Thursday, January 24, 2008

Adam Smith on Health Provision

Tim McDonald writes in The Evening (here)

I want my medicine

The invisible hand of the marketplace that economist Adam Smith (late 1700s) defined as that invisible relationship between suppliers and sellers that determine what products and services are offered to the market. Adam Smith could not have foreseen the development of healthcare and the dichotomy between competition of the market and the Hippocratic Oath.”

No such invisible hand was defined by Adam Smith as operating between buyers and sellers in markets, nor could Adam Smith ‘foresee’ anything about modern healthcare or lack thereof. He didn’t ‘do’ forecasting.

In his days medical care was fairly primitive, though Edinburgh was better furnished in these respects that most parts of Scotland (and England).

Today, health care is a major business entity and how it should be supplied and on what terms is a major topic full of controversy.

His sole mention about health provision is in Book V of Wealth Of Nations where at the tail-end of a section of the education of youth he suggests:

In the same manner as it would deserve its most serious attention to prevent leprosy or any other loathsome and offensive disease, though neither mortal nor dangerous, from spreading itself among them; though, perhaps, no other publick good might result from such attention besides the prevention of so great a publick evil’. (WN i.f.60: pp 787-8

To what extent he might have contemplated a general role for government funding in health matters is purely speculative.

Living, as I do, within a National Health Service in the UK – definitely overburdened with a State managed system – there is much scope for introducing a wider variety of private funding and commercial management of health delivery within a system of ‘free at the point of need’, as there is probably scope to introduce publicly funded, but definitely not publicly managed medical services (Adam Smith distinguished between these forms of delivery) in some totally privately funded schemes in other countries. I recently have used both the NHS (free to use) and the private health sector (pay for use).

For Adam Smith, what worked was more important than what ‘men of system’ proposed or imposed.


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