Problems with Age-Testing
By Bryan Caplan
Let me clarify my question for David. I support both means-testing and age-testing, but they’re more similar than they seem. It’s true, of course, that you can change your means, but not your age. But in both cases, there are perverse incentives for people near the cut-offs.
For means-testing, the problem is clear: If you’re near the cut-off, there’s little incentive to help yourself. But age-testing has the same basic problem. If Medicare kicks in at 65, for example, a 64-year-old could easily be better off doing without insurance, and – if necessary – delay treatment for a year. For Social Security, similarly, raising the age cut-off increases the wedge between taxes paid and benefits received – especially for groups (e.g. men, the poor, and blacks) with below-average life expectancy.
When you put it that way, of course, it’s also easy to see why some people might see age-testing as “unfair.” Low life expectancy is bad enough; age-testing adds insult to injury. Right now, for example, black males have a life expectancy of about 70. If we raised the age cut-off for Medicare and Social Security from 65 to 70, roughly half of black males would never collect.
Since I want to abolish the welfare state entirely, I’m always in favor of making it harder to collect benefits. But appearances notwithstanding, age-testing and means-testing really do have a lot in common.