> You've got that exactly back to front. NHS's immense buying power lets them negotiate lower prices for drugs, exactly as medicare used to (before pharma lobbying stripped them of that power).
In principle, you're correct. In practice the fact that they're the only buyer, means in many cases that they pay at whatever a drugs company sells at since there's no "but company X is only paying Y, why are you charging us Z" as a comparison, particularly in the case of non-generics.
> The UK public adores the NHS and is one of the few things polls say that people would be happy to fund with tax raises.
And that was exactly my point. The UK public might "adore" the NHS, but they have a pretty poor understanding of how it is funded. If the government kept funding the NHS by an extra X percent every year, we run out of public funds.
> The ruling party does not like it, however, which is why it has been slowly degrading service over time as preparation for full privatization in 10-15 years.
The ruling party, being the Tories, that have been "in charge" of the NHS for the majority of its 70 or so years? And who on earth would buy a loss making healthcare system that's funded to the tune of a billion or so a week? Apple?
>> If the government kept funding the NHS by an extra X percent every year, we run out of public funds
Lets say the uk gov allocated 10x to the nhs in the next budget - to be clear, this would put just nhs spending at more than total govt income for the year. If this were a company we’re talking about, they’d be insolvent.
But we’re talking about a govt with a sovereign currency. So what would happen in this scenario? It doesn’t go bankrupt…
How is money created? What is fractional reserve lending? How is money destroyed? Can a country issue a fiat currency without an associated public debt? Or to put that last bit another way - could you settle your tax bill in GBP if there was £0 public debt?
The govt has rules for borrowing from the capital market, and that's (mostly?) for national infrastructure projects. It will never (hopefully) borrow from the capital markets to fund the NHS, and then continually pay it off.
That leaves tax or private money to fund the NHS, and we can't tax people much more. So in your comment "how is the money created?" Answer, tax, and there's a maximum limit to how much we can fund the NHS.
>> The govt has rules for borrowing from the capital market
Yeah it does. The UK govt has had 6 different sets of rules in only the past 10 years.
The current rules followed by Rishi Sunak are actively opposed to what you say - he’s been celebrating beating borrowing forecasts of the OBR by £26bn, and he makes a big song and dance any time he can stating excessive public borrowing is immoral. He found the magic money tree instead…
The scope of quantitative easing has increased massively since it was introduced. On top of this, the bank of england does not publish a report on which govt bonds have matured - but we know some have already without having been sold.
So, the govt borrowed from the govt (bank of england bought out uk govt bonds held by non govt entities) then held them to maturity (so the govt paid the govt back), while remitting the coupon payments back to the govt. All while we can’t see inside the machine - none of this is available via public reporting.
It’s not quite “printing money” but it definitely qualifies as a magic money tree.
It’s how govt’s corona responses are paid for today and it’s the reason NHS funding is constrained not by tax receipts but by policy, political decision.
> It sounds like you are disputing empirical evidence as well as standard economic theory regarding monopsonies.
When there are multiple sellers of generic drugs, you're correct. When there is one seller of a non-generic, life saving drug with no alternative, the NHS is going to pay whatever the one seller, which by definition is a monopoly, is going to charge. [1]
> What is even the point of that sentence?
That we cannot keep increasing NHS funding exponentially. Some people seem to find that fact hard to grasp - there's an upper limit. Another commenter talks about the UK raising debt to fund the NHS. Thank goodness there's a set of rules for government borrowing in the capital markets.
> A) If it is a majority of years it's a fairly slim majority and B) they werent there when it was set up.
Both parties campaigned for the NHS in the 1940s. Labour won. Blair, in power for over a decade promised to "fix the NHS" whatever that meant, but he didn't do it. Thatcher/Cameron/Johnson, all in charge for 2 decades or so, still haven't "sold it off".
> Somebody who knew that they could start charging either customers or government through the nose and make it fantastically profitable.
Except it will never happen. The government would not introduce a commensurate tax cut since they're no longer funding the NHS, so your cost of living would go up, and even in the UK, I think people would get rather upset.
> Branson is one example (Virgin Healthcare sucked £2 billion out of NHS coffers, yay for crony capitalism).
Did he really? Evidence? 2 billion of private money paid by companies into Virgin Healthcare, sure. But did he take £2bn from the NHS?
> They are not so aware of the corruption going on underneath with taxpayer money.
What corruption? Surely the police should be involved if there's true corruption?
I won't defend the NHS. I'll defend the staff that treated my father, but the organization itself needs fixing.
>When there are multiple sellers of generic drugs, you're correct. When there is one seller of a non-generic, life saving drug with no alternative, the NHS is going to pay whatever the one seller, which by definition is a monopoly, is going to charge.
This is incorrect. If the price is too high they refuse, depriving the company of all income. This has been done for certain cancer drugs.
Even if they dont refuse their pricing power lets them beat down prices.
>That we cannot keep increasing NHS funding exponentially
It's barely even increasing in line with inflation.
>Some people seem to find that fact hard
They really dont.
>Both parties campaigned for the NHS in the 1940s.
This is provably false. The tories wanted an insurance based system rather than the system we have modeled on the soviet union.
I think Im gonna leave this discussion here. We clearly dont live in the same plane of reality.
In principle, you're correct. In practice the fact that they're the only buyer, means in many cases that they pay at whatever a drugs company sells at since there's no "but company X is only paying Y, why are you charging us Z" as a comparison, particularly in the case of non-generics.
> The UK public adores the NHS and is one of the few things polls say that people would be happy to fund with tax raises.
And that was exactly my point. The UK public might "adore" the NHS, but they have a pretty poor understanding of how it is funded. If the government kept funding the NHS by an extra X percent every year, we run out of public funds.
> The ruling party does not like it, however, which is why it has been slowly degrading service over time as preparation for full privatization in 10-15 years.
The ruling party, being the Tories, that have been "in charge" of the NHS for the majority of its 70 or so years? And who on earth would buy a loss making healthcare system that's funded to the tune of a billion or so a week? Apple?