Sunday, April 17, 2005

Swaminomics: Miracles for Rs 7.50

Swaminathan Aiyar's piece in Sunday TOI (Apr 17) talks about a group insurance scheme that covers medical operations at absurdly low premiums. Interesting read.

Swaminomics: Miracles for Rs 7.50
http://timesofindia.indiatimes.com/articleshow/1080153.cms

One point which Aiyar thinks works for the scheme is that it's NOT voluntary. That bugs me a bit because however low premium might be, taking away choice is someone else deciding the "common good". On the other hand, choice is a misnomer even in democracy. Knowing that lot of my taxes go down the drain, I still have to pay them. That brings me to a (no doubt utopian) idea:

As government anyway spends a lots of it's coffers on numerous such schemes without any kind of accountibility mechanism, the tax payer should have the choice of deciding where  a part (say 20%) of his taxes should be diverted. This would do three things:

1) It will give the tax-payer an added incentive to pay taxes (again utopian, but at least they cannot give the "i dunno where my money goes" excuse with a moral certitude)

2) It will reduce the "centralization" in the socail spending decisions.

3) It will mean those who use the funds, partially compete for the funds, thus forcing them to be more accountable.

This would of course mean some of administrative overhead, but it's not that difficult in the times when tax info is computerised.

-Amit.