In recent posts I’ve compared social security as managed in this country and in Germany. It surprised me that the website of the German Social Insurance Associations here (in English) gives a lot of emphasis to the principles underlying social insurance. The basic principle the web site cites is human rights, this by means of a quotation from Article 22 of the Universal Declaration of Human Rights, 1948. Here it is:
Everyone, as a member of society, has the right to social security and is entitled to realisation, through national effort and international co-operation and in accordance with the organisation and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.
The site then, under Basic Principles, lists six.
- The principle of compulsory insurance
- The principle of financing through contributions
- The principle of solidarity
- The principle of self-government
- The principle of free movement
- The principle of equivalence
The first is self-explanatory. The second, financing through contributions, emphasizes that the primary, but not the exclusive, financing should be by contributions of employees and employers. The third, the principle of solidarity, says the following:
Risks to be insured are borne collectively by the community of all insured persons. Irrespective of how much each person has paid into the social insurance system, all have access to comprehensive coverage. This solidarity-based approach creates an equilibrium between the healthy and the sick, between those at the bottom and the top of the earning scale, and between families and singles.
This principle contains within it the idea that coverage must benefit everyone in the same way regardless of contribution. Thus in effect it affirms redistribution of contributions based on need—whereas contribution by any individual is based on ability.
The principle of self-government makes the point that accomplishing these common goals should be at the lowest appropriate level, not at the level of the State. Thus these programs should be managed by insurance funds. The Germans label this the “subsidiarity principle.” But what does that mean? Here is a quote (thanks, Online Etymology Dictionary) that brings it home. It is from a papal encyclical, Quadragesimo Anno (Pius XI, 1931):
Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.
The principle of free movement pertains to the European context. Programs should be portable across borders. Indeed this principle is implemented between our SSA and other countries as well under international agreements, although I’m vague on details.
The last principle, that of equivalence, is restricted to pension programs. It says, in effect, that in the case of pensions the solidarity principle may be modified. Thus pension benefits should not be equal but be proportional to the pension contributions made by an individual.
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It’s worth our time as citizens to contemplate these principles with some concentration. I note that tensions exist between them. Remove the limiting contexts of these as found on the German site, and it is clear that the principles of the subsidiarity and of the equivalence principles clash with the others. Subsidiary suggests a tension between requiring compulsory contributions by the State, the equivalence principle with the principle of solidarity.
This tension is quite obvious in the debates that form our own “national dialogue.” The debate takes place between those who would deny the government any kind of role in pensions or health care (subsidiarity) and think that people should get what they put in and nothing more (equivalence)—and those who, under the principle of human rights would grant all of the principles stated and feel that unless the highest power is actually involved, the whole concept of social insurance becomes meaningless.
Filed under: Human Rights, Insurance, Social Security
