Any “health care reform” that fails to recognize the inherent fatal flaw of a system that is built on the expectation of third-party payments for services that provide personal benefit is doomed to fail.
I think you're right.
Letting the free market handle it sounds good but we're miles from a situation where the market can work effectively.
Functioning markets require knowledgeable actors and the more transparency the more efficient the market.
We've built a system seemingly designed to keep the users ignorant of the real costs and to obscure as much as possible of the inner working of the system.
The third-party payer problem is huge, with no one but the insurance company and maybe the medical practitioner knowing the cost of any procedure in advance.
Add to that the large number of people who's insurance is heavily subsidized by their employer so they don't even know the true cost of their own coverage and you effectively hide the information users need to make the rational decisions that make markets work.
We've been on this path for almost a century and are totally pregnant. We will need to make incredibly fundamental, wrenching changes to how we do health insurance before free markets have a chance.