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The free market will never freely work whenever a customer and a business don't conduct business directly with each other. Adding any kind of third party -- an insurance company or a government agency -- into the transaction is inevitably going to distort prices and/or degrade quality. That's true whether the product or service you're talking about is health care, education, or an aircraft carrier.

This is why health insurance has a lot of the same problems as auto insurance. If you are involved in a crash and you take your car to the body shop for repairs, the body shop has to fix your car but really answers to the insurance company that pays the bill. You don't care how much it costs to fix the damage because you aren't paying directly for the repairs, and the insurance company doesn't care if the body shop does a good job because they aren't driving the car when the repairs are completed.

This isn't a criticism of health insurance, mind you. It's just a way of explaining that "free market" principles have serious constraints when it comes to this type of business arrangement.