Adam Smith Institute

News just in from the Lib Dem conference – the party is planning to give income tax breaks to the healthy. Under the proposals, Local Health Boards would be set up with powers to cut taxes for those who gain 'points' by attending regular cancer screenings and take part in physical activities. Activities would be logged via a swipe card system and points redeemed against proposed local income tax bills. Direct incentives would be backed up by penalties for failing to turn up to GP appointments.

At first glance the proposals appear to contain some sound principles – in particular the attempt to break the Stalinist grip Whitehall has over the health service by establishing directly elected Local Health Boards who would be "free to commission services from a range of providers to secure improved quality of care and value for money". The explicit incentives to get patients to take more responsibility for their healthcare would also bring a welcome shift in patient attitudes towards their health.

Last week I discussed Clegg’s proposals for directly elected health boards pointing out that a market based health system would provide a form of democracy far superior to that of merely voting every four years for a health board. 

Similarly, proposals to recreate the incentives of a market based insurance system beg the question – if insurance companies have been so effective in incentivising healthy living why try to merely recreate these incentives? Why not just switch to the superior model? An insurance system would put the purchasing of health services firmly into the hands of the patient - simultaneously breaking the government monopoly on healthcare delivery, while providing patients with incentives to live healthy lifestyles. Clearly the Lib Dems believe that markets work – why not put those beliefs in to practice?

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