> The health insurance industry would make Franz Kafka proud.
The incentives are Kafka-esque. If you're a provider, your incentive is to maximize billable treatment, and you often have prospective patients who have an extremely limited capacity to evaluate your relative expertise/value bs other options, and they often don't have the time luxury of being able to shop around even if they did (and might be justifiably wary of selecting medical treatment based on discounts anyway).
If you're an insurer, you're selling a product with inherently cross-aligned incentives -- the people with the greatest need for it will not be able to pay enough in premiums to meet your risk pool, the people with the least need for it will have limited incentives to buy in. Good actuarial work can partially balance this out but at some level your incentives have to do with attracting/keeping those with the least need for your product and trying to avoid or ditch people with the greatest. On the other hand, other than patient bankruptcy, insurers are probably the single greatest (if limited) force for cost control in the US system, a fact which doesn't frequently win them any love, and thanks to a certain mix of legally compelled and inherent responsibility found in the industry they do at times come through for people, as your experience may indicate.
Given the incentives, the wonder isn't that there are problems for people and providers who don't want to work with insurance. The wonder is that it works at all, and that there is anyone who continues to focus on market solutions. Hayek was about as big a laissez-faire advocate as you can find in the history of economic thought and even he thought that public insurance had things to recommend it over solely private institutions.