Thread by @Coyoteblog

1/ I have a million problems with single-payer health care plans but here is perhaps the most obvious: The claim that single-payer negotiating leverage will lower prices is simply insane and unsupported by any history in any other field

@CafeHayek @Mark_J_Perry @asymmetricinfo

2/ This is easy to understand. Name one very large market where the US government is essentially the only buyer. The answer is the military. The US Government is the single payer in this country for military and defense hardware. No one else is buying littoral combat ships.

3/ Does anyone with a room temperature IQ and any sort of memory think that the Defense Department gets the best price on.... anything? Anyone my age can remember the $1000 hammers and $6000 toilet seats

4/ I would argue that market-based prices are the single-most valuable contribution of free market capitalism.

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5/ A single-payer system eliminates market pricing and all the enormously valuable information that those prices contain. In a real market, prices are set based on the knowledge and preferences and expertise of millions of people. In single-payer, you lose access to all that.

6/ I know the retort - "well country X has single payer and they have lower costs." This is true, but of limited utility in analyzing US single payer, for three reasons:

7/ First, its not at all clear that prices are set correctly in these countries. For many consumers the prices are too low, limiting supply and increasing wait times. In many cases lower service prices come at a cost of drastically worse service.

8/ Second, for a variety of reasons we have a system where US drug companies subsidize lower prices to the world by charging higher prices in the US. I am not a huge fan of this system and have supported allowing drug re-importation as a way to combat it

9/ Third, country X is likely a small part of the global market and can still negotiate in reference to quasi-free (sort of) market prices the US. Single payer systems in the US will not have this ability.

10/ Volume discount negotiations work best in the context of market prices. Walmart gets discounts but they are always in reference to market-set prices. Without the latter, they would not even know where to start the negotiation.

11/ To this end, single payer would likely work OK for a few years because there will still be a reference price pre-single-payer. But over time, as new services are introduced or new conditions obtain, single payer negotiations will be increasingly untethered

12/ In some ways it is equivalent to private rounds of funding at companies like $we WeWork. A very small group of people with limited information make valuation decisions that often turn out to be way off valuation set in a market with millions of people applying their knowledge

13/ This is why defense spending and to some extent utility regulation (government is not the single payer for PG&E but does negotiate a single price for all consumers) tend to default to cost-plus pricing systems that a) provide zero incentive for efficiency and...

14/ b) have little incentive for innovation.

Add in the cronyism sure to be part of the rate-setting process, e.g. Congress STILL has not been able to cut Medicare doctor reimbursements despite literally decades of proposing it and then putting it off (e.g. doc fix).

15/ Some better ideas for health care include:
a) allow drug reimportation
b) HSA's
c) eliminate supply restrictions (licensure, certificates of need)
d) streamline drug approval

16/ e) Shift government role to providing catastrophic insurance for all, putting day to day spending back in consumers hands (e.g. recreate a real market). See my proposal below: @boriquagato @ElonBachman

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