Exactly where do free markets exist???? All markets are imperfect to one level or another, the more complex, the less free. I bet the insurance companies would love for everyone to buy their own insurance, then it would be their actuarials, government lobbyists, marketing shills, and MBA braintrust against each and every consumer. And if it were wide open, there'd be no explicit or implicit price collusion; none whatsoever...eyes rolling...
The markets are largely free as is. Competition does exist. The problem is the double digit % price increases, and of course that derives from defensive medicine because of malpractice lawsuits.
Those are not going to change. An incremental approach can work. Just attack the pre-ex issue by making all individuals part of a group, and group plans can't exclude pre-ex. Compensate the industry for their loss with a tax cut.
It's a very philosophically conservative tax cutting approach.