The Era of "Means Testing"

I think most people know that the future for the US probably means fewer entitlements in the face of a rapidly increasing Federal deficit. The projections for shortfalls in Social Security and Medicare are huge and almost totally ignored by politicians, business leaders, and the public. When the Baby Boom generation reaches full retirement, government programs will undergo financial stress unparalleled in human economic and political history. By some accounts, the unfunded portion of Medicare alone is $36 trillion over the next 75 years ( see The Healthcare Bubble). This represents about 2.5 times current GDP!

An interesting article in Barron's highlights some trends from the U.K. that might foretell the fate of American entitlement programs.

Forsyth, Randall W., 2010. We may no longer be entitled to "entitlements." Barron's, Oct. 19.

The following two paragraphs from the article, which outlines the change in U.K. policy for entitlements, are interesting for several reasons:

"These changes would reverse the long-standing British principle that everyone, rich or poor, be entitled to the same benefits. Cameron now holds Greece as an example of where Britain could be headed if it doesn't break from the past."

"Americans would call this 'means testing' for 'entitlements,' the principle that the government funnel benefits for those who truly need them, not everybody. Given the projections of where the U.S. budget is headed, we Yanks seem certain to move in the same direction."

I think the idea of "means testing" goes much further than government entitlement programs. In some cases, mostly informal, I am aware of means testing as a condition for employment and even relating to on the job expenses. This type of attitude and behavior, even if informal, goes against hundreds of years of American tradition, the Law, and everyday practice.

For America, a policy shift by business and government toward means testing is a radical change and something that should receive widespread attention by the press. It is an emerging issue with important ramifications, some yet unknown.