No single payer

As an initial matter, it is important to point out that the term "Social Security" in the United States refers to the government-run insurance program for older and disabled Americans.1 9 The term was first used when Congress passed the federal Social Security Act in 1935.20 Shortly after World War II, it became popular in Europe, introduced by the Beveridge Report that had the term "social security" in its title.21 This means-maybe somewhat remarkably-that Europe inherited the term from the United States. Still, it has an entirely different meaning in the United States than in Europe (where it generally refers to all schemes covering social risks).22 In the United States, pension and disability benefits are defined by federal Social Security statutory law, while all states have their own public sector pension statutes and a few states have state-provided disability plans. 23

In addition to Social Security, a large segment of the American populace receives employer-provided retirement and welfare benefits either under collective bargaining agreements or, more likely, through the unilateral and voluntary actions of employers (spurred on by vast tax subsidies for sponsoring such benefit plans). 24 The federal Employee Retirement Income Security Act of 1974 (ERISA)25 provides rules for the provision of such benefits, including rules for the protection of certain forms of pension funds from forfeiture. 26

The American Social Security system is funded on a pay-asyou- go (PAYG) basis and takes the form of a defined benefit plan.2 7 After employers and employees pay into the program, during the employee's working life, the employee begins to receive a defined retirement benefit after she reaches a designated retirement age (which can vary based on the individual's wishes as to when she or he wishes to start receiving benefits).28 This program in its current form, after some futile attempts to introduce privatization, remains bereft of private actors, and is run completely by the Social Security Administration, which is an independent federal agency. 29

The rest of this Part considers the four major American social insurance schemes: (1) the old-age, survivor, and disability insurance program under Social Security; (2) the unemployment compensation system; (3) the Family and Medical Leave Act (FMLA)30 for sickness and family leave; and (4) with regard to healthcare, both the public Medicare and Medicaid health insurance systems, as well as the private health insurance system under the Affordable Care Act (ACA). Part A. discusses pensions and disability insurance under the federal Social Security program. More specifically, this section considers why privatization has been unsuccessful, even though such participation might lead to more choice, more efficiency, and more activation. "Activation" is a term generally absent from social insurance discussions in the United States. The term is used here to refer to activation strategies that seek to activate large groups of inactive persons in the labor market, such as recipients of unemployment or disability benefits.31 Privatization, and the greater use of private actors in the social insurance context, tends to go hand-in-hand with redirecting resources toward activation strategies. 32

Part B. next explores the federal-state unemployment compensation program and highlights the few places where nonpublic actors have played a role in this program, primarily in the job search context. Additionally, this Part considers why it is unlikely that unions and employer organizations will play a greater role in the future development of this program, similar to the European Ghent System of unemployment insurance.

Part C. discusses the largely inadequate American version of sickness benefits. Unlike many other countries, the United States does not have a national social insurance scheme that provides for sickness benefits. Instead, under the federal Family and Medical Leave Act (FMLA), qualified employees are entitled to twelve weeks of unpaid, job-protected leave for designated reasons.33 In addition to the federal FMLA, as discussed in more detail below, many states and municipalities have their own equivalent laws and various types of sickness benefits.

Finally, Part D. is divided into two subparts. The first subpart discusses the public health insurance programs, Medicare (for the elderly and disabled) and Medicaid (for the poor, needy or disabled). The second subpart recognizes that without a true national healthcare system, those not covered by Medicare or Medicaid must find health insurance coverage either through their employer or on their own through the private market. Consequently, health insurance remains largely an employerdominated area in the United States, and the Affordable Care Act (ACA) plays a large role in the provisions of healthcare for an increasing number of Americans. So, the second subpart discusses the provision of private health insurance through employer-sponsored plans under ACA and ERISA.

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A. OLD-AGE AND SURVIVORS In the Old-Age, Survivors, and Disability Insurance program (OASDI), the federal system organizes retirement security for elderly and disabled persons, as well as for survivors of elderly couples. 34 The Social Security Act was signed into law by President Franklin Delano Roosevelt in 1935 as part of his New Deal Program. 35 It now covers some 58 million Americans, with one out of every four American families receiving benefits, and for people aged sixty-five and older, it is the main source of income. 36 In addition to the elderly, through the social supplemental insurance (SSI) program, more children receive benefits under Social Security than any other federal program.37 It is also the most efficient social insurance program, costing less than one penny in administrative expenses for every dollar that it metes out.38 Because of its hallowed status after almost eighty years in existence, it is considered to be politically untouchable and the "third rail" of politics in the United States. 39 Social Security provides an income base, in the form of a lifetime annuity, to nearly all retired and disabled workers and their surviving spouses. 40 It was not until 1956, twenty years after the Social Security Act was initially enacted, that the Disability Insurance program was added to the Social Security program, providing income to disabled workers.41 OASDI benefits are defined by federal statutory law.42 Throughout its history, it has been consistently administered exclusively by public authorities, with a complete absence of any role for private actors. 43 The program is a pay-as-you-go system (PAYG), meaning today's workers pay (through payroll taxes matched in amount by their employers) for the benefits of today's retirees.44 Social Security covers more than 95% of Americans, provides half of all retirement benefits, and currently, one in seven, or 58 million Americans, receive such benefits.45 Under the OASDI program, benefits are adjusted for inflation and support the beneficiary's spouse during the beneficiary's life, as well as after the beneficiary's death.46 There is some debate about whether Social Security is in financial trouble and in need of reform.41 On the one hand, the financial distress of the system stems, in part, from a smaller generation of workers seeking to support a larger generation of workers (i.e., the baby boomers).48 Indeed, as a result of increased life expectancies, there has been "a decrease in the ratio of [old age and survivor insurance] OASI-covered workers to OASI beneficiaries from 16.5 in 1950 to 3.7 in 1970 to 3.2 in 2008."49 At some point, there will be more beneficiaries than workers, and the PAYG system will falter. In the meantime, in attempt to keep this scenario from coming to fruition, the retirement age for full social security benefits has been raised to sixty-seven for those born after 1960,50 and payroll taxes have been raised to help keep the system solvent.51 Although not exactly optimistic about the future of the Social Security System, the 2014 report by the Trustees of the Social Security System does point out that the system is not in short-term danger of failing, but some immediate legislative action could forestall further difficulties.52 The Disability Trust fund faces the largest challenges, with its beneficiaries facing benefit cuts starting in 2016 if Congress does not take immediate action. 53 Social security alone does not provide adequate retirement income, evidenced by the fact that a large majority of U.S. workers will see about a 40%-50% income replacement ratio from Social Security.54 Most experts believe that at least a 70% income replacement ratio is required to have adequate retirement income.5 5 As discussed below employer-provided pension and retirement plans have become so important in the United States as a result of the current state of Social Security benefits and the lack of personal savings. Supplemental Security Income (SSI) is one system through which eligible people receive retirement income, but it is strictly based on need.56 In general, a person can qualify for SSI benefits if he or she meets the following requirements: (1) is at least sixtyfive years old, (2) is blind or disabled, (3) has limited income and resources, and (4) is either a U.S. Citizen or national or eligible alien.5 7 For 2014, those eligible individuals who fit the criteria can receive $721 per month ($1,082 for an eligible person with an eligible spouse).5 8 The purpose of SSI payments are to help people pay for necessities-food, clothes and housing. Many disabled individuals who get SSI will also be eligible to get Medicaid from the state in which they live.5 9 But because SSI is a federal benefit with specific requirements, the government can be as stringent as it would like in enforcing who receives it. This has even led some to question its effectiveness and whether it actually helps to perpetuate people living near the poverty line.60 In addition to the federal SSI payments, forty-six states offer supplementary state SSI payments. 61 As the supplemental programs are state-run, each state can decide on its own how much of a benefit to offer. As of 2013, Wisconsin, for example, would pay up to $83.78 per month to an eligible individual ($132.05 per eligible couple). 62 Critics attack state SSI claiming states have an incentive to get a "welfare-receiving family [i.e. receiving public assistance] with a disabled child, onto the SSI rolls."63 B. STATE AND EMPLOYER-SPONSORED DISABILITY PROGRAMS (SSDI) In addition to being eligible for disability benefits under SSDI, many states have different forms of short-term and longterm disability programs, which provide income replacement for qualified disabilities. 64 Additionally, many employers provide short-term and long-term disability plans as one of the welfare benefits they provide to their employees. 65 SSDI can best be described as a related but separate component of SSI, with a couple of important distinctions. First, SSDI is an earned benefit provided to people with physical and mental impairments that are severe enough to keep them from carrying on in their regular jobs or from partaking in any other type of work.66 For an impairment to be deemed severe enough, it must be believed that it will last for one year at minimum, or that it will inhibit a person throughout his or her life.67 Second, there is a distinction in how the two programs receive funds: SSDI is fuelled by Social Security taxes that workers, employers, and the self-employed pay, whereas SSI gets paid out of the Treasury Department's general revenue.6 8 So even though SSI and SSDI use the same definition to classify disabled adults, SSDI focuses on impairment-based need, while SSI is for people with very low income. 69 Only five states provide short-term disability benefits (sometimes called temporary disability insurance (TDI)): California, Hawaii, New Jersey, New York, and Rhode Island. 70 The purpose of such programs is to give people partial pay replacement if they cannot work for more than three days due to conditions such as injury, illness, or pregnancy. 71 While it is just one example, California administers its program through its Employment Development Department, which requires all employees to contribute to short-term disability via payroll deductions. 72 Through this structure, if someone cannot work due to disability, that person can then get weekly payments until she or he goes back to work or his or her benefits run out. 7 More commonly, however, disability programs (outside of SSDI) are provided by employers. In its 2013 review of claims data, the Council for Disability Awareness, which is comprised of nineteen insurance providers, found that more than 213,000 employers make long-term disability insurance available to their employees. 7 4 This is a marginal increase in terms of number of providers, but the number of people who opt-in for coverage declined by about 1.5%.75 Despite the decrease in coverage, payment claims increased once again, up to $9.8 billion in 2013.76 The way that long-term disability typically works in the employment context is that it is a voluntary benefit, meaning that the employee pays the full cost of coverage.77 In the past, however, many employers took it upon themselves to pay the full cost, or at least pay for coverage up to a certain level.78 According to Barry Lundquist, president of the Council for Disability Awareness, there are a few good reasons for the change in how companies approach disability insurance, such as "employers are focused on compliance with the new Affordable Care Act's health insurance provisions-so employers and agents/brokers are saying they'll deal with other benefits like disability insurance later."79 Another factor is tied back to whether disability is a voluntary versus employer-driven benefit. For voluntary (employee choice) plans, enrollment is about 40%.so Of course for an employer-paid plan, employees are automatically enrolled, but they are sometimes given the choice if they want to increase coverage by making pay check deferrals.81 C. UNEMPLOYMENT COMPENSATION The current United States unemployment insurance (UT) system 82 was enacted in 1935 as part of the New Deal program of President Franklin D. Roosevelt. 83 The UT system provides temporary, partial wage replacement for workers who are unemployed through no fault of their own. 84 The unemployment compensation system is based on a joint federal-state scheme that effectively encourages states to form their own UT programs. 85 Under this scheme, the federal government does not directly provide UT benefits, but states receive federal subsidies for their own UT programs. 86 The source of federal funding is a tax, currently set at 6.2% of the first $7,00087 in wages, on every covered employee in the United States.88 Under the Federal Unemployment Tax Act,89 an employer may offset this federal tax with any state UT taxes it pays, up to 5.4% of the $7,000 base wage.9 0 Not surprisingly, this incentive has proven very effective, as every state currently has its own UI program.9 1 Yet, states have substantial flexibility in setting eligibility criteria once minimum federal requirements have been met.9 2 The State of Wisconsin, which had the first unemployment compensation system in the country, 93 provides a good example of how a "traditional" unemployment compensation system works in the United States.9 4 Generally, Wisconsin bases UI eligibility on a worker's length of time in the workforce, how the end of the employment relationship occurred, and the extent to which the worker is looking for a new job.95 Workers who are eligible for UI benefits frequently must wait a week before receiving their benefit, and the maximum duration of benefit receipt is usually twenty-six weeks.96 Benefits consist of payments of up to 50% of the worker's previous weekly wage, capped by a statutory maximum.97 The most significant disqualification factors for receiving unemployment compensation are (1) whether the employee voluntarily quit his or her employment, 98 (2) whether he or she was fired for "wilful misconduct," (changed as of January 2014 to "substantial misconduct," a lower standard, at least in Wisconsin), 99 and (3) whether he or she did not continue to search for work under the job search requirement.1 0 0 If any of the three factors are applicable to the employee, the right to benefits could be partially or completely terminated. As for the job search requirement, a worker must be not only willing and able to work, but must also actively seek a new job in order to continue to receive unemployment compensation.1o1 Workers must also accept suitable employment when found to be entitled to unemployment compensation.102 Established during the New Deal, state job centers, sometimes referred to as "labor exchanges," help workers meet the job search requirement.103 They function through "One-Stop Career Centers," which match unemployed workers with suitable job positions, and also ensure that workers continue to search for work while on unemployment. 104 It is unlikely that participation by unions, such as in the Ghent System where funding for unemployment benefits is handled by trade unions and not governmental actors,105 will ever happen. 106 The reasons are at least two-fold. First, unions are generally weak in the United States, where they make up less than 7% of the private, non-agricultural workforce. 107 Their ability to push a union-based, Ghent-style system, even in states with higher union density rates, is therefore questionable. Second, and perhaps even more significantly, it is not clear at all whether the federal Social Security Act in the United States would permit a Ghent-style unemployment system in the United States. Sections 303(a)(1) and (2) of the SSA establish that the Secretary of Labor will not certify payments of federal funds to states unless states provide such methods of administration as are '"found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due' and '[p]ayment of unemployment compensation solely through public employment offices or such other agencies as the Secretary of Labor may approve."'108 Thus, to involve unions in unemployment compensation, the SSA would have to be amended to certify payments to unions and to permit unions to make payments when due. Such a scenario is highly unlikely in the anti-union environment of the United States. 109 D. SICKNESS AND FAMLY BENEFITS: THE FAMTLY AND MEDICAL LEAVE ACT (FMLA) As noted above, the United States does not have a true sickness social insurance benefit. Instead, the federal government mandated, via the FMLA enacted in 1993, that all covered employers (with fifty or more employees in a seventy-fivemile radius) provide covered employees (who have worked for the employer for at least one year, and more than 1250 hours in the previous year) twelve weeks of unpaid, job-protected leave for one of four covered situations.11o These situations include (1) one's own "serious health condition," (2) the "serious health condition" of a close family member (child, spouse-including same-sex spouse-or parent), (3) the birth of a child, or (4) the adoption or foster care of a child.111 A serious health condition is defined as in-hospital treatment, treatment for chronic conditions, conditions related to pregnancy, or continuing treatment by a doctor for more than a three-day period (which requires one doctor visit with a medical prescription or more than one doctor visit). 112 Although such Family and Medical Leave Act (FMLA) provides sick leave, that leave is presumptively unpaid.113 Employers can force employees to use other sources of paid time off (e.g., vacation and sick pay) to provide payment during this leave time.114 Employers can also (1) define the twelve-month period in which the worker receives the twelve weeks of leave (usually starting the first day of FMLA leave);115 (2) require notification of the need for leave (though magic words invoking FMLA are not required);116 (3) require medical certification of the need for leave, and in the case of an employee's own serious health condition, require a fitness for duty certification to come back to work;117 and (4) if the FIMLA leave is for intermittent or reduced leave, the employer may place the employee in a more appropriate job during that time period.118 Employers are supposed to keep employees on their current health insurance plan during FMIA leave, but if the worker does not return from leave, employers can ask for reimbursement of their insurance contributions 119 Finally, an employee cannot be terminated or face adverse employment consequences for exercising his or her rights under the FMLA, but the employer is free to eliminate his or her position for non-FMLA related reasons. 120 This is the extent of sickness benefits at the federal level in the United States. There is no federally required sick pay or maternity leave.1 21 As a result, a number of states and municipalities have enacted their own laws to fill in the gap. 122 For example, the city of San Francisco has a Paid Sick Leave Ordinance that requires employees to earn one hour of sick leave for every thirty hours worked, generally up to seventy-two hours of accrued paid sick leave saved up at any time.1 23 Only three states provide for paid maternity/family leave (California, New Jersey, and Rhode Island).1 24 "All three states fund their programs through employee-paid payroll taxes and are administered through their respective disability programs."125 More specifically, California provides: Up to [twelve] weeks of unpaid family leave plus 4 months of maternity disability may be combined for a total of [twenty-eight] weeks per year. The California Paid Family Leave insurance program provides up to [six] weeks of paid leave to care for a seriously ill child, spouse, parent, or registered domestic partner, or to bond with a new child. The benefit amount is approximately 55% of an employee's weekly wage, from a minimum of $50 to a maximum of $1067. The program is funded through employee-paid payroll taxes and is administered through the state's disability program. 126 Connecticut is the only state that provides for paid sick leave for private sector employers that have fifty or more employees and requires up to forty hours of paid sick leave annually, depending on the number of hours employees work.1 27 Other states have their own family and medical leave acts that may apply to smaller employers and to more employees, but generally, these acts only provide unpaid leave.128

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E. PUBLIC AND PRIVATE HEALTH INSURANCE IN THE UNITED STATES

1. Public Health Social Insurance Programs

The two public health insurance programs in the United States are Medicare and Medicaid.129 Medicare provides approximately 50 million sixty-five-and-older and disabled130 Americans with hospital,131 medical,1 32 and prescription drugl 33 coverage. 134 Currently, non-public actors play no role in the administration of the Medicare scheme, but private healthcare providers of all types receive payment for their medical services through this program.135 Medicaid, on the other hand, is not strictly a social insurance program. It is a federal-state, joint-financed program for low-income, seriously ill and disabled individuals.136 At its heart, Medicaid requires states to receive and process all Medicaid applications and to provide medical services to eligible individuals.137

Medicaid is not a subsidy scheme for clinics and hospitals, but instead a third-party payment system structured to operate like insurance, paying participating healthcare professionals and institutions for covered services furnished to enrolled persons. 138 Recently, the federal government began to play a less significant role in its administration, and states are gaining more discretion to keep poor Americans off their Medicaid rolls in order to reign in the spiralling cost of Medicaid coverage.139

Private actors, such as employers and unions, play a large role in the private employer-based health insurance system. There historically has been little regulation of employer-based health plans and employers have "great discretion in determining eligibility criteria and what benefits to offer under such plans", although this is beginning to change with the passage of the Affordable Care Act in 2010.140 Unions, for their part, play a significant role with multi-employer health plans, where health insurance is provided as part of a collective bargaining agreement.141 There is no close linkage between union and employer-provided health insurance and Medicare and Medicaid in the United States, as is sometimes seen in other countries' social insurance programs.142

If Americans are not covered by Medicare or Medicaid, there is no national health insurance system to rely on. 143 Instead, individuals not covered by either Medicare or Medicaid must receive health insurance through their employer or purchase it on the open market, which historically has been prohibitively expensive.144 Otherwise, the person will be uninsured. Approximately 42 million Americans, or about 13% of the population, currently have no health insurance.145

Medicare, like Social Security, is facing significant financial troubles. According to the most recent Trustees' Report:

The Trustees project that the Medicare Hospital Insurance (HI) Trust Fund will be the next to face depletion after the DI Trust Fund. The projected date of HI Trust Fund depletion is 2030, four years later than projected in last year's report. At that time dedicated revenues will be sufficient to pay 85 [%] of HI costs. 146

On the other hand, other Parts of Medicare appear to be in better shape (though the cost of healthcare in the United States continues to grow at a startling pace):

The Trustees project that Part B of Supplementary Medical Insurance (SMI), which pays doctors' bills and other outpatient expenses, and Part D of SMI, which provides access to prescription drug coverage, will remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year's expected costs. However, the aging population and rising health care costs cause SMI projected costs to grow steadily from 1.9 [%] of GDP in 2013 to approximately 3.3 [%] of GDP in 2035, and then more slowly to 4.5 [%] of GDP by 2088.147 2. Government-Regulated Private Health Insurance

In response to this healthcare quandary, President Obama signed into law the Patient Protection and Affordable Care Act (ACA),148 which hopes to reform the public and private provision of health insurance in the United States and cover an additional 32 million people in public and private programs. More specifically, the ACA will require that an essential health benefits package be offered by qualified health benefit plans, which must include specific categories of benefits, certain cost-sharing standards, and provide certain levels of coverage. 149 However, essential health benefits are contingent upon whether a health benefit plan is grandfathered or non-grandfathered, and insured or self-insured. A self-insured plan is one in which the employer pays for each claim out of pocket compared to an insured plan, where the company would pay a fixed premium to an insurance company.1 50 A grandfathered plan allows companies who had a health benefit plan in place prior to March 23, 2010 to maintain their plan from that time so long as they do not encounter a trigger event that would force it to lose that status, such as (1) significantly cutting or reducing benefits, (2) significantly raising deductibles or co-pays, or (3) lowering employer contributions. 151 A non-grandfathered plan would be one that was instituted after March 23, 2010, or one that faced a status-changing event.152 The biggest similarities between grandfathered and nongrandfathered plans are that (1) the waiting period before coverage is effective cannot exceed ninety days, (2) there are no dollar limits on essential health benefits, and (3) there are no preexisting condition limits for participants, no matter their age. 153 The key differences are that grandfathered plans (1) do not have to cover ten essential health benefits (EHBs) for individuals and insured smaller employers (less than fifty employees starting in 2016), (2) can deny women and children immediate access to gynaecological and pediatric care, and (3) do not have to provide immunizations and preventive care on a first dollar basis. 154