Ageing, Social Security and Affordability

Theodore. R Marmor, Philip. R De Jong

• Publisher: Routledge
• Year: 2018
• ISBN:
  9780429872464
• Edition: 1
• Topic: Ciencias sociales
• Subtopic: Sociología

First published in 1998. This volume (the second of a twin set grouping articles based on papers presented at seminars in Sigtuna, Sweden, during 1994 – 1996) deals with the largest spending programs of the welfare state – old age pensions and medical care, and their place within debates about the desirability and affordability of modern social programs.

The volume is divided into four parts. The first part deals with general welfare state issues, cross-cutting themes and characterizations of whole systems within such diverse disciplines as social law, sociology and economics. Part two deals with old age pension reform. The countries discussed have widely different geographical, cultural and historical backgrounds. Part three takes up a number of interesting topics under the heading of health care reform. Part four deals with a substantial issue located and the juncture of aging, affordability, pensions and especially health care: increased longevity (and population aging) and the associated disability and frailty. What effect will these have on the future of modern welfare states?

PART 1

GENERAL ISSUES

1.1Social assistance in the member states of the European Union: Common features and continuing differences

Bernd Schulte

The historical and theoretical background

Techniques of social protection

Throughout history, many different means of preventing or combatting poverty, insecurity in life and negative consequences of social contingencies have been in use: savings, family maintenance obligations, voluntary assistance by private persons, charity, civil liability, employers’ liability, private insurance on an individual or mutual basis, and social provision such as social insurance, social assistance, social compensation and non-contributory, non-means-tested benefits, i.e. demogrants.

A typology of systems of social provision to characterize conceivable institutional scenarios can be specified using the following criteria:

1.The degree of coverage of social risks, such as:

a.The risk of loss of income from work because of

-old age;

-disability;

-sickness;

-unemployment;

-deficiency of (need for) education/training;

-deficiency of physical/ capabilities (need for rehabilitation;

-the need to care for family members.

b.The risk of loss of maintenance payments

-separation and divorce;

-absence of breadwinner;

-death of breadwinner.

c.The risk of special needs

-cost of children;

-cost of health and rehabilitation measures;

-cost of education;

-high cost of housing;

-cost of support measures for disabled persons;

-cost of nursing (dependency);

-cost of counselling and of legal redress.

-The risk of not being able to provide for a socio-cultural mini mum of existence.

2.The degree of coverage of persons (‘universality’ versus ‘selectivity’, e.g. groups of nationals/all nationals/all individuals living in a country, irrespective of nationality/in addition persons living outside the country but with certain relations to it).

3.The average level of benefits.

4.The formula according to which benefits are adjusted over time.

5.The method of financing.

6.The degree to which actuarial equivalence between contributions and benefits is preserved.¹

Social security

As regards the modern concept of social security, we have to distinguish social security as an objective and social security as an institutional pattern. According to a famous definition by the International Labour Organisation, social security:

… has wider aims than the prevention of relief of poverty. It is the response to the aspirations for security in its widest sense. (…) It is the guarantee of security that matters most of all, rather than the particular mechanisms, such as contributory or tax-financing, the insurance or service model delivery (…) by which that guarantee is given.²

As regards the pattern of social security provision, history has shown the emergence of several common characteristics in countries all over the world.

First, there is a strong link between formal wage employment and participation in social security schemes which restricts, at least in Central Europe in the last decades of the 19th century when modern social protection emerged with the introduction of social insurance in Germany, coverage to (blue-collar) employees. Later such coverage has been extended to all employees, to self-employed persons and in some cases to all citizens, at least in the well-established modern welfare states in Central, Western and Northern Europe. Secondly, social protection by modern social security schemes is restricted to specific social contingencies, such as sickness, maternity, invalidity, old-age, accident at work and occupational disease, death of the breadwinner, and family charges. Today, in almost all countries we can distinguish two basic types of social protection schemes, i.e. social insurance and social assistance.

Social assistance

As an approach to social protection, social assistance has always had a relatively minor role (in spite of the fact that it originated historically earlier than social insurance). Social assistance has been defined by the International Labour Organisation as:

… a service or scheme which provides benefits to persons of small means as of right in amounts sufficient to meet minimum standards of need and financed from taxation.³

This ILO definition has been quoted deliberately in this context, as it serves as well today, in any country, in the Central and Eastern European countries as well as in developing countries,⁴ as it did when it was formulated in 1942. The definition has four crucial elements:

1.Benefits are provided only to persons ‘in need’.

2.Benefits in social assistance schemes should be set at levels adequate enough to meet ‘minimum standards of need’ which means that the level of benefit is determined by the definitions of ‘need’ relevant in a particular social and historical context.

3.These benefits should be provided ‘as of right’, which means, that they should not be granted as a kind of charity or at discretion.

4.Social assistance schemes are funded from general taxation and not from contributions.

The way in which these two basic forms of social protection are related to each other varies, however, deeply. Social protection can, for example, be strongly insurance-based, with a general social assistance scheme acting as a ‘safety-net’ (e.g. Germany). Social assistance can, however, also play a more dominant role, for example through specific schemes that cover specific risks or groups of the population.

Furthermore, insurance systems vary greatly, too: insurance-based benefits may be either flat-rate, or earnings-related. In the first case, the role of social assistance in supplementing insufficient income from contributory benefit schemes may be greater, and accordingly the role of means-tested social assistance may be greater, too (e.g. the United Kingdom).

Systems of social protection A factor which is characteristic of all the systems of social protection in Europe is the fact that they can be broken down into several sub-systems, some of which belong to the field of public law (social law), while others do not, and these in turn can be subdivided into other sub-systems.

One of the greatest disadvantages of this modern approach to social protection consists in the fact that the totality of all sub-systems of social protection is highly complex.

The distinction between the different branches of social protection under social legislation is primarily made on the basis of the models and instruments which are typical of them and with which they pursue the various objectives of social protection. We can distinguish between three basic types:

1.Contributory benefit schemes (based on the insurance principle).

2.Non-contributory benefit schemes to which entitlement is based on non-financial characteristics and/or circumstances and which are financed from general taxation.

3.Non-contributory, tax-financed, and means-tested benefit schemes.

On this background, we may further distinguish between classic branches of social protection which are constituted by the traditional social contingencies or social risks which they are meant to cover:

1.Sickness.

2.Maternity.

3.Invalidity.

4.Old-age.

5.Death of the breadwinner (survivors).

6.Employment injuries and occupational diseases.

7.Family benefits.

8.Unemployment.

Today, a ninth branch may be added.⁵

9.Guarantee of sufficient resources.

The scope of social security schemes refers to the group of persons who are included in the scope of protection afforded by such schemes. The range of persons covered is one of the principal elements for classifying social protection schemes.

The aspects according to which individuals are included in the range of persons covered by a given scheme depend on various fundamental determinants, in particular the maxims governing the state’s social policy, the prevailing ideas on the degree to which the state should participate in social protection as well as on the role and reasonableness of individual/family protection and/or private provision, the recognition of specific need situations for protection, the objectives and purposes of social protection schemes, the organisation of and/or the methods employed by such schemes, the way social security schemes are financed, and the nature of the different social benefits.⁶ All these factors for determining whether individuals should be included in or excluded from social protection schemes are closely connected to one another.

In deciding on the range of persons covered, generally two fundamental approaches are distinguished, namely the universal approach on the one hand, and the categorical approach on the other hand.

1.Social protection schemes based on a universal approach define the group of persons protected primarily by reference to membership of society as a whole. They presuppose that all individuals are in need of protection and ask about the social problem situations in which protection is to be afforded.

2.Social protection schemes based on the categorical approach take it for granted that there will be certain social problem situations and ask about the need of specific groups of persons for protection. They define the group of persons protected primarily by reference to their status in the working population.

The differences between the two approaches to the personal scope of social protection schemes have admittedly diminished in the course of time, as both approaches have undergone different expansions and are both used to supplement each other, too.

Social insurance For contributory benefit schemes (social insurance), two elements are essential: On the one hand, there is the balancing of risks which is typical of insurance, and on the other hand there is a specific social component to this balance.⁷

It is the second element which distinguishes social insurances from private insurance, social insurance, Within the system of social insurance, there is a balancing of risks and a social equalization, independent of individual need among the insured (for whom insurance is in most cases compulsory).

In contrast to private insurance, the contribution is not, or at least not primarily, orientated towards the average risk of the individual insured (according to the principle of individual equivalence), but the contributions are rather - and this is the ‘social’ component of social insurance - calculated according to social criteria by means of a redistribution mechanism, i.e. they are orientated towards the income - in most cases only the income from gainful economic activities (wages) - of the insured.

A further distinction mus...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Introduction and Overview
• Part 1: General Issues
• 1.1 Social Assistance in the Member States of the European Union: Common Features and Continuing Differences
• 1.2 The Relation Between Social and Occupational Security
• 1.3 Legal Indexation of Social Security Benefits: An International Comparison of Systems and their Effects
• Part 2: Pension Reform
• 2.1 The Hidden Liabilities of Public Pension Plans in Twelve EU-Countries: What does it Mean?
• 2.2 Pensions in Transition in the U.S. and Japan: Parallels and Contrasts
• 2.3 Transitional Effects of a Change in the Spanish Pension System
• 2.4 Financing Old Age in Singapore: Are there Lessons for the Welfare States?
• 2.5 Pay-as-you-go Versus Funded System of Financing Pensions in Central and Eastern Europe
• 2.6 Pension System Reforms in Latin America: How Much Privatization?
• Part 3: Health Care Insurance
• 3.1 Equity, Cost Containment and Efficiency in Health Care: Can they be Achieved by Regulated Competition?
• 3.2 Health Care Reform: What is the Problem?
• 3.3 The Social and Economic Consequences of Delaying a Political Decision Concerning Reform of the Health Care System in Poland
• 3.4 Provision and Financing of Long-Term Care for the Elderly: The role of Government
• Part 4: Healthy Life Expectancy
• 4.1 Impact of the Evolution of Health Expectancy on Future Public Health Care Expenditures
• 4.2 Forecasts of Future Disabled and Institutionalized US Populations 1995 to 2040
• List of Contributors