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"The one almost all-embracing measure of security is an assured income. A program of economic security, as we vision it, must have as its primary aim the assurance of an adequate income to each human being in childhood, youth, middle age, or old age -- in sickness or in health. It must provide safeguards against all of the hazards leading to destitution and dependency."

The money loss caused by sickness in families with less than $2,500 of income per year is estimated at a total of $900,000,000 per annum even when this cost is restricted to lost wages and is considered exclusive of any costs for medical care. If the loss of wages on account of disabling sickness occurred regularly or evenly among employed persons, the costs would not be very serious or burdensome for the individual or the family. It is characteristic of these losses, however, that they are not spread evenly; they are determined by the occurrence, severity and duration of sickness.

While it is true that the total or average occurrence of disabling sickness can ordinarily be predicted for a million wage-earners, its occurrence cannot be predicted for any particular wage-earner. In the individual case, disabling sickness may last only a day or may be permanent. The individual worker and his family face an uncertain risk. Wages lost on account of sickness may, at the one extreme, be negligible or within the family's means or may, at the other extreme, be so serious as to wipe out the family's resources or render its members dependent upon public welfare or private charitable agencies. For the family with small income individual budgeting or savings can furnish only very limited protection against the risk of disabling sickness.

Security against loss of income caused by disability requires insurance against this risk. Under an insurance plan the uneven and uncertain losses of individuals are replaced by the regular and predictable average costs for the large group.

It is obviously desirable that, so far as may be practical, an insurance plan should be comprehensive and should afford protection against wage-loss resulting from all classes of disability which may occur among wage-earners. There are two important circumstances which compel us to limit the scope of our proposals:

(1) In respect to disability due to industrial accidents, safeguards have been developed through safety laws and orders, voluntary efforts of employers to reduce accidents, and workmen's accident compensation laws. All but four States now have accident compensation laws. These safeguards have, on the whole, worked beneficially. A good start has been made to furnish protection to wage-earners against industrial accidents and progress may be expected through further legislation in the States. We reaffirm the views and recommendations recorded in our previous report. Accordingly, we have omitted disability arising out of the accidents and injuries of employment from our proposals for insurance against disability.

(2) Practical considerations require us to divide disability into two classes, one dealing with temporary disability and the other with permanent disability or invalidity. The administrative procedures required by insurance plans for the two classes are different in some important respects, temporary disability involving regular, periodic certification of disability and permanent disability requiring final certification of the permanence of the disability. These procedures can be devised and operated, as witness the fact that both temporary disability insurance and permanent disability or invalidity insurance are practiced successfully in many countries. The difficulty we have not been able to overcome in the brief period of our studies is of another kind. There is a substantial volume of data on the occurrence of temporary disability in the United States; but there is no such equivalent information on permanent disability or invalidity. We therefore confine our present proposals to insurance against the losses caused only by temporary disabilities. We also recommend, however, that provision should be made for the further study of the occurrence of permanent disability and of measures to furnish protection against this risk.

Insurance against temporary disability is primarily a system of pooling contributions so that the pooled funds may furnish partial replacement of wages lost by the individual worker on account of disabling illness. The general pattern of the system may be designed along several different lines and its administration may be linked with that of old-age annuities, unemployment compensation, or health insurance. The experience of European countries shows clearly that linkage with health insurance is undesirable, unless a physician's responsibility to certify disability is separated from a physician's responsibility to furnish medical care. Our studies lead to the conclusions that it is simplest and most convenient to regard insurance against temporary disability as a form of unemployment compensation in which the unemployment is caused by disabling sickness and to design the general pattern along the same lines as have been proposed for unemployment compensation. On this basis, our plan for disability insurance conforms to the general characteristics of State-wide rather than of Federal systems of social insurance. European experience shows that disability insurance often bears the first weight of impending widespread unemployment. It is therefore important that the benefits furnished by disability insurance and by unemployment compensation systems should be equitably related and their administration correlated.