Actuarial Estimates for Public Sickness Insurance Plans

Abstract

Proponents of social insurance consider sickness insurance a logical extension of the unemployment compensation program. Two state plans and one Federal sickness insurance plan are now in operation, and a number of other states are giving serious consideration to this matter. This paper explores the possibility of making cost estimates for public sickness insurance plans along established actuarial lines. The use of the actuarial approach may be of importance when long-range estimates are desired. Appropriate actuarial techniques are presented for a typical public sickness insurance plan. The method is theoretically simple, and does not require the use of statistics which are not ordinarily available. The details would depend on the provisions of the plan and on the purpose of the cost calculations. The general method is sufficiently flexible to be adoptable in various situations. * The opinions expressed in this paper are those of the author and do not necessarily represent the official views of the Railroad Retirement Board.