You could make the argument that continued easy profits stifle innovation just as easily. Until you have data to support the correlation, I think the default of not overpaying for basic medical services is orders of magnitude more important of an issue.

It seems that you are suggesting that the profits made by insurance companies is the key factor funding innovation in health care. This might be worth looking into, but I doubt this is true. It seems just as plausible if not more so that government grants in a country with single payer health care would drive innovation. The government would have an interest in both improving the health of citizens and finding new methods/techniques that reduce the cost of diagnosis and treatment.

The usual argument is that single payer will be cheaper because the single payer has a strong negotiating position from which to pay doctors and drug companies less. The suggestion is that the profits made by drug companies are a key factor in innovating health care.

The only people who seem to be saying this are the insurance companies who would be hurt the most. And I think that even if this were true, you're leaving out the opportunity for innovation in other fields which are stymied by people who are too scared to leave a job with secure insurance to go on their own. This was one of the huge benefits to ACA even, and that plan still had alot of tradeoffs.

If America is moving more toward a "gig" economy, we are going to require a healthcare system that is no longer tied to a single job to make it work.