> And anybody can do what you are doing.

So where are the 12 countries of comparable levels of economic development that are operating with 1/2 to 1/10 the administrative overhead of the social systems? If it's so easy to support your argument with evidence, why are you arguing with philosophical generalities instead?

I understand how the free market is supposed to work and why it usually does work. I'm still a huge fan, contrary to what you read between the lines (I agree with you on deregulating education, for instance). More on that later. But something is amiss in the US health care market. The socialists are beating us. By a lot. Not overall -- I do not believe their higher taxes provide a better net return for someone like me, not by a long shot, and so I do not plan to move -- but it is possible to section out health care for purposes of comparison, and our system has a 2-3x worse value proposition along that dimension. We agree about the general principle that markets tend to have better self-corrective properties than rulebooks. Where we disagree is that I think healthcare is an exception. A glaring exception that we have invested trillions of dollars into trying to fit with our free-market-is-better worldview and still find that it's an exception.

What we already pay for medicare and medicaid would provide universal coverage if our system were as efficient as Canada's or the UK's (in terms of percent PPP adjusted GDP/capita spent on health care), so this isn't even a philosophical question about how much we want to spend on government-mandated charity. It's a question of getting value for the money we are already spending. You could postulate that the medicare/medicaid administration is spending money inefficiently, but two facts suggest otherwise. First, the overhead of medicare/medicaid administration is ~4% (vs 12-30% for private insurance), so the money isn't disappearing into the bureaucracy itself. Second, medicare/medicaid drive a harder bargain than almost any other insurance plan (ask your doctor next time you visit, the administrators do not like dealing with medicare/medicaid), so it's difficult to argue that medicare/medicaid are responsible for our inefficient health industry

We have two options:

1) Keep spending 20% of our GDP on health care (vs our neighbors at 10%) while we try different permutations of rules and hope to land on one that fixes the free-market feedback mechanisms and kicks it into gear.

2) Cut our losses and copy/paste the well-tested solution, using other countries as a template until we have health care at 10%GDP rather than 20%GDP.

Option #1 has been in the whack-a-mole stage for decades (the feedback mechanisms are broken by default, more on that later) and shows no concrete or theoretical signs of letting up. I'm for option #2. The experiment has been run, the results are in. Healing the feedback mechanisms in the health care market was a harder problem than it appeared. Saying that the next set of regulations or deregulations will make our health care market do a U-turn seems crazy to me, like saying that communism is the way of the future in 1990 while the USSR is busy collapsing. This time it's our turn to cut our losses, thankfully in a less traumatic manner.

> I can't even attempt to understand where you might be coming from.

MSCS student, ex-libertarian. I took a health care policy class in undergrad to satisfy a requirement and it changed my worldview. I had heard that the US health care market was inefficient, so I thought it would be a good place to look for opportunity. I thought that maybe I could use my data-fu to help make it better and possibly turn a profit while I was at it. The health care policy class seemed like a good place to get a 1000-ft overview of the industry.

As I learned more about the specifics of the health care market, I realized that the problems weren't due to a strange historical trajectory, barriers to entry, obsolete/misguided regulation, failure to adapt, monopoly/lock-in, or any of the challenges I was familiar with from the software world. Not fundamentally, at least. The usual problems have analogs in other countries, yet they're doing just fine compared to us. The "traditional problems" explain waste on the order of billions while the efficiency gap that needs to be explained is on the order of trillions (per year). I have already listed the explanations that I think best account for the gap, but to make a long story short: the health care market is the perfect storm of factors that frustrate the free-market optimization process.

> When it comes to healthcare the free market approach would create efficient markets quickly due to competition.

So why has this failed to happen? Our current system does not suffer from monopoly or regulatory capture. You are free to shop around between insurance plans, yet they operate at 3x the overhead of medicare/medicaid and 2x the entire (not just insurance) administrative overhead of the UK's NHS. What do you plan to change and why do you think it will succeed where past efforts have failed? I have an explanation for the failure, and it is not one that deregulation will fix:

Customer feedback through buy/no buy decisions is broken in the health insurance industry. In other industries that also aren't plagued by monopoly, dissatisfied customers push back by not buying a product. In the health care industry, a strange situation arises where customers don't know that they've been duped. The bulk of costs are concentrated in a handful of customers (those that get cancer, get in a terrible car crash, etc) so if an insurance policy figures out a way to dump the expensive patients, 99% of customers never realize that the piece of mind they have bought is worthless and they never demand better. This isn't hypothetical, this is precisely what happens: by design, private insurance doesn't actually shield one from the cost of a debilitating injury or illness, leading to the statistic that 62% of personal bankruptcies in the US were caused by medical problems even though 78% of those people had insurance [1]. The insurance companies make sure each person has just enough "responsibility" so that they can dump their own responsibility if it ever actually comes due.

Innovation in the insurance industry happens largely by finding new, clever ways of fooling people into thinking they are covered for something that they are not.

> How do we deal with that situation? I'd say much like we do with auto insurance. You own it. It's yours. It does not live and die with your employer.

Paying for insurance through your employer is a legitimate market innovation that decreases statistical, legal, and bandwagon-effect risk. Your employer provides two services to you: they aggregate your bargaining power with the rest of their employees, driving a better deal, and they decorrelate you with the specifics of the plan because you will take what they give you (bypassing the bandwagon effect).

This isn't speculative, the market has already spoken, and declared that individual insurance is more expensive (if you think otherwise, go form an individual insurance company and sell it for less). As a libertarian, you, of all people, should respect this. The PPACA's exchanges attempt to mimic the beneficial effects of an employer without going through an actual employer. I suspect it will work at least a little bit, after adjusting for the fact that we have sealed some of the loopholes individual plans used to dump sick people, which will necessarily increase costs. But I don't think we'll see administrative overhead fall even to 2x what we see in a typical social system, because most of the market problems are still there, and a single-payer system is still the limiting case of addressing the problems in [2] individually.

> What to do about the really poor who can't afford any of it. We help them, of course. The details are not important here. We help them. Period. If you can't possibly pay for your insurance we, as a society, have a mechanism through which you will have it.

This creates a discontinuity in marginal incentives (or reduction in marginal incentives if you pro-rate between income brackets) that single-payer doesn't, in addition to retaining all the problems of small plans listed in [2].

> we can always let observe them for a while and THEN decide

The cost of continuing to experiment with the free-market solution is 45,000 deaths [3] and $1.3T every year ([4], assuming we could figure out how to emulate one of the ~16 single-payer systems ahead of us in health rankings [5] right now).

I would not call this "beautiful." Health care just isn't as compatible with the free market as the internet. We've tried extraordinarily hard to make it work but it hasn't happened yet. A better analogy for free market health care would be the Hurd, scaled to $2.7T/yr. It's a beautiful vision, but there are some major architectural and compatibility issues that have been proven to separate concept from reality, all while there's a perfectly serviceable Linux kernel available that is

* 2x as fast <--> costs 1/2 as much

* less buggy <--> USA is dead last in top 17 health rankings [5]

* more compatible <--> doesn't pay 2x for drugs because of size disparities when bargaining w/drug companies

* has a smaller memory footprint <--> observed lower administrative overhead in medicare vs private, universal vs private [6]

[1] http://www.businessweek.com/bwdaily/dnflash/content/jun2009/...

[2] https://news.ycombinator.com/item?id=6582753

[3] http://news.harvard.edu/gazette/story/2009/09/new-study-find...

[4] http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...

[5] http://www.theatlantic.com/health/archive/2013/01/new-health...

[6] http://www.pnhp.org/publications/nejmadmin.pdf