Never Confuse “Could” and “Would”

Matthew Yglesias agrees that "an awful lot of medical spending is wasteful, and spending money on medical care isn’t a particularly effective way of improving the health of the population" and thinks this speaks well of single-payer options: 

I think Hanson’s observation that "humans long ago evolved a tendency to use medicine to ‘show that we care,’ rather than just to get healthy" partially explains why things like the UK’s National Health Service generate so much bang for the buck. In effect, a highly centralized state run health care system is able to put a cap on how much demonstrative caring can be done through the health care system.

Yes a single payer system could cut spending, but would it?  Tyler Cowen doubts "America can cover everyone through a single payer system at lower expense."  He asks:

I am always curious to hear — from single-payer proponents — which interest groups they think will have a decisive say over the system, and how those interest groups differ in America vs. Western Europe. 

This seems a great applications for policy decision markets.   Let us create betting markets on total U.S medical spending conditional on whether or not we adopt a single-payer system in the U.S.  And as long as we do that, let’s also have markets estimate lifespan or some other health measures, conditional on the same thing.  Then we could find out how those willing to "put their money where their mouth is" really think a single-payer system would effect spending and health.

Matt, is this too "bold, outlandish" a proposal for you to endorse?  If so, why? 

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  • mobile

    An obstacle to these markets is getting a good definition of “single-payer” or “lifespan”. For example, if people are still free to buy additional health services with their own money, or to travel outside the U.S. for services, is that still “single-payer”? If there’s too much uncertainty about what people are betting on, the spreads will stay high and the market won’t function.

  • Mobile, for the purposes of this challenge I’m happy to declare Matt the judge on how much of a single-payer system is whatever happens. Would he accept my proposal, given that proviso?

  • I’ll bite; because of the ferocious resistance the politicians who agree with you will put up to any proposed change. Come on, a little realism is in order; it would be tough enough to pass a single-payer measure without the Special Robin Hanson’s Brilliant Scheme Topping…

    Further, the biggest gainers from a single payer system would be the uninsured; the biggest losers the healthcare/pharma industry. Which one has more money to bet in your genius scheme?

  • Alex, I’m not proposing to change any single-payer bill, and prediction markets can robustly resist such manipulation if enough neutral parties are able to participate.

  • DaSarge

    “UK’s National Health Service generate so much bang for the buck”

    Is Yglesias out of his mind? That is a classic case of assuming theory translated to reality. NHS is a seriously non-functional system. The astounding amount of money thrown at it in the last 10 years or so has been wasted. Just a few examples:

    a. Been to an NHS hospital lately? They are filthy.
    b. 65 & need a kidney transplant? Forget it?
    c. Acute herniated disc & need an MRI? Get in line & wait weeks to months.
    d. Got your MRI at long last? Look at the link to see the orthopod.
    e. Hate your Dr & want another? Forget it.

  • mobile


    What I was getting at was that there are more devils in the details of a policy decisions market. Matt cannot possibly imagine, much less enumerate, all of the ways that a policy like “single-payer” might be implemented, and the specific implementation might matter a lot to the investors. For example, you might be bullish on the concept of single-payer, but if you don’t anticipate that the rat poison lobby will become very strong and that in the actual implementation the prescription drug plan in strychnine, then you will take a bath even though your beliefs have still not been invalidated by the market. Investors have more exposure to Black Swans in this type of market, you might say.

    Consider betting on a football game where the rules of the game are made up as the game goes along. Some investors may be confident enough to say “I don’t care if the game is only 8 minutes long and touchdowns are only worth 2 points, our team is still going to cover the 12 point spread”. But the additional uncertainty would spook other potential investors, and that might make it hard for the market to function.

  • Mobile, our amble experience with speculative markets in general, and prediction markets in particular, doesn’t suggest that the number of possible states much affects willingness to trade.

  • mobile

    Fair enough. Evaluating a predicition market contract seems more complicated to me than say, exotic commodity options. But that doesn’t make it a deal breaker.

  • nick

    MY: “In effect, a highly centralized state run health care system is able to put a cap on how much demonstrative caring can be done through the health care system.”

    Why are opportunities to show we care less important than lifespan or other abstract variables that a centralized system would obsessively pursue?