When a consumer is insulated from cost they have no incentive to weigh up the costs and benefits of a decision. Once the costs are zero any benefit (or even a perceived possible) benefit will encourage over-utilisation. This is what has happened when medical prescriptions have been free with people collecting the prescription even if they didn't actually need it. In a letter to The Irish Independent one person wrote.
As a public health nurse visiting homes on a daily basis, it is astonishing to note the vast amounts of excess and unnecessary medication which accumulates in people's homes.There is also other anecdotal evidence of the families of recently deceased relatives returning thousands of euro worth of prescribed medicine to the HSE that had been collected but never used, simply because there was a prescription for it. As the HSE can not vouch for the medicine it must be destroyed. The above letter continues
Despite the fact that many monthly prescriptions are not used in their entirety, and despite both patient and pharmacist being alerted to this, the system allows the entire monthly prescription to be reissued regardless. There is little or no appreciation or consideration of the cost, particularly as this flawed system is paid for by the taxpayer, who, by the way, is not entitled to free medical care or medications.
Many years go when I lived and worked in the UK, a charge was payable for each prescription. The busy GP might have been quick to issue the prescription but I had a little more time to consider if the purchase was essential enough for me to hand out the charge rather than the easier option of obtaining the item, knowing someone else was paying for it. The 50c per item fee is negligible and will go some way to reducing the vast mount of unnecessary prescribing and waste.
This public health nurse would make a fine economist.
We are finally cottoning on to the idea that anything free will be over-utilised. And that even a small charge can have a big impact. The blight of plastic bags was "cured" when a small charge was introduced that made people consider whether it was actually worth using a plastic bag to home a pint of milk and a packet of biscuits. When A&E visits were free (in money terms) many patients who should have gone to their GP made unnecessary trips to an Accident and Emergency Departments in situations that were neither an accident or an emergency.
Of course, the issue of setting the appropriate charge remains. The plastic bag levy began at 15c in 2002 and is due to be increased to 44c next year. A&E charges currently stand at €100 compared to an average of €60 for a visit to the GP.