In the few medical situations where we do have price transparency and true customer pay (e.g. LASIK eye surgery, most cosmetic surgery, etc) costs have not increased nearly as much as in the rest of the the medical system, and patients are generally quite happy with the promptness and quality of care. And there are some surgical clinics that do not accept insurance and that have good outcomes and much lower total prices. But these situations are rather unique--they tend to be discrete, one-time, non-urgent medical requirements.
I'm less optimistic that this would work for even a very savvy consumer who had a cancer diagnosis, chronic heart or liver disease, etc. And this is where a lot of our spending goes. I think it might be better if there was a more free market for people to choose the overall "agent" for their health care (a PPO insurer, an HMO, an accountable care organization (ACO), etc). So, you would shop for the "agent", they would shop for (or directly provide) the care.
How would this be different from today's insurance? It seems to me that, certainly in the Marketplace programs, insurers now have what amounts to a "cost plus" contract. There's little incentive to reduce spending on medical services if your company gets to keep 20% above whatever is spent. To the contrary--more spending means that the allowable 20% increases. The current level of subsidies for Marketplace insurance premiums does serve to reduce downward pressure on premiums.
The cost of medical care will continue to rise as long as larger amounts of corporate, individual, and government funds are pumped into the system. We have a similar situation in higher education--it is more clear in that case that there's no objective reason that the cost of educating a college student should be higher each year, but various policies make easy money available, so costs rise.
Three important roles government could play (IMO):
1) Create standardized coverages and descriptions. This was done in the case of Medicare supplement insurance, and significantly benefited consumers. Insurers/providers >hate< transparency and standardization, consumers benefit from it. It makes price comparisons simple and turns these services into commodities. This would not prohibit providers from throwing extras into their "purple" package, but all purple plans would have basic attributes in common.
2) Collect and make usable by consumers health care/provider outcome information and patient satisfaction information. This is critical information consumers need to choose well, and to build a functioning free market. If people in a region can see that those insured by Helping Hand insurance hate their plans, or that they wait 10 months for a knee replacement, then they may be more likely to choose a different "agent".
3) Discontinue policies that encourage a linkages between employment and health care. (This could be controversial
)
