The benefits of social insurance

Social insurance is operated differently from private insurance. Social insurance is operated by the state, and is usually compulsory. It is funded partly by contributions from the insured members with the deficit covered by tax revenue.

Examples of social insurance are the unemployment insurance and old age pensions operated by many developed countries. In America, this is called social security. It is popular in America, which is the capital of capitalism and free market. Many countries also have health care insurance operated as a social insurance, e.g. UK, Canada and most countries of Europe.

Under a social health care insurance, there is no need to worry about pre-existing or congential conditions as they are covered. There is the risk of over-consumption of health care services which are paid by insurance, but this can be controlled to a large extent. There is also the need to control the charges made by doctors and hospitals. When the control is exercised by the state, backed by the law, it produced better results than control by private individuals exercising market choice, as can be seen by the high cost incurred by private health care insurance in America.

Singapore has stayed away from social insurance on the fear that they can be abused. This fear is exaggerated, and reflects the mindset of Singaporeans, including our leaders, in avoiding taking personal judgement and responsibility. We have to change this mindset and find new solutions to problems that have been ignored a long time. Private insurance is not suitable to handle problems such as unemployment relief and affordable health care.

Tan Kin Lian