Change 1. Unification of social insurance in respect of contributions, that is to say, enabling each insured person to obtain all benefits by a single weekly contribution on a single document.
41. The advantages of this are obvious. It means having one insurance document in place of two documents a year with stamps to correspond, for each of about 20,000,000 persons. This is a saving of paper, a saving of trouble to the insured persons and a saving of administration to the employers. The administrative costs of compulsory insurance, as they are usually reckoned, are not the whole costs. They show what the Government Departments or Local Authorities or Approved Societies spend on administration. They do not show the cost to employers of affixing insurance stamps, calculating and making deductions from wages, and dealing with insurance documents. The estimate made in Appendix E suggests that the employers’ costs for the administration of the present schemes of compulsory social insurance are of the order of magnitude of about £1,200,000 a year, and that unification of insurance documents or stamps would reduce this by about £400,000 a year. Neither of these amounts is large in relation to the total sums involved in social insurance but the saving is worth making. The advantages of a single contribution on a single insurance document are so clear that the only question that can be asked is whether the advantages would be bought too dear. What other changes in the present insurance schemes are involved in unifying the contribution? The answer is in two stages.
42. In the first place, unification of contributions does not of itself involve any change in the present practice of keeping separate the money required for different purposes—unemployment or sickness or pensions. The proceeds of the single stamp which is now affixed to the health and pensions card are divided absolutely between health insurance and pensions insurance. It will be convenient, though not absolutely necessary, for all the contributions to go into a single Social Insurance Fund. But that is consistent with having fixed proportions of the contributions earmarked by Statute for named purposes, so that they can not be spent on anything else. Completely separate accounts could be kept in the Social Insurance Fund for unemployment, for sickness, for pensions, for widows and so on, as they are kept now in the single Unemployment Fund, in respect of the general and agricultural schemes respectively. It may be doubted whether this degree of separation in the Social Insurance Fund would be desirable or in the interests of the contributors; it might mean that the Fund simultaneously had a surplus on one account— say, unemployment—so as to be able to increase that benefit, while a prospective deficiency on pensions or on sickness was making necessary a decrease of those benefits, bringing them out of line with other benefits, or a raising of contributions. To some extent a Social Insurance Fund raised to meet the various needs of the same general body of insured persons should be a common fund, and will be the stronger for being so. But some degree of separation is necessary and any desired degree of separation can be laid down by Parliament, either by earmarking most of the single contribution for specific purposes while leaving a fraction for allocation according to circumstances, or by fixing statutory minimum rates and periods of benefit for each purpose, so that the money needed for each purpose up to that minimum has to be kept available and cannot be absorbed by deficiency on another purpose. Whatever the procedure, there is no difficulty in providing safeguards for particular benefits under a scheme with a single contribution to a single fund.
43In the second place, unification of contributions and insurance documents is hard to reconcile with administration of sickness benefit, as at present, through numerous financially separate societies. The approved society system means that the contributions of each individual insured person for health must be associated with a particular society; the present and most practical way of doing this is to have a document for these particular contributions which gets into the hands of the society, and is used to establish the total number of its contributions, that is to say, its share of the proceeds from sales of insurance stamps. The administrators of unemployment insurance at the same time may need an individual’s contribution record to determine his claim to unemployment benefit. The administrators of pensions will need it to determine the claim to pension. It is true that at present a single contribution card is used for health and for pensions. The card finds its way to the Approved Society and the society is required to keep records and furnish information to the pension authorities showing whether the contribution conditions for pension have been fulfilled. This is practicable with the present system, under which right to pension depends on contributions made in the last five years; the Approved Societies need not keep records covering more than that period. If, however, with the making of contributory pensions universal, the right to such pensions is made conditional on payment of contributions throughout working life (as is proposed in para. 367), it will probably prove impracticable to rely upon Approved Societies for this information; apart from differences in the organisation and efficiency of different societies, difficulties would arise through the fact that any individual may have changed his society. If there is to be a single insurance contribution for all purposes on a single insurance document, the document, when stamped, must be retained by the central insurance administration. In order to assign the health insurance contributions on it to a particular society, either the document itself must show to what society the insured person belongs or he must have a separate membership card of which the central insurance administration takes note. The need for such additional work, as an alternative to having more than one insurance document to be stamped for each person under the approved society system, is one of the minor arguments set out in Change 3 below in favour of changing that system.
Change 2. Unification of social insurance and assistance in respect of administration in a Ministry of Social Security with local Security Offices within reach of all insured persons.
44. The main advantage of this change is immensely improved efficiency, in the sense of greater satisfaction to insured persons as consumers of social insurance. In detail, this advantage may be set out under several heads:—
(a) Convenience to the insured person of having one authority to deal with, in place of being bandied about from pillar to post.
(b) Avoidance of demarcation problems, that is to say, of disputes as to which authority is responsible for dealing with a particular case and on what principles.
(c) Avoidance of overlapping and duplication of benefits.
(d) Avoidance of gaps: unified insurance can become, even if it does not start as, “all-in insurance,” covering fresh needs as they are recognised, without dispute as to which authority is responsible for dealing with them.
(e) Absolute security of benefit, such as is not now guaranteed in workmen’s compensation.
(/) Uniformity of benefit rates and conditions, except in so far as differentiation is justifiable by real differences of need, or other circumstances.
(g) Uniformity of procedure for determination of claims to benefit, except in so far as differences of procedure are justified.
The main ground for this proposal, as stated above, is greater efficiency in satisfying the needs of citizens; it is obvious that there can also be economies through concentration of administrative machinery.
45. Unification of social insurance and assistance does not mean that the citizen must obtain all benefits in the same way or from the same place. Unification of administration is entirely consistent with the citizen getting money when sick in a different way from that in which he gets money when unemployed and, normally, he will do so. He can have disability benefit or pensions taken to him or posted to him just as at present. More than that, under the proposals made in Change 3, a man who is entitled to voluntary benefit as well as State benefit for sickness will be able to continue, if he desires, to obtain these benefits just as at present through his society. Unification, again, does not exclude an extension of such arrangements and the use of special schemes such as that now established for the insurance industry or for banking or finance to administer State benefit with their own benefit to their own members. Unification does not mean ruling out differences where
differences are appropriate and in the interest of the consumer. It means avoidance of departmentalism which is of no conceivable advantage to him and often leads to his distress and confusion.
46.Unification of responsibility for administration involves the setting up of a Ministry of Social Security. This is one of the main proposals of the Report. Through this Ministry unified responsibility for administration is extended beyond social insurance to the sphere of assistance. This question is discussed further in connection with Change 21 below. That unification of departmental responsibility is in the interests of the consumer of social services is clear.
47. The obtaining of the full advantages of co-ordination is inconsistent with maintenance in its present form of the approved society system and also with maintenance of a separate scheme of compensation for -industrial accident and disease. It is not inconsistent with giving to the consumers all the advantages which they now obtain from the approved society system; it is not inconsistent with making special provision for the results of industrial accident or disease or with raising the funds required to meet the cost of this provision in part, at least, in a special way. These issues are dealt with in connection with Changes 3 and 4.
Change 3. Supersession of the present system of Approved Societies giving unequal benefits for equal compulsory contributions [combined with retention of Friendly Societies and Trade Unions giving sickness benefit as responsible agents for the administration of State benefit as well as voluntary benefit for their members].
48. One of the most important features of the scheme of national health insurance, as established in 1911, is the administration of its cash benefits by autonomous Approved Societies, each with separate finance. In the first draft of the Bill of 1911, it was proposed that recognition as an Approved Society should be confined to Friendly Societies of a particular type, those giving sickness and other benefits for actuarial risks without division of any part of their funds on other occasions. This limitation was removed, through introduction of a proviso to Section 23 (1) of the Act of 1911, which allowed any society registered for any purpose to form a separate section as an Approved Society. Under the proviso it became possible, not only for the various types of dividing and deposit societies which would otherwise have been excluded, but also for the Industrial Life Offices, that is to say, the companies and Collecting Societies engaged in industrial assurance, to enter the
field of national health insurance. Only two main conditions were imposed by Statute on all Approved Societies, namely :—
(i) that the Society should not be conducted for profit; and (ii) that its constitution should provide for its affairs being subject to the absolute control of its members.