The private insurance industry, as currently constituted, would collapse if the government allowed real competition. The companies offer no real value and so instead must create a regulatory system that virtually mandates their existence and will soon actually do so.This is an attractive sentiment, but, unfortunately, false.
I used to work for a private health insurer a couple of decades ago, and they absolutely do provide "real value", in two different forms.
1) They offer an opportunity to share risk among subscribers. If every small business (or individual) were responsible directly for their own health care costs, a catastrophic illness in the pool would most likely cause bankruptcy. By spreading the expenses (in the form of premiums) across a large pool of people (both healthy and sick), costs are levelled to everyone's advantage.
2) Even for groups with large enough risk pools to manage their own risk (i.e., companies of over 500 employees, generally speaking), health insurers provide a useful services in terms of negotiating discounts with hospitals, and in the formulation (and execution) of rules (such as which services are covered, what the co-payments should be, etc.). Large businesses often would self-insure (i.e., manage their own risk) but pay us a service fee to administer their plan.