It's a predictable libertarians-have-to-drive-on-state-highways line of argument (ie it's ok so long as you complain vociferously about statist tyranny while you're driving) and at first glance seems to be straightforward. But I think a subtlety here is being overlooked that undermines this angle.
Freelance writer Patia Stephens, who seems to have picked up on this story first, quotes the original interview by the ARI's Scott McConnell (now in the "100 Voices: An Oral History of Ayn Rand" volume) with New York social worker Evva Joan Pryor from whence this story emerged. Let's go to the tape:
“She [Rand] was coming to a point in her life where she was going to receive the very thing she didn’t like, which was Medicare and Social Security,” Pryor told McConnell. “I remember telling her that this was going to be difficult. For me to do my job she had to recognize that there were exceptions to her theory. So that started our political discussions. From there on – with gusto – we argued all the time.The interesting point here is that far from having a clear conscience on the issue, as her defenders try to portray, Rand in fact is obviously conflicted, and only acquiesces after several meetings and arguments - and even then tries to distance herself from the decision by giving power of attorney to the social worker to apply for the government benefits, rather than simply doing it herself. Why this extreme reluctance, when she supposedly had provided her own philosophical get-out-of-jail-clause? I think that Rand sensed that her line of argument was in fact rather weak. After all, if she had simply paid for her own private medical insurance, or had sufficiently saved for her own retirement, she could have set a powerful example of uncompromising self-reliance in reality, and into old age (an area her virile fictional heroes never get to experience). Further, libertarian heroines such as her former mentor Isabel Paterson and Rose Wilder Lane set just such examples themselves, both declining to enrol in what they considered fundamentally immoral programs. Yet here was Rand, taking the government handouts. Rand well understood the power of symbolism; perhaps it was this image that stuck in her craw. There are many things she could have done with that regular social welfare cheque that could have put a PR thumb in the eye of statist authority - for example, announcing she'd fund The Objectivist with it, or donating it an anti-tax foundation or similar prank. Surely this is the kind of thing Howard Roark or John Galt would have done, rather than give a social worker power of attorney to quietly accept it for them.
“The initial argument was on greed,” Pryor continued. “She had to see that there was such a thing as greed in this world. Doctors could cost an awful lot more money than books earn, and she could be totally wiped out by medical bills if she didn’t watch it. Since she had worked her entire life, and had paid into Social Security, she had a right to it. She didn’t feel that an individual should take help.”
McConnell asked: “And did she agree with you about Medicare and Social Security?”
Pryor replied: “After several meetings and arguments, she gave me her power of attorney to deal with all matters having to do with health and Social Security. Whether she agreed or not is not the issue, she saw the necessity for both her and Frank. She was never involved other than to sign the power of attorney; I did the rest.”
Further, given her advocation of life-long self-responsibility, of thinking outside of the "range of the moment" to the long-term consequences of one's actions, it is puzzling how, given her undoubtedly considerable means she might now find herself needing to take this less than ideal option. Is it simply because, like so many people late in life, she found she'd ended up in a situation she didn't quite expect? And if so, how is the average income earner supposed to allow for their future circumstances any better?
In the end, Rand was an elderly woman of frail health with no family to support her, the fearful burden of a husband suffering from dementia, and facing a future that their means might not be sufficient for. In other words, she was the very person government programs such as Medicare and Social Security was designed for. Equally naturally, she looked at the options and took the money. The only question is why she would still consider the fact that option even existed to be ultimately evil.