CA Assembly’s rejection of single-payer “CalCare” this Jan consistent with healthcare innovation, says economist

Economist/Hoover Institution fellow Dr. John Cochrane spoke at SJSU Econ dept’s David S. Saurman Provocative Lecture Series on economic reform.  Cochrane lays out why outlawing private health and insurance competitors is the antithesis to Silicon Valley-style healthcare advancement. Controversial AB 1400 may have failed again this January, but advocates like SJ’s Ash Kalra haven’t specified if their campaign against the free market—and, according to Cochrane, innovation—is over.

(1:12:37–1:16:28)

Guest: So my question is, would United States be better off with universal healthcare or stick to the premiums and all that sort?

John Cochrane: Short answer, no. But these are, these are code words, and you have to unravel what they mean. What does universal or single-payer healthcare mean? What are you really talking about when you say that? Because there's lots of different visions.

One vision is that there is a universal public option. So, you know, we got this problem of very poor people and very sick people. We want to take care of them. And there's a public hospital or a public insurance that they can use, and that on top of that, however, you and I are allowed to get fancier… better healthcare and insurance, and doctors are allowed to treat us in in fancier places… If that's what you mean by universal, it's actually, it's arguably a better system.

Now, we're down to how do we provide charity care? Do you provide Medicaid, where the government runs an insurance company and then farms it out to private doctors with a lot of rules and a lot of limits on competition? Do you provide a system of public hospitals where the government directly provides care? Do you give people a voucher and then, you know, “Go buy yourself some health insurance”? Those are, I think those are good debatable questions on each end.

What often is meant by universal health insurance is, however, not only we will provide for people who need it, but we will outlaw anybody else doing another system. So doctors may not, on pain of going to jail, treat you and charge you money for it. You may not buy anything better than what's offered.

I think that would be a bad idea in part because health is like everything else. And we live in a time of enormous innovation. And the way the iPhone works… initially, it comes out. They charge a ton of money. And rich people get it, and that funds all the development costs. And the next thing you know, it is true that the homeless guy under the tracks in Palo Alto has an iPhone, which is a great thing. But he wasn't the first one to get an iPhone, and that's the way health, that's the way innovation is going to work: that wealthy people get it first and pay through the nose to do it.

But if we have a system where you're not allowed to opt out of the system, that innovation will go. And that, I think that's the central tragedy…

[Concerning medicinal advancements,] it’s just unimaginable what we can do, but that takes money. And that money’s got to come from somewhere. And I know one recipe for where it comes from, and that’s not the government tells you exactly what everybody gets and no one’s allowed out of the system.

Watch the whole thing here.

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