In last week’s Scotsman (“Middle class…“), the National Health Service (NHS) said it would be transferring money from wealthier areas in the east (Edinburgh and Grampian) to poorer areas in the west. These types of transfers are necessary for a stable society generally most people support some redistribution. The question remains, why should the Scottish government be transferring bureaucratic money from one region to another? For any transfer program, we must compare whether or not the program is better than simple monetary transfers to the poor.
One justification cited in the article is access to care. The NHS runs most of the medical care is Scotland and claims that the areas in the west are under-served. On the other hand, if there was a more deregulated medical market, transferring money to poorer areas would increase a doctor’s incentive to move to those areas since the move would now be more lucrative.
Another justification is paternalism. In the article, one un-named insider states:
“I you take people in the leafy lanes of Dowanhill or Morningside, they don’t need to be told what needs doing. They know it and they have the personal means of tackling it.”
This implies that poor people do not know how to take care of themselves, which I do not believe. Later the insider claims that the poor do know how to tackle their healthcare problems, but do not have the financial means accomplish this.
Both of the previous reasons I believe are not valid justifications to use bureaucratic transfers of funds in lieu of direct monetary transfers. One good reason is the “tagging” argument (see June 14th post). If those who are medically needy are the ones that use the free medical services, than this could be more efficient. On the other hand, if many people who otherwise would use private health insurance decide to use the free medical services because it is now of a higher quality, it would decrease efficiency.
Why would a person not want to use a free good? The two main rasons are that 1) there is a time cost of waiting to see the doctor for one’s free medical service and 2) one offers suffers pain or at least discomfort during many medical tests. These are the difficult decisions which must be made when a nation’s medical care is organized by a central authority.