In an ideal world, everyone eligible for an aid program should be able to benefit from it. However, in reality, this is often not the case. For example, before the pandemic, nearly one-fifth of Americans who were eligible for food stamps did not receive them. In fact, millions of Americans who are eligible for existing social welfare programs do not receive all the benefits they are entitled to.
As I wrote in a previous edition of this newsletter, a big part of the problem is the paperwork and bureaucracy that people have to jump through to participate in certain programs. But the root of these hurdles is often the all-too-common policy choices lawmakers look at. That is, the means test, or the establishment of eligibility requirements for social programs (such as income and asset standards).
This means that testing certain social programs may have good intentions. That means directing spending to those who need it most. After all, if middle- or high-income people who can afford to pay for groceries or rent can get federal help with those payments, then less money will go to those who actually need it. Isn't there?
The answer is not that simple.
How means testing can thwart policy goals
Implementing strict eligibility requirements can be very cumbersome and lead to unintended consequences.
First, let's look at one of the main reasons lawmakers advocate means testing: saving taxpayers money. But that doesn't always happen. “Although these benefits are typically framed as a way to rein in government spending, means-tested benefits are on average larger than universal benefits simply because of the administrative support required to vet and process applicants. “It's often more expensive to provide than it is,” said my colleague Li Zhou. I wrote it in 2021.
Beyond that, testing reduces the effectiveness of anti-poverty programs because many people miss out on their benefits. As Chou points out, figuring out who is eligible for welfare requires a lot of effort from both the government and potential recipients, who must fill out cumbersome applications. The paperwork can be daunting and can deter people from applying. It can also introduce errors and delays that can be easily avoided if the program is generic.
There's also the fact that income standards create incentives for people to avoid career advancement and avoid taking higher-paying jobs. For example, one woman I interviewed a few years ago said that after she started working as a medical assistant and lost benefits such as food stamps, it became difficult to make a living for herself and her daughter. When lawmakers aggressively implement testing programs, people like her often get left behind, making it harder to climb out of poverty.
As a result, means testing can significantly limit the potential for welfare programs. For example, a report from the Urban Institute found that the United States could reduce poverty by more than 30 percent simply by ensuring that everyone eligible for existing programs received their benefits. One way to do that is for lawmakers to make more welfare programs universal, rather than means-tested.
Why universal programs are a better choice
Universal programs are sometimes frowned upon because they are seen as unnecessarily expensive. But a very simple fact often makes a universal program a better choice. That said, universal programs are generally much easier to administer and less expensive. Two examples of this are Social Security and Medicare, the most popular social programs in this country.
A universal program could also lead to less division among taxpayers over how their money should be spent. Much of the opposition to welfare programs comes from the fact that some people don't want to pay for programs that don't directly benefit them, so eliminating that factor can increase support for a particular program. can.
In 2023, Minnesota, following several other states, introduced a universal school lunch program in which all students receive free meals. This was in response to problems that arise when means testing goes too far. Public school students across the country pay for food based on their family's income. But the system stigmatizes students who receive free meals. In one study, 42 percent of families surveyed reported that their children were less likely to eat school lunches because of surrounding stigma.
Minnesota's program has proven popular so far, with the amount of breakfast and lunch served in schools increasing compared to the previous year in September 2023, shortly after the program began. increased by 30 percent and 11 percent.
Although it may be politically unfeasible, or even necessary, to abolish means testing for all public subsidies, free school meals is an important consideration in determining whether a compromise at national level is possible. This is also an example of what it would look like. Although Congress did not make school meals free for all students, a provision in 2010 that allows schools to provide free meals to all students in school districts with at least 25 percent (originally 40 percent) eligible. was approved. The program showed that by providing free meals to all, eliminating stigma can reduce food insecurity even among poor students who are already eligible for free meals. (Community Eligibility Provisions currently serves approximately 20 million students.)
As for how to pay for universal programs, the answer is, yes, by imposing higher taxes. It may seem inefficient to give benefits to people if you're basically going to take them from them as a tax, but what you actually get in the end is that it's easier to manage and nobody A more efficient program that leaves no one behind.
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