risk and compensate the beneficially of the program according to the law made when the program was initiated.

Despite being most effective in their operation, social insurance programs have been affected heavily by social, economic, and political forces. Economic factors such as inflation have resulted in higher insurance charges to mitigate the issues during compensation (Jin & Vasserman, 2021). Increased payments for social insurance programs result in the attenuation of the number of insured in the insurance company, which can eventually cost the insurer the collapse of the whole program. Increased savings by the household has also contributed to many failing to join such programs in fear they will not benefit from such programs. However, legislators and healthcare advocates collaborate to develop policies to regulate the market and rid it of unscrupulous insurance sellers (Smith, 2017). Such directives are very harsh to such programs as they terminate the contract of the social insurance programs and the insured earlier than they would need their clients to continue paying their premiums.


Han, X., Luo, Q., & Ku, L. (2017). Medicaid expansion and grant funding increases helped improve community health center capacity. Health Affairs, 36(1), 49-56.

Jin, Y., & Vasserman, S. (2021). Buying data from consumers: The impact of monitoring programs in us auto insurance (No. w29096). National Bureau of Economic Research.

Smith, D. G. (2017). Entitlement politics: Medicare and Medicaid 1995–2001. Routledge.

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DemoEssays. "Importance of Social Insurance Programs." November 29, 2022.