In the comments over at 11D, Russell Arben Fox argues that the government is necessary to curb monopoly power on the part of providers:
I tend to believe that only truly effective cost controls available to modern people--that is, people that reasonably will choose to make use of available technology to make their lives as long and as comfortable as possible--is collective bargaining power with the providers out there, the doctors and dentists and hospitals and so forth. That can mean employing them all (Britain NHS approach), or making the government alone responsible for paying them (Canada's single-payer approach), or something else--but ultimately, something that, one way or another, challenges the effective monopolies which health care providers and insurers have over the great majority of us.
The idea that you need government to break up monopolies is standard liberal political economy, but I cannot imagine a situation in which it is more misplaced. Doctors do not have a monopoly over us--I do not bargain with the AMA for my health care, and as someone who has been uninsured with expensive medical conditions, I've seen no evidence that they are able to implement cartel pricing. Ditto hospitals outside of rural areas where the majority of us do not live.
And yet they exercise something like cartel power. Why? Because they spend half their time negotiating with the government. And when you negotiate with the government, you do indeed negotiate as a cartel, with your trade association. Everywhere else, insurers negotiate with providers individually--hospital networks are probably the largest bargaining bloc.
Needless to say, if you think monopoly bargaining is the problem in health care, our cost problem is going to get worse, not better. Think of the one area where we see the most customer complaints: quasi-public utilities like the cable and phone companies. They also have a rather ponderous rate of innovation, and no particular interest in controlling their costs. That's not an accident; it's a feature of a regulatory structure that starts from provider costs and works up to what extra percentage they will be allowed to charge essentially captive consumers.
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