Soviet Thinking Makes Flu Shots Miss

Prices communicate information to producers and consumers.

When the price of a product goes higher, that tells producers to produce more. It also tells consumers to spend their money on something different, buying less of that product.

When it goes lower, that tells producers to produce less and comsumers to consume more in relation to other things they could spend their money on.

As supply and demand for a product changes, that affects the price. Even though all the possible consumers and all the possible producers don't directly communicate otherwise, the effect of their mass actions on prices is that about the right amount of a product is produced for how much people want or need of it compared to other things they could have spent their money on.

The above is named Supply and Demand and it's about the least controversial idea in economics.

Yet somehow governments persist in ignoring it in the same way the Soviets used to.

The seasonal flu vaccine and the swine flu vaccine are both having shortages when people want them, while both will have plenty available when it's too late to matter much.

Why?
Well, how do producers decide when they need to have what flu shots available for distribution?

The short answer is, they don't. Government bureacrats in a command-and-control style of economics (like the old Soviet Union used) decide the price and also tell producers how much of what to produce when.

Using that same method, the same problems routinely happen in the flu shot market. Shortages, followed by over supply and waste, followed by more shortages, followed by more waste, year after year it goes on as most years the bureacrats don't have the information provided by the simple, lowly, price mechanism of supply and demand.

The "experts" don't have more knowledge than the millions of people combined that would set the price in a flu shot market. Without a market, they don't know where to send flu shots for them to be used the best. They don't know how many are going to be demanded and when they're going to be needed.

Pricing Externalities
If the objective is to increase the number of people that get a flu shot above the number that would naturally get one, because there are benefits that are external to the market transaction. i.e. you think other people benefit from every person more that gets a flu shot, then that's an externality and you can make a case that there should be a price subsidy. Most externalities are negative, meaning an aconomist would fix that by adding to the price in order to pay for it, but in this case the health authorities seem to think there is a positive externality.

The way to solve that externality isn't to take flu shots out of a market and turn the decisions over to a bureacracy. If you make the price producers are paid go up, but the price consumers pay go down, you'd get more production and more people and clinics would buy flu shots.

So if the objective is to be most effective, while also encouraging more people to get a flu shot, then the simple method is for the bureacrats to stay out of it all except to offer a set rebate or subsidy for each flu shot sold and used. Whatever the amount of that is will determine how many more people will get a flu shot.

Here's an extreme example to illustrate this. If the government gave $50,000 per flu shot used to producers and another $50,000 to the person that got that flu shot, I'd guess that there would still be a handful of people in the country that didn't get a flu shot, but not very many. Reduce the amounts and less people decide to sacrifice the time and other resources to get involved, but the same basic principle holds. The principle of Supply and Demand.