In theory, competition should take care of the escalating costs, though?
Try asking a cardiologist or neurologist for a fixed price estimate before a test is run. If you press the issue you'll be labeled a "confrontational" or "hostile" patient and rejected from the practice.
It's time to admit that not all problems are amenable to market solutions.
Likewise, insurances would negotiate rates for certain procedures. Of course it is not the task of the patient during cardiac arrest to do so. But the patient would choose the insurance provider.
This sort of thing is usually fertile breeding ground for corruption and backhanders. The NHS has been dogged by scandals caused by this sort of pseudo-privatization.
It works for smaller and short term contracts, especially for things which the private sector also needs, but the larger the size of the contract the more likely it is that the price will be determined by backhanders and which ministers play golf with which chief execs.
For something the size of "supply a city with emergency services", you could practically guarantee that the city council leader's cushy post-political job would be determined by which company they picked.
tl;dr read up on the principal/agent problem.
Sure, governments/councils spending other people's money is always a fertile ground for corruption.
Most privatization efforts come about as an attempt to inject corruption, however, so arguing that it could be done in a fairer and cheaper way is something of a moot point: if it were going to be cheaper and fairer they wouldn't be pushing for it in the first place.
Huh - citation needed? I've never heard that claim before. Corruption pretty much needs governments, who else are you going to bribe?
To me competition seems the only surefire way to keep prices fair/low. Yes, motivated governments in theory could do everything. A supercomputer could theoretically compute the perfect prices and allocations for everything. But no such computer exists, and markets are the only approximation available. You can not rely on governments to be motivated to be selfless and good. Even if perhaps some individuals are, in the long run the incentives are just not aligned, and it takes just a few bad apples to ruin the system.
It's worth noticing that most of ambulance services in the world are run entirely or in a good part by volunteers and no-profit organizations to ensure honesty and quality of the service.
...to put it mildly. Applying the market law to medicine encourages the most inhuman behaviors.
[1]http://theinvestmentsblog.blogspot.fi/2014/09/munger-on-airl...
full speech