What if everyone qualified for welfare benefits?

In an ideal world, everyone who qualifies for an aid program ought to receive its benefits. But the reality is that this is often not the case. Before the pandemic, for example, nearly one-fifth of Americans who qualified for food stamps didn’t receive them. In fact, millions of Americans who are eligible for existing social welfare programs don’t receive all of the benefits they are entitled to.

As I wrote in an earlier edition of this newsletter, a big part of the problem is the paperwork and the bureaucratic hoops people have to jump through in order to participate in certain programs. But what’s often at the root of those hurdles is an all-too-common policy choice that lawmakers turn to: means testing — that is, establishing eligibility requirements (like income or wealth thresholds) for social programs.

Means testing a given social program can have good intentions: Target spending toward the people who need it most. After all, if middle- or high-income people who can afford their groceries or rent get federal assistance in paying for those things, then wouldn’t there be less money to go around for the people who actually need it? 

The answer isn’t so straightforward. 

How means testing can sabotage policy goals

Implementing strict eligibility requirements can be extremely tedious and have unintended consequences.

For starters, let’s look at one of the main reasons lawmakers advocate for means testing: saving taxpayers’ money. But that’s not always what happens. “Though they’re usually framed as ways of curbing government spending, means-tested benefits are often more expensive to provide, on average, than universal benefits, simply because of the administrative support needed to vet and process applicants,” my colleague Li Zhou wrote in 2021.

More than that, means testing reduces how effective antipoverty programs can be because a lot of people miss out on benefits. As Zhou points out, figuring out who qualifies for welfare takes a lot of work, both from the government and potential recipients who have to fill out onerous applications. The paperwork can be daunting and can discourage people from applying. It can also result in errors or delays that would easily be avoided if a program is universal.

There’s also the fact that creating an income threshold creates incentives for people to avoid advancing in their careers or take a higher-paying job. One woman I interviewed a few years ago, for example, told me that after she started a job as a medical assistant and lost access to benefits like food stamps, it became harder to make ends meet for her and her daughter. When lawmakers aggressively means test programs, people like her are often left behind, making it harder to transition out of poverty.

As a result, means testing can seriously limit a welfare program’s potential. According to a report by the Urban Institute, for example, the United States can reduce poverty by more than 30 percent just by ensuring that everyone who is eligible for an existing program receives its benefits. One way to do that is for lawmakers to make more welfare programs universal instead of means-tested.

Why universal programs are a better choice

There sometimes is an aversion to universal programs because they’re viewed as unnecessarily expensive. But universal programs are often the better choice because of one very simple fact: They are generally much easier and less expensive to administer. Two examples of this are some of the most popular social programs in the country: Social Security and Medicare.

Universal programs might also create less division among taxpayers as to how their money ought to be spent. A lot of opposition to welfare programs comes from the fact that some people simply don’t want to pay for programs they don’t directly benefit from, so eliminating that as a factor can create more support for a given program.

In 2023, following a handful of other states, Minnesota implemented a universal school meal program where all students get free meals. This was in response to the problems that arise when means testing goes too far. Across the country, students in public school pay for their meals depending on their family’s income. But this system has stigmatized students who get a free meal. According to one study, 42 percent of eligible families reported that their kids are less likely to eat their school meal because of the stigma around it. 

Minnesota’s program has proven popular so far: In September 2023, shortly after the program took off, the amount of school breakfasts and lunches served increased by 30 percent and 11 percent compared to the previous year, respectively. 

While it might not be politically feasible — or, in some cases, necessary — to get rid of means testing for all public subsidies, free school meals also offer an example of what a compromise might look like at the national level. Though Congress hasn’t made school meals free to all, it passed a provision in 2010 that allows schools to provide free meals to all students in districts where at least 25 percent (originally 40 percent) are eligible. The program showed that providing free meals to all lowered food insecurity, even among poor students who already qualified for free meals, by removing stigma. (The community eligibility provision now serves nearly 20 million students.)  

As for how universal programs can be paid for, the answer is, yes, imposing higher taxes. It might seem inefficient to give people a benefit if you’re going to essentially take it back from them in taxes, but what you actually end up with is a much more efficient program that is more easily administered and doesn’t leave anyone out. 

This story was featured in the Within Our Means newsletter. Sign up here.