The rationale for the welfare state rests in part on the benefits of reducing economic insecurity, which afflicts even relatively well-off families. One source of economic insecurity is the risk of a sudden loss of income, as occurs when a family member loses a job and either spends an extended period without work or is forced to take a new job that pays considerably less. In a given year, according to recent estimates, about one in six American families will see their income cut in half. Related estimates show that the percentage of people who find themselves below the poverty threshold for at least one year over the course of a decade is several times higher than the percentage of people below the poverty threshold in any given year.

Even if a family doesn’t face a loss in income, it can face a surge in expenses. The most common reason for such surges is a medical problem that requires expensive treatment, such as heart disease or cancer. Many Americans have health insurance that covers a large share of their expenses in such cases, but a substantial number either do not have health insurance or rely on insurance provided by the government. In 2014, about 42 million Americans were uninsured. In the same year, several major provisions of the Affordable Care Act of 2010 went into effect, with the aim of expanding health insurance coverage to an additional 24 million citizens by 2023.