Blog Post

The Coronavirus Pandemic Lays Bare the Limitations of U.S. Social Protection Systems

April 21, 2020
Photo Credit: JHDT Productions / Shutterstock

The world finds itself faced with an extraordinary global health and economic crisis as a result of the coronavirus pandemic. The resilience of any one country to pull through it is based on several factors, chief among them strong public-health, healthcare, and social-protection systems. Strength rests not only in the extent and generosity of coverage in the latter two but the ability of all three systems to respond quickly and adapt in times of crisis. Sadly, the United States is a case study in what not to do.

For too long, U.S. public-health systems have been underfunded and understaffed. Its social-protection system, which is designed to manage classic social risks (unemployment, ill health and disability, and old age) is excessively limited in generosity, duration, and who is eligible and therefore covered. For example, in 2018 only 27.8 percent of jobless workers received unemployment insurance, while low-wage workers were the least likely to receive benefits. The United States has effectively created a dual system—insurance, albeit limited, for the privileged few with the “right” worker status, and nothing for the rest. It does not have a universal social-assistance program for working-age adults who are not eligible for unemployment insurance. Moreover, the United States ties essential social benefits to one’s employment status.

For some workers, access to health insurance, 401K pension plans, and paid sick and vacation leave is obtained through their employer. Therefore, losing a job means losing access to healthcare, among other benefits. On top of this, millions of Americans have no health insurance or have prohibitively expensive care purchased through the market-based Affordable Care Act insurance exchange. Choices on the exchange range from Blue Shield’s Bronze 60 PPO with a $12,000 deductible per year to Aetna’s Silver Copay HNOnly with an annual $7,000 deductible and up to $14,000 in out-of-pocket expenses. Such costs will make people think twice about going to the doctor even if they are insured. This is certainly not ideal at the best of times, but especially when it is vital that everyone have access to affordable healthcare in the time of a health pandemic.

In the United States, any notion of universal healthcare, universal sick leave, and universal parental leave managed by the federal government is framed in terms of those who are deserving of coverage versus those who are not.

In the United States, any notion of universal healthcare, universal sick leave, and universal parental leave managed by the federal government as opposed to employers or the market is continually framed by many as ‘socialism’—therefore bad—or else it is framed in terms of those who are deserving of coverage versus those who are not. If you are not deserving, it is presumably because you are not working hard enough. That, or the justification is grounded in a racialized, ideologically driven notion of undeserving that asserts that the uneven distribution of power, resources, and privileges is biologically based and therefore “natural.”

The role of universal programs and services is to manage the risks for everyone that are inherent in the market economy. When this factor is taken out, any public-health crisis creates a situation in which the market is either unable to respond at pace or does not respond in ways that meet the needs of millions of sick and/or unemployed people. No one wins—certainly not the individuals in desperate need of relief, nor the institutions in cities that are on the frontlines, managing the effect of poor national (and in some cases, state) policymaking at a time of crisis.

In contrast, in Europe response systems are more able to weather such unprecedented times. Although some countries instituted reforms in the 1990s to liberalize their labor markets and tighten social-protection policies with the objective to “activate” the unemployed into the labor market—with countries like the United Kingdom instituting harsher reforms that have left individuals in desperate need—European countries largely operate under a social rights-based framework. This framework extends healthcare coverage to all, does not put time limits on unemployment assistance (unemployment insurance is always time limited, but on average six months longer than in the United States), and has to varying degrees extended employment rights to part-time and other nonstandard workers.

Because these systems are in place, countries like Denmark, France, and Germany do not have to focus on the basics—getting cash to those in need—in their responses to the economic crisis caused by the pandemic. Rather, they can focus on ramping up responses that address the massive social and economic volatility of this particular crisis, such as extending cash stimulus to businesses to keep people on their payroll.

Of course, not everything in Europe is perfect. Every country is tested beyond their limits in these unprecedented times, highlighting limitations and crucial gaps in each country’s healthcare, public-health, and social-protection systems. All of these will have to be evaluated and gaps addressed once the coronavirus crisis has passed. But for the United States especially, it is time to face the fact that the discourse on “deserving versus undeserving” that informs policy design, combined with overreliance on market mechanisms to manage risks across the life course, has met its limits.