Is it a good Idea to Charge People £10 to see the Doctor?

1. It would raise revenue to help improve health care.
2. It would reduce waiting lists
3. It would reduce time wasters.
4. It could increase social efficiency. - Free Health care may lead to over consumption.

In the below diagram social efficiency occurs at Q2. Therefore the price should not be zero. Of course, it depends on elasticity of demand and how much positive externalities there are.



Arguments against Charging to see the Doctor

1. Demand for health care is quite inelastic, higher prices would not reduce demand very much. There are not many time wasters who go to see the doctor.
2. Positive externalities of health care quite high
3. Going to doctor is merit good, especially for cancer screening
4. Would increase inequality
5. Cost of collecting the money.
6. Only a small % of total NHS cost.

Paying for prescriptions is a way of paying to see the doctor.

• Disadvantages of Private Health Care
• Benefits of Private Health Care
  

Labels: healthcare

Yesterday, I posted about the benefits of private health care. Today there are the problems of relying on Private health care insurance. These arguments are particularly relevant with regard to the US health care vs the Current UK system.

If health care is not universal and free at the point of use people will be require to take out private health care insurance. There are several disadvantages to relying on Private health care.

1. Inequality.
It will be a bigger burden for those on low incomes to take out health care insurance. Those on low incomes may not be able to afford certain types of treatment. High income earners can afford to have privileged health care.

2. Health Care is a Merit Good.

People may forget, be unwilling or be unable to take out private health care insurance. A merit good means people underestimate the benefits. Therefore, the government should intervene to prevent this market failure of under-consumption.

3. Positive Externalities.

A good health care system can contribute to a successful economy. If people are treated quickly and efficiently it will help improve labour productivity. In a free market these positive externalities are ignored leading to under-consumption.

4. More Expensive.

Private Health care firms require a profit motive to make it worth while. Therefore, consumers must pay for not just health care but also the necessary profit margin. The US spends the highest

5. Bureaucracy

In US govt subside health care for people on low incomes through programs like Medicare. However, this procedure is very bureaucratic. It takes a long time to fill in the forms and get

6. Difficult to get money back.

Can be difficult to get Private insurance firms to Pay for the cost of treatment

If you watch Michael Moore's new film - Sicko, you will probably get more examples of the inefficiency and inequities of the current US health care system

Labels: healthcare

Private Health care can arouse strong emotions. In the US, private health care is often criticised for being bloated, inefficient and inequitable; - designed primarily for the benefit of private health insurance companies.

I actually included US health care in a post - 3 of the Worst economic policies of all time

Nevertheless, we need to be aware of the economic arguments in favour of private health care. This enables us to make a more rounded judgement about the best approach for health care provision in the UK and US. Tomorrow I will look at disadvantages of private health care and consider the best way forward for the UK and US.

Advantages of Private Health Care


1. Greater Efficiency and Quality of Service.

Private firms have a profit incentive to cut costs and maintain a good service, which is essential to attracting customers.
Private firms also face competition which is another incentive for better quality services. These factors are absent in government public services.

However, It can be argued health care is not like a private business. E.g. Doctors and nurses don't need a profit incentive to do a good job.

2. Provides greater choice for consumers.

We can choose most goods, why not choose health care?

3. Reduce burden on Government Spending.
If more people go private, less will use the NHS, therefore, the government can spend less

4. Reduce Waiting Lists.
If people go private it will reduce waiting lists.

5. Government Services can become very bureaucratic and experience diseconomies of scale. Arguably the NHS is overstaffed with too many administrators. Private health care can avoid these tendencies to bureaucratic inefficiency.

• Essay on Rationing and the NHS

Labels: healthcare