What about universal burial insurance?

What about burial insurance was one of the counterfactuals–is this ok too?– that was batted about yesterday as the Justices heard arguments about the individual mandate and Conservatives were asking where the limit of federal power might be. Doesn’t Social Security already provide something like this? Sort of, maybe.

Social Security today provides a one time payment of $255 that is payable upon death to a surviving spouse or children. However, the history of this one time lump sum death benefit (that has existed since the program inception in 1935) is a bit more ambiguous, and it was initially meant to recompense the estate of someone who paid in but who would otherwise get no benefits due to an early death. When survivor benefits were added in 1939, the lump sum death benefit was retained and became viewed as ‘burial insurance’. Says the SSA website:

The major Amendments of 1939 introduced survivors benefits into the program and began regular monthly benefit payments in 1940. Due to the addition of survivors benefits, the original LSDB was discontinued. In its place, the current LSDB was introduced, with the intention that this would assist surviving family members when regular survivors benefits were not otherwise payable. If there were no surviving family members, the LSDB could be paid to an individual who assisted with the burial expenses of the worker. So the LSDB was not strictly a burial benefit, although it evolved over the years to be considered as such.

The amount of the LSDB was defined as 6 times the Primary Insurance Amount (PIA). The PIA is basically the monthly benefit amount for the worker at full retirement age.

The average LSDB payment in 1940 was $145.79. The minimum payment ever made under this 6X computation rule was $63.75 and the maximum payment $273.60.

The purchasing power of the lump sum death benefit has obviously been greatly reduced (average pay out was $145.79 in 1940; today it is a flat $255); that amount may have paid for a burial 70 years ago, but certainly would not today. As survivor benefits expanded, the ‘burial insurance’ component of Social Security was greatly reduced in real terms (not updated for inflation, etc. in the same way that other benefits have been).

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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