Social Insurance during the Pandemic: Successes, Shortcomings, and Policy Options for the Future

Executive Summary

As the United States grappled with the COVID-19 pandemic in 2020, the National Academy of Social Insurance formed a COVID-19 Task Force consisting of two Working Groups that deliberated in two phases. The first phase was the Epidemiology Working Group. Chaired by Academy Member Dr. Neil Powe, Professor of Medicine at the University of California – San Francisco, the Epidemiology Working Group issued its report, Understanding COVID-19’s Outcomes and Possible Trajectory: Implications for Social Insurance Programs in May 2021.

The second phase of the COVID-19 Task Force was the Policy Translation Working Group, formed in 2021. It was co-chaired by Academy Founding Board Member Henry Aaron of the Brookings Institution and Academy Member Katherine Baicker, until recently Dean of the University of Chicago’s Harris School of Public Policy and now Provost of the University of Chicago. Academy Member Louise Sheiner, Senior Fellow and Policy Director at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, served as Principal Investigator. Its report, Social Insurance during the Pandemic: Successes, Failures, and Policy Options for the Future, can be downloaded here.

The report describes and evaluates the performance of the nation’s social insurance system during the pandemic and highlights its successes as well as its shortcomings. As is well known, the U.S. social insurance system helps protect individuals and families from risks to their economic well-being. Even in normal times, the social insurance system mitigates the harms caused by unemployment, illness, aging, and other forces that affect household finances. However, in times of crisis like the pandemic, the U.S. social insurance system becomes even more important.

This report assesses the performance of pre-existing social insurance and related programs, temporary changes in those programs made in response to the pandemic, and some new federal and state policies. It addresses the following critical questions:

• What temporary measures, specifically addressing short-term crises, would have worked better to protect people?
• What changes in permanent policies or administrative practice might be considered based on the successes or failures of policies and practice in the pandemic emergency and recovery?
• What kinds of additional data collection might have produced better and more useful knowledge about the successes and failures of specific policies and administrative practices?

Key Findings

Overall

The U.S. social insurance system successfully mitigated the impact of the economic downturn for most individuals and families. Without the major legislative and administrative changes implemented by Congress during the pandemic—including changes to Unemployment Insurance, Workers’ Compensation, Medicaid, the Affordable Care Act, and the Supplemental Nutrition Assistance Program—households would have experienced much greater financial distress and worse health outcomes. That said, the severity and abruptness of the economic slowdown stressed, and in some cases overwhelmed, the
capacity of state and federal agencies to provide well targeted assistance in a timely way. The pandemic also highlighted that the social insurance system provides different levels of protection depending on the state in which individuals and families happen to live. Lack of accurate, detailed, and timely data made it difficult to fully evaluate the performance of the social insurance system and limited the responses available.

Social Security and Medicare

The huge drop in economic activity during the pandemic did not lead to a deterioration in the finances of the Social Security and Medicare Trust Funds as was feared. However, it did highlight the sensitivity of these programs’ finances to changes in economic conditions. The closing of Social Security Administration field offices and the transition to remote work for SSA employees reduced the number of people receiving Supplemental Security Income (SSI) and Disability Insurance (DI) benefits. The pandemic underscored problems in nursing homes that had long been apparent. Medicare beneficiaries living in nursing homes were more likely to be diagnosed with COVID and more likely to die than beneficiaries living in the community, even controlling for age.

Administrative Issues

Administrative problems in the delivery of aid were particularly injurious to populations most in need. Because the federal and state governments jointly administer Unemployment Insurance and Medicaid, residents of different states received different amounts of assistance with varying degrees of administrative delay. Administrative systems that were overwhelmed by the increased demand for aid and hampered by reduced staffing delayed the delivery of aid and made accurate targeting of assistance impossible, diminishing the effectiveness of the social insurance system.

Inequities and Disparities

The pandemic highlighted and often exacerbated existing deficiencies and inequities, particularly in our health care system. It exacerbated many existing inequalities across race and ethnicity although fiscal policy responses mitigated others. Without Congressional action, many of those without health insurance would have been unable to afford COVID treatment and vaccinations. Members of different ethnic and racial groups did not have equal access to the benefits of social insurance and related programs, in part because members of different groups live in different places and in part because of other differences in access that predated the pandemic. The inequities resulting from the digital divide sharpened during the pandemic. The pandemic also exposed and magnified the inequities of the “digital divide”—the lack of access to high-speed internet and the lack of familiarity with technology.

Public Health Infrastructure

Analysts have long warned that our public health infrastructure is inadequate. The COVID pandemic confirmed those warnings.

Potential Income Security and Health Security Policy Options

The report of the Policy Translation Working Group identifies and assesses a broad range of Income Security and Health Security policy options in social insurance and related programs. The 44 policy options fall into three major categories.

The first consists of options that would make permanent or automatically trigger some of the new programs set up during the pandemic. These include increasing benefits and eligibility under the unemployment insurance system, automatically increasing the federal share of Medicaid spending and lowering administrative burdens for programs like SSI and SNAP during economic downturns, and making permanent some of the changes in the regulations about telehealth and scope of practice regulations in health care, among many others.

The second category relates to the need for new policies where the pandemic uncovered a need—for example, narrowing the digital divide by ensuring high
speed internet services in every community to help beneficiaries take advantage of telehealth and fixing antiquated UI administrative systems so that they are
better able to respond to crises.

The third category of options includes improving data collections and research so that we are better able to understand the consequences of the pandemic
and any shortcomings in the response to it. We note the significant shortcomings of the available data on health, health insurance, housing security, and
income, particularly by race and ethnicity. We also note a number of areas where more research is needed. One example concerns the question of whether the
high replacement rates in the UI program during the pandemic kept the DI rolls from rising as they typically do during economic downturns.