Regarding health care being a failure of the free market, I recommend this (rather long) article for some perspective:
http://www.theatlantic.com/magazine/archive/2009/09/how-amer...
http://www.theatlantic.com/magazine/archive/2009/09/how-amer...
In other words: the healthcare discussion in America revolved around "how can we make it so everyone can afford this $300 asprin?" rather than, "Why are we letting hospitals charge $300 for asprin?"
A very clever smokescreen.
It also has secondary effects in employment markets:
* employers should not be encouraged to replace full-time workers with part-time workers because of health insurance costs
* employees shouldn't be making decisions about careers and jobs based on what health insurance costs will be
* the actual compensation levels between jobs is harder to evaluate since health benefits can be a huge chunk of compensation these days
To critics of the ACA, the relevant question is, who or what is in an effective position to put downward pricing pressure on hospitals? Because to date, it has clearly not been individuals or insurance companies.
Nobody who is familiar with the market is surprised that single-payer systems are so much cheaper.
Health Care costs by country: http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...
Scholarly Analysis: http://www.pnhp.org/facts/single-payer-resources
> they lack perverse incentives to allow costs to rise
But, of course, they also lack incentive to actually provide all that much care, so long as those who are inconvenienced are politically unimportant (e.g. disabled newborns), and they have plenty of incentive to provide more care for the politically connected.
In practice, we can just look at existing single payer systems and see how they're doing. Would you rather be a poor parent of a disabled child in the US or the UK?
The ACA pretty much doubles down on employer-provided health insurance that covers many routine costs, which doesn't address that issue.
Neither President Obama nor Sen. Baucus (the real author of what became "Obamacare") ever had that in mind: If you weren't going to get single-payer, there was no way you were going to cut government worker and blue collar labor unions away from the very cushy tax-advantaged plans they'd negotiated with their employers for current and retired members. They're already extremely upset about just the "Cadillac" tax.
First there's the obvious, and quite significant, tax benefits to employer provided healthcare over private purchased healthcare. In the former case, neither the employer nor the employee pay payroll taxes on their contributions and the employee portion is also exempted from income tax (the employer also doesn't pay income tax on its contribution, but it wouldn't for cash salary either).
Second, more subtly, the group market faces much more favorable underwriting than the individual market. Even if non-employer group health insurance were allowed (which it isn't anymore under ACA) such groups are always subject to self-selection bias and thus are unlikely to be underwritten as as favorably. However, this point is somewhat tricky because there are both cross-subsidies and gross economic surpluses, which can be hard to untangle.
The question is whether this indirect harm is greater or less than the direct benefit of the 1962 mandate that drugs be "effective".