US Healthcare Is A Walled Garden: Centralized Without The Ability To Innovate, Disrupt And Change The Status Quo: A Federalist Article

Excerpts from a 10-year old article on the Federalist, "What The Internet Teaches Us About Healthcare" by Pascal-Emmanuel Gobry, October 10, 2013:

In 1993, almost everyone in the technology industry agreed that the next wave of innovation in computing was going to be related to some global network to which consumers and businesses could be connected and shop and converse.

However, almost no one thought that this global network could be the internet, which was the province of academia and wasn’t user friendly.

In Silicon Valley in 1993 the conventional wisdom was that this global network would be some sort of connected TV run through the cable system, and that it would be controlled by gatekeepers (such as cable companies and media companies) which would approve and run the services that would be on top of it. ***The whole point of decentralized innovation is that nobody can tell in advance what the innovation will be, exactly. In fact, if you were a person from this alternate universe, and you didn’t know about the other internet, all you had was a “simplistic” faith in Hayekian and Schumpeterian principles, you couldn’t even begin to describe these things. You would know that the walled garden internet would be bad for innovation, but you couldn’t point to any specific thing that the open internet would provide, because no single person can come up with the idea for Amazon and Twitter and Wikipedia and Google on their own. That’s the whole point of decentralized innovation, nobody can tell in advance what the innovation will be, exactly. So you would be left spouting off platitudes about “innovation,” and people would smile and nod politely, and say, well, that certainly sounds very nice, but over here in the real world, things are a little bit more complicated than that.

I think you can get to the point I’m making. The healthcare system in most advanced democracies is like the walled garden internet. Just like in the walled garden internet, you can “shop” and “communicate” and do other things, in these systems, you have “hospitals” and “innovation.” Things happen. But as a matter of fact, there’s no real innovation–disruptive, changing the status quo. *** This isn’t “free market: good; government: bad.”

Again, I want to emphasize the point that the key thing isn’t “the free market” vs “the gummit.” As all ideological advocates note, the government had plenty of a role in creating the internet. But it did so in a decentralized fashion. If you read about the history of DARPA, when a guy had the idea for TCP/IP (the fundamental protocol on which the internet runs) he basically went to his boss who was an engineer like him and the guy said “Sure, I’ll give you $3 million [of 1960s money] to try it out” and the engineer went and convinced other guys who were assigned to other projects to work on it with him. That’s not how government typically works, but it’s definitely how decentralized trial-and-error innovation works.

When you see how extensively we use hospitals even though they are inherently dangerous places, you see potential for innovation being untapped.
Similarly, in healthcare, discussions of “free market” and “gummit” quickly lead to dead-ends. There’s no telling where one begins and the other ends. And because of widely-shared (including by me) moral intuitions about the desirability of common access to healthcare, government will always be involved in that sector. But the question is: how decentralized is decision-making? And the answer is: in most non-US countries, very little; in the US, not by much, and Obamacare makes it worse. This centralization is much more the fault of the insurance-driven view of healthcare than of the government as such.

Now, what are these precious innovations that healthcare centralization is making us miss out on?

Like walled-garden-internet-universe-guy, I’m at a bit of a loss to say for sure. We can see hints, though.

[The original article continues on the Federalist, including a list of some hints.]