That line of thought can be used to justify a huge amount of intrusion into people’s lives.
Giving them a specific good is equivalent to giving them money, but forcing them to only spend it on something you approve of.
Some amount of "paternalism" is good for society. Someone likened health to car maintenance, but I can tell you that of the drivers I know, zero of them would get their car the yearly technical check unless it was explicitly illegal to drive that car otherwise. I'm starting to believe we should have something similar in places with public healthcare - there should be a set of free, mandatory, noninvasive checkups to screen for diseases that don't have symptoms noticeable by patients, and there should be a way to compel everyone to take those tests. It would be better for everyone's well-being, would save public healthcare a lot of money, and the doctors could stop attaching unrelated tests to getting prescriptions for glasses or birth control.
With cars, there are greater third-party effects (i.e. your car failing and crashing into someone else), so it makes sense to require a certificate before one is allowed to use public roads.
Of course, in practice the government would probably come up with silly layers and restrictions on how to use the money etc.
The idea of giving cash is, frankly, asinine. The objective is not to increase the recipients spending power, but to reduce health problems population wide, reducing expensive medical interventions and productivity-draining disability.