What Would A Free Market In Health Care Look Like?

Something Karl Smith and I agree about is that if you want to assess the merits of "socialized medicine" it's important to to recognize that a true free market in health care would look extremely different from what's happening now. For one thing, in the absence of federal subsidies (most notably the exclusion of employer-provided health insurance from taxation) and regulation (things like continuity of coverage rules) private health insurance would be largely unavailable. But beyond that, the actual provision of health care services is one of the most government-dominated spheres of the economy:

Further, in any case there is nothing akin to consumer soverignty in Medicine because first drugs have to be approved by the FDA, or else its illegal to prescribe them. Then you have to convince a licensed physician to prescribe them or else its illegal to buy them. [...] A true free market in medicine would let people create whatever drugs they wanted, however they wanted and would let consumers buy whatever drugs they wanted however they wanted. If someone chose to get the advice or consul of a physician then fine, but there would be no law making them do so.

Now maybe someone wants to stand up for that vision of libertarian medicine. Maybe Smith does. But even if you do, this is obviously not a politically realistic vision. The policy options on offer simply don't include a free market in health care. The question is what kind of subsidies and regulations are best. And my contention is that fairly direct government provision of health care services seems to be the most cost-effective way of providing subsidized medical care to the population.