Social contingencies, the aged, and public policy

Today's older population is notably different than it was a few decades ago, both in well-being and in diversity, a shift that must be acknowledged in public policy. The U.S. social insurance system overprotects against highly likely, predictable, and nonvolatile events at the expense of more unlikely, potentially catastrophic, and less volatile events. The public sector, therefore, should move toward proportionally emphasizing health-related, functionally impairing events rather than income maintenance; the private sector is better suited to insuring against predictable and nonvolatile old-age events. A contingent event scheme would: (a) encourage the growth of long-term-care insurance; (b) help bridge the gap between those arguing for greater "efficiencies" in social welfare spending and those pressing for new universal benefits; and (c) bring a new perspective to the "generational equity" debate.