I always loved the Monty Python ‘Insurance Man’ sketch: “Let me explain to you the principles of insurance. We take your money….. [leaves it hanging]”. I think one of the policies had the bonus offer of a free naked lady, but that’s not important right now.
The point is that businesses do not exist for your benefit. Their purpose is to make money. Now there are various other political and economic schemes around, but we have capitalism, and that’s how capitalism works. Capitalist institutions do not inherently have any morals or social responsibility. They can be made to behave, by laws, or by customer or shareholder pressure; but on their own they will seek to grow and prosper by any means necessary.
It’s up to politicians to make the laws to balance capitalism with the needs of society, but politicians are usually driven by dogma and prejudice rather than logic and evidence, which has often had the effect of letting the capitalist dogs off the leash.
For example, the centre-right governments of Tony Blair and Gordon Brown in the UK had adopted “neo-con” dogma that lack of regulation of financial institutions was good for business, and that what was good for business was good for the country. Any idiot could see that both halves of that formula were wrong, and the world’s economic collapse proved it.
The near collapse of crucial financial institutions caused the government to go deep into debt to bail them out, but the subsequent David Cameron government, politically still more right-leaning, then used the debt as a frightener to convince the public that drastic cuts to public expenditure were necessary. In reality, it was just an excuse to implement their own traditional Tory vision of reducing welfare and social spending and transferring many of the responsibilities of government into the profit-making private sector.
One of the most fundamental pieces of Tory dogma is that a profit-making enterprise can always do the job cheaper than a publicly-owned, non-profit one, even though this is mathematically impossible. (That fact proven by Virgin Care’s official complaint that their bid for a Yorkshire orthopedic contract had been lost because of “predatory pricing” by a competitor, Yorkshire NHS Trust, who have the temerity to make no profits.)
So it is definitely impossible to make costs plus profit less than costs; although it’s certainly possible to make costs unnecessarily high, through poor management and practices. If parts of the NHS are costing too much, then they should be fixed, not replaced by profit-making businesses. Remember how I said capitalism worked: the only objective of a business is to grow, prosper and make money. Providing healthcare isn’t an objective of Virgin Care and their ilk. It’s a means to making a profit.
One of the ways of making a profit out of the new Health Act will be to cherry-pick procedures and practices which are cheap and simple. It should be possible to undercut the NHS on this basis, because the NHS has to bear the costs of an infrastructure for a wide range of medical care, complex and expensive as well as simple and cheap. If businesses are allowed to take away the easy stuff, it would also superficially appear as though the average costs in the NHS have gone up, giving a false justification to the Tory dogma.
An example of that process is what has happened to the Post Office. When its monopoly was removed, commercial competitors took away only the cheap, easy and profitable parts of its business, leaving it unable to maintain reasonable prices for the remainder of its services. That’s why your stamps are going up by a third. I predict that you’ll see the same kind of thing happen to your health care.