Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Social health insurance is a method for paying for medical care for a population of beneficiaries
  • Typical social health insurance systems use employer, employee, self-employed worker contributions to fund medical care
  • Typical social health insurance is private with government policy oversight and supervision
  • Government requirements usually involve a package of necessary benefits


There is little room for disagreement about the purposes of social health insurance systems. They seek to do the following:

  • keep people healthy
  • heal the sick
  • guard families against financial ruin from the weight of the costs of modern medical science

The consensus ends there; the means for reaching these agreed purposes have caused division and political friction.

The question of social health insurance causes deep political divisions among nearly all of the advanced societies that have sponsored universal health care in some form.

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The Principles of Social Health Insurance

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Social health insurance is not just government-operated insurance paid by taxes.

The government owned and operated type follows a national health insurance model. Social health insurance has its roots in private sector medical providers and private insurers.

Social health insurance uses fees, premiums, and wage and salary contributions to provide a substantial part of its funding. Government subsidy, while important, is usually not the bulk of the financing.

The items in the below-numbered list describe the principal elements of social health insurance.

  • Universal access for all citizens and qualified residents
  • The effectiveness of care is measured by better health outcomes
  • The system enforces efficient use of resources
  • The system provides high-quality services
  • The system must be responsive to patient concerns

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Financing and Payments

There are four models that carry out social health insurance in advanced nations and to a lesser extent in developing nations.

The issues between the relate to the amount of government involvement and the approaches to help those that cannot afford to pay market prices for medical care or health insurance.

  1. The National Health Insurance Model – This funding model is a popular European model uses private sector providers with a single government payer. The single government payer has leverage over the medical marketplace and can dictate prices and terms. Everyone pays into a government-funded insurance program.
  2. The Public Finance Model – This government-centered approach uses taxation to raise funds and pay the costs of medical care. The government designs, operates, and manages the delivery of medical services. The medical providers act as government employees or agents.
  3. The German Model – Applied in Germany and much of Central Europe, this approach uses employer contributions and worker deductions to fund the non-profit program along with government subsidies. The program uses private providers and must cover everyone.
  4. The Out-of-Pocket Model – The out-of-pocket approach requires citizens and residents to find the funds to pay the price demanded by medical care providers. Out-of-pocket expenses can change the situation of an individual or family in drastic ways.

The effects of the out-of-pocket model are temporary or permanent financial disadvantage. This system uses a limited safety net for emergency care to supplement the efforts of the individual.

This system is common in poor and under-developed countries, and surprising to many observers, major parts of the US system before Obamacare resembled this model.

Moving towards Universal Coverage

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Social Health Insurance covers ideas about financing health care.

The goal is to move society towards universal coverage in which every resident can get a minimum level of high-quality medical care and more.

There are policy choices that nations must make to allocate medical care and costs in ways that its people agree to be fair and reasonable.

The impetus to universal coverage can come from any or all levels or classes within a population, but it is the poor that have the greatest unfilled needs.

Social Health Insurance in the US

There are elements of social health insurance in the US healthcare system, and they include the below-listed programs. The US attempted healthcare reform in recent decades, and the Affordable Care Act was a giant step towards social health insurance and universal coverage.

Obamacare was not universal coverage because it does not accept those that cannot pay.

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Medicaid Expansion

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Obamacare attempted to use Medicaid Expansion to cover those that could not pay, and the plan was well-conceived but not successful. Political opposition denied millions of the benefits created by Congress in Medicaid Expansion.

Similarly, political opposition stopped the COOP program intended to create new providers and cost competition for private sector insurance companies.

  • Medicare is the national program to provide healthcare coverage for older Americans. The foundation is individual funding paid by contributions during the working years.
  • Medicaid is the national program to provide medical care for the poor.
  • The Children’s Health Insurance Program protects infants, children and adolescent with health, vision, and dental coverage.
  • Social Security provides income and supplemental income for some persons with severe limitations.

Social Health Insurance and the Poor

In many societies around the word, the debate grows in frequency and intensity as to whether to recognize a right to certain minimum conditions including medical care.

In these debates, the subject more often than not focuses on social health insurance and its promise to provide medical care to everyone without regard to ability to pay.

The social safety net that exists in most advanced nations rarely exists in poor and under-developed societies. They cannot organize sufficient resources to cover those vulnerable members, and those with greatest needs.

What is Social Health Insurance?

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Social Health Insurance is essentially a public policy for universal health coverage. In most instances, it is a government supported design that uses taxes, employer funds, wage contributions, and other types of fees to fund medical care for every member of the population.

Participants often have no choice in participation. In social health insurance, the sick do not pay more than the healthy, the rich pay more than the poor, and payment for subscriptions can scale with the ability to pay.

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