I can think of a few reasons, I guess. I should say up front that if we're talking about handing out cash, means-testing on income is always going to be identical to some universal lump sum plus some set of marginal tax rates.
First, maybe you're worried about distorting a market. Medicare, for example, pays some factor times the prevailing rate for certain things. I don't want to get into whether or not that's a good way to do things, but it does mean that you couldn't handle everyone's treatment through Medicare without changing anything else about the law, and the more people you treat through Medicare the less you can be sure that you're paying a market price. A universal program will cause more market distortion than a means-tested one. An example might be the nearly universal availability of subsidized student loans allowing tuition to rise.
Really?
You think that what stands between Medicare and abusing its buying power is means testing?
Sorry, but the numbers are not there.
But maybe more importantly, Medicare is not a for profit corporation, it doesn't need to behave like a monopolistic corporation, we get to decide how it acts and we get to set the compensation level.
And come on, market distortions?
Have you read the brilliant Time piece on healthcare cost?
(if not stop everything and read it now).
The market hasn't exactly performed all that well for patients, maybe it can use a distortion or two.
Also we got to stop talking like a "market distortion" is an inherently bad thing.
Minimum wages is a market distortion, so are workplace safety and child labor laws, those are all good things for society, but they distort the market much more than the extra distortive effect medicare will have for not having mean tested.
Second, programs alter people's incentives. Suppose you have a rent-assistance program that pays the first $300 of everyone's monthly rent. For low-income people who are on tight budgets, that's fine, provided landlords don't all just raise their rents by $300. The whole point is to get poor people to pay more than they otherwise would for better housing than they'd otherwise get. But with a universal program young professionals who have more money to spend would likewise get that voucher, and they would then tend to rent nicer apartments than they'd rent if they were just given cash in the amount of the voucher. That's inefficient.
What incentives are you talking about specifically here?
To what beneficial behavior me (or anyone else for that matter) is incentivized for having a mean tested system?
No sure I fully follow your voucher example.
Third, programs can be inefficient themselves. Not everything is like health care; there are lots of things the government just isn't very good at.
But they can also be efficient.
In fact, medicare is more efficient than any for profit health insurance program out there.
Also, what makes you think that the government isn't good at doing these things?
Outside killing people, it's the stuff it has most experience with (and more happy costumers than those on the receiving end of our military programs).
The bigger the program the more loss there is.
That's actually demonstrably false, insurance programs of any kind are more efficient the bigger they are.
Edit: that tone came across a bit more combative than I intended, so you'll have to take me at my word that I'm genuinely asking.