Welfare State

Although in most Western capitalist democracies the lion’s share of welfare-state expenditures goes to older adults, this age group has played a particularly important role in the development of the welfare state in the United States. Today no other welfare state is so heavily focused on programs for older adults. It is the only industrial nation that restricts national health insurance coverage to the older population (and the poor). In contrast to the European nations, the United States never developed a family allowance program (monthly cash benefits based on the number of children in the household). The large expenditures that go to programs for older persons have prompted sociologist John Myles to refer to the American welfare state as a ‘‘welfare state for the aged.’’ A large proportion of federal expenditures goes to age-based policies such as Social Security and Medicare, programs that use age as a criterion in awarding benefits.

Jill Quadagno notes that the United States was late to develop a welfare state for several reasons. The enduring split between North and South assured that the working class would not be strong enough to push for welfare-state programs. Because of the inability of the working class to push for reform, programs for older adults took center stage in the development of the American welfare state. Before the 1930s, the primary welfare-state programs in the United States were pensions. For instance, some states provided public pensions for which very few people were eligible. In addition, the Civil War pension system, introduced in 1862, provided benefits to former Union soldiers and their dependents, regardless of race. By 1910, over one-quarter of all American men age sixty-five or older were receiving Civil War benefits. Because these pensions provided benefits to many well into the twentieth century, they ended up delaying the introduction of social insurance–based old age pensions.

After the Civil War generation and their dependents died out, several voluntary organizations campaigned for old age pensions including the Fraternal Order of Eagles, Upton Sinclair’s pension movement, the Ham and Eggs movement, and the Abraham Epstein’s American Association for Social Security. The most successful of such organizations was the Townsend movement; it eventually attracted over one million supporters. Francis Townsend proposed that all Americans over age sixty-five receive a pension of two hundred dollars per month. The Great Depression hit older adults hard, producing higher rates of unemployment and poverty among older workers. President Franklin D. Roosevelt’s push for the adoption of the Social Security Act of 1935 was intended in part to respond to (or, more precisely, to undercut the demands from) such groups. By increasing the purchasing power of and discouraging labor force participation among older adults (and thus opening up jobs for younger workers), the act was intended to help stabilize the economy. The adoption of this legislation instituted a mandatory, contributory pension system for the United States.

In addition to the relatively late development of a national pension system, the United States is the only industrialized nation never to have developed a system of universal health insurance. The health insurance system is predominantly private, with two primary forms of public insurance: Medicare and Medicaid. Medicare insures the population eligible for Social Security, typically covering only acute care and rehabilitation costs. Medicaid is a means-tested program limited primarily to persons who receive Temporary Assistance for Needy Families (TANF) or Supplemental Security Income (SSI). Of these, Medicare is the most explicitly age-based. Enactment of Medicare in 1965 during the Johnson administration was preceded by several legislative failures during the Truman and Kennedy administrations. The bill was backed by a labor-senior coalition including the American Federation of Labor, the American Association of Retired Workers, and the National Council of Senior Citizens. Simultaneously, the original opponents of Medicare put forward a more modest alternative proposal called the Eldercare bill, which promised to provide more extensive benefits to a limited population of elderly persons. A health-industry coalition, including the American Medical Association, the American Hospital Association, the National Association of Manufacturers, and the Chamber of Commerce backed the Eldercare bill. In general, these organizations opposed government intervention into health insurance.