INSURANCE AGAINST INFIRMITY.
IN dealing with the difficult problem of insurance against infirmity, or invalidity as the Germans call it, Mr. Lloyd George is apparently proceeding in a spirit of caution which is agreeably in contrast with his general attitude. Instead of flinging in the face of the public some scheme hatched in the secrecy of a Cabinet Com- mittee, he is seeking information from the people most experienced in dealing with this problem. Last week, for example, he received a deputation from the Manchester "Unity of Oddfellows, and though he and the members of the deputation were obviously unable to come to an agreement with one another, the conference was certainly valuable as a means of pointing out difficulties which have to be overcome.
First and foremost among these is that of per- suading a democratic electorate to accept a system of compulsory insurance. Even in Germany, where the Governme.nt is much more autocratic than in Great Britain, this difficulty was from the outset appreciated, and the German authorities decided to combine their system of compulsory insurance with an immediate grant of gratuitous assistance to persons already over the age of seventy. By launching the scheme under these favourable conditions the German Government was able to win general acquiescence for its proposals. All the old people over seventy were immediately provided for, and within four years the infirm people under seventy also became entitled. to receive benefits under the working of the scheme, although of course actuarially their subscrip- tions were not by that time sufficient to justify the pay- ment of benefits. Very ingeniously, too, under the German scheme the scale of payment for infirmity was so arranged that after a few years infirmity pensions would become more valuable than old-age pensions. This explains how it is that in Germany old-age pensions co nomine are rapidly disappearing, being replaced by infirmity pensions.
Unfortunately, the opportunity of instituting an equally efficient system in this country was lost in 1908 because the present Cabinet did not take the trouble to inquire into the German scheme until after they had forced. their own scheme through the House of Commons with the aid of the "guillotine." The country is now committed to the expenditure of £12,000,000, or more probably £13,000,000, a year for the exclusive benefit of persons over seventy, many of whom are not in any need of public assist- ance. It would therefore be extremely difficult to finance any scheme for universal insurance against infirmity without a fresh heavy draft upon the funds of the tax- payer. In fairness to Mr. Lloyd George it must be admitted that this difficulty is not of his own making, for though he now claims the credit for the Old-Age Pensions Act, his earlier speeches made it clear that the Act was not of his devising, and that he was much more favourably impressed with the German scheme.
A second difficulty which must be faced, and which did not exist in Germany, arises from the fact that in this country there is already a vast network of voluntary organisations for dealing with the very problem which it is now proposed that the Government should attempt to solve. The great Friendly Societies by enthusiasm and self-sacrifice have built up a marvellous-system of mutual insurance on voluntary lines. If Parliament were slavishly to follow the German model, and create a vast Government organisation for dealing with insurance against infirmity, the Friendly Societies would. in a very few years be completely destroyed. That would. be a grave national misfortune, for the work of the Friendly Societies is not merely financial, it is moral also. They teach their members the moral duty of helping one another. The members themselves canvass for new recruits. They get hold of young men who are wasting their lives, and persuade them to join their Society. By this work the Societies have helped tens of thousands of men and women to help themselves and their families. No Government agency could possibly undertake this moral work. Therefore we are entirely in agreement with the spokesmen of the Manchester Unity of Odd- fellows when they urge that nothing ought to be done to weaken the position of the Friendly Societies. We are glad, too, to see that Mr. Lloyd George fully accepts this general proposition. But hitherto he has not been able to make it clear how he proposes to intro- duce compulsory insurance without weakening, or perhaps destroying, the Friendly Societies. No blame attaches to him for holding back his proposals, for the problem is certainly a difficult one. We believe, however, that it is not insoluble, and suggest that it could be successfully solved on some such lines as the following.
The two points which have to be dealt with are the application of compulsion and the preservation of the Friendly Societies. The first is comparatively simple. Here the German model can safely be followed. Parlia- ment will place upon every employer the obligation of deducting each week from his workmen's wages a sum sufficient when added to the employer's contribution to effect the required insurance. The employer will dis- charge this obligation by providing for every workman a card with fifty-two spaces upon it, into one of which a stamp of the requisite amount bought from the post- office will be affixed each week. When this has been done every workman in regular employment will have been compelled to pay his premium of insurance against infirmity.
Next for the Friendly Societies. In view of the wide extension of financially sound Friendly Societies, and in view also of the existence of commercial companies, such as the Prudential Insurance Company, which undertake working-class insurances, there is no neces- sity for the creation here, as in Germany, of State institutions for insurance. The whole work can be carried out by the Friendly Societies and. by com- mercial companies. All that is necessary is to give to the individual workman the choice of the Society or company with which he wishes to insure. As soon as he has made his choice, his employer will transmit at regular intervals, annually or quarterly, the insurance card to the secretary of the Society or company. That official will then recover from the post-office the value of the stamps affixed. to the card. Thus the financial circle will be completed. The post-office sells the stamp to the employer; the employer passes it on to the Society or company ; and the Society or company obtains from the post-office the money paid. for the stamp, and. assumes liability for the insurance. It may be said. that the recognition of the Friendly Societies to this extent by the Government would involve a Government guarantee of their solvency, and that this in turn would necessitate Government control of their investments. We do not accept this proposition. All that is necessary is that the Government should insist that the Societies and companies recognised for the purpose of administering the compulsory system of insurance should have their accounts audited and published. The workman himself would then be responsible for his own choice. No doubt the ordinary British workman is unable to estimate the solvency of a Society or company by reading a balance- sheet ; but it is certain that he would have plenty of friends and advisers to help him in that matter. It may be added that the strong Friendly Societies, like the Manchester Unity, would probably not have the least objection to a Government examination of their financial position. Societies which were unwilling to accept this test would naturally be suspect. As a matter of fact, the Registrar of Friendly Societies already acts in a semi-paternal capacity as a friend and. adviser of these Societies.
One further point must be pressed. The scheme which we have been outlining would, if it stood. alone, relieve the Friendly Societies of one of the most important of their duties,—namely, that of securing new recruits, and this would. mean the discouragement of voluntary thrift. That would be disastrous, and it is unnecessary. The way to obviate this evil is to limit the compulsory insurance to the minimum. The premium compulsorily payable by the workman would be extremely small, and the future benefit payable would be equally small. Thus the workman would. have the means and the motive for making a further insurance of his own free will, and here would
arise the opportunity and necessity of what we have described as the moral work of the Friendly Societies.
Our last point is that in order to make any scheme of compulsory insurance palatable, or even tolerable, to the 'working classes in this country it must not be limited to the one danger of infirmity. Many a workman would quite fairly say to himself :—" It may be that I shall never be infirm. I may die too soon. Why should I be compelled to insure against a danger which I do not par- ticularly dread ? " Therefore the -scheme should be so
cr as to include provision for the certainty of death aswell as for the risk of infirmity. On these lines we believe that it is possible to secure the general consent of the working classes to compulsory insurance, and also to preserve, and even to extend, the magnificent work of the Friendly Societies. It will be noticed that the whole of the above argument implies the relationship of master and servant, whereas we all know that a large number of poor people are not in regular
• employment, and that some are employing themselves as small shopkeepers, cobblers, and in similar occupations. No system of compulsory insurance can touch all these. They must be given, as in Germany, the liberty of voluntary insurance, and here again the work of the Friendly Societies would be of priceless value. If they fail to take advantage of this opportunity, they must necessarily fall back upon the Poor Law. In no circum- stances at present conceivable shall we be able to dispense with the Poor Law, or something analogous to it. The Government would therefore be wise not even to attempt to make their scheme embrace the men and women outside the range of fairly regular employment. If they can succeed in dealing with the enormous body of workpeople included within that range, it will be a sufficient task for, at any rate, one Session. Qui trop embrasse, mat etreint.
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