Which mechanism does social health insurance use to manage financial risk?

• A. Direct user fees at the point of service.
• B. Pooling risk via payroll contributions.
• C. Government subsidies only.
• D. Donations from international agencies.

Answer: (B)

Pooling risk across a large group through prepayment financed by payroll contributions is how social health insurance manages financial risk. By collecting contributions from workers (often shared with employers) into a common fund, the system spreads the cost of health care over many people. This large, collective pool smooths out the financial impact of individual illnesses or high medical bills, so a single costly health event doesn’t financially devastate a household. People gain access to care when needed without facing large out-of-pocket charges at the point of service, which protects households and supports financial stability.

Direct user fees at the point of service place the cost on individuals as they seek care, which undermines risk pooling and increases financial barriers. Government subsidies alone don’t create a shared funding pool, though they can support access; they don’t by themselves distribute risk across a population. Donations from international agencies are irregular and funding is not embedded in a systematic, universal risk-sharing mechanism.