To see why not, imagine a town with two residents and three things to consume: apples, oranges and pears, each costing £1. Jack earns £100, Jill earns £200, and each wants to eat an equal number of apples, oranges and pears. So Jack buys 33 apples and Jill buys 67.
Suppose they decide that apples should be “free at the point of use” and funded from taxation. How big should the collective apple pool be?
Since they value apples, oranges and pears equally, and the total spending available is £300, the apple pool should contain 100 apples: 50 for each resident.
If their contributions to the apple fund are proportionate to their incomes, Jack will pay £33 and Jill £67. So Jack is better off. He now gets 50 apples and pays only £33. Mary is worse off. She spends £67 to get 50 apples.
But something has gone wrong for Jack. He values apples, oranges and pears the same. But this policy means he consumes 50 apples, 33 oranges and 33 pears. The policy has lifted his income from £100 to £117 but distorted his consumption. With this increased income, he would prefer to consume 39 of each fruit. He would be better off simply receiving £17 in cash from Jill.
Jill’s consumption is also initially distorted. She consumes 50 apples, 67 oranges and 67 pears. But she can fix this problem by buying more apples. After transferring £17 to Jack, her income is £183. So she will want to spend £61 on each fruit. She can achieve this by buying 11 apples in addition to her collective allocation of 50.
Total spending on apples thus increases from £100 to £111. Which reveals the real beneficiaries of the policy: namely, apple growers. The policy transfers wealth from the rich to the poor and simultaneously forces the poor to spend it on apples.
Substitute “healthcare” for “apples” and you can see the absurdity of the idea that the NHS is a friend of the poor. Indeed, matters are even worse, because the poor typically want to spend a smaller portion of their incomes on healthcare than the rich do.
The NHS forces people on low incomes to forgo things they would prefer to healthcare. It’s perverse that something so unfair should be a source of national pride.