Doctors are expensive. Computers are cheap. The more we can replace doctors, teachers, taxi drivers and other baumol workers with machines, the more consumer surplus is generated.
How would improved diagnosis bring down the price of medicine? Medicine doesn't only consist of diagnosis, there's also treatment and infrastructure. It's obvious that any improvement in diagnosis of illness cuts down on misdirected treatment and improves public health, saving money would be a secondary effect.
Besides, the fact that healthcare in the US is so expensive compared to the rest of the Western world is due to political reasons; we know how to bring down the cost of healthcare here without affecting outcomes by doing what the rest of the civilized world does.
How would improved diagnosis bring down the price of medicine?
I didn't say improved diagnosis would. I said replacing humans with machines would. If the process were 1 hour with a diagnostic bot and 1 hour of treatment with a doctor, that will allow 2 patients to be treated in 2 hours of a doctor's time (increasing supply and reducing price).
Your political baiting is completely orthogonal to the point. If you play politics and tweak the payment system (e.g. adopting India's excellent capitalism-based system), a doctor still spends 1 hour diagnosing and 1 hour treating. 1 patient is treated rather than 2.
Consumers can't consume if they don't have the money. Every time you fire someone and he can't get job for time X, you are reducing overall consumption during that time X.
Instead the money if concentrated in fewer hands and there is an upper limit to what a human can consume (e.g. a single rich person can't eat more than hundred middle class people).
If someone is spending less on healthcare, they will instead direct that money into buying perhaps restaurant meals. More demand for restaurant meals means that prices and profit margins in that industry will go up which will cause more restaurants to open, who will in turn employ more chefs and waiters causing their wages to go up and causing them to buy more things (like healthcare).
I don't think healthcare expenditure would have reduced cost, because health is not a negotiable goods.
If anyone becomes permanently unemployable, he will become poor. If there is demand for restaurant meals, prices and profit margins will increase and poorer people will be unable to afford it.
Each person that becomes poor, is another consumer less and the rest of people will become richer. Once you have waiters/chefs that have super high wages, they'll be automated and removed permanently from their job. Repeat until there are only few producers/consumers and the rest are living on a fringe.
Besides, the fact that healthcare in the US is so expensive compared to the rest of the Western world is due to political reasons; we know how to bring down the cost of healthcare here without affecting outcomes by doing what the rest of the civilized world does.