Goolsbee analyzes health insurance like a conventional economist, and fails to recognize that it falls far outside the conventional model.

1) It is economically and physically impossible to satisfy everyone's desire for the best possible care when care is needed. There is and will be rationing of some kind. The only question is whether the system will provide sensible (moral? efficient?) rationing or just to the highest bidder.

2) Health care does not operate like a traditional market, at least in crisis care. There is no bargaining between seller (health care provider) and buyer (patient). There is not equal knowledge of value. Instead, the seller creates the demand and sets the price, and the buyer (patient or insurer) must accept.

It is true that maintenance care in the managament of long-term illnesses provides some opportunity for traditional market forces, but this affects less than a quarter of medical care costs.

3) Any private insurer will necessarily have marketing costs and selection (underwiting) costs to avoid being the dumping ground for poor risks. The more competition there is among insurers, the greater these costs will be. At present, marketing and underwiting costs add 30% or more to premiums but do not increase the available health services.

These facts all but destroy any argument for private insurance or any hybrid arrangement. The only plan that can work consistently is a single-payer plan with mandatory coverage.

On target - When your company's HR department tries to buy your firm health insurance they get virtually useless information on what they are buying, the only clear information is what it will cost.

While you may not see it on your Dr bill or insurance Co's Explanation of Benefit form the service is charges by a procedure code and is justified by a Diagnosis Code. These codes are standardized (though they constantly change).

What the amount paid per procedure code is a trade secret, but it inevitablly will be based on a percentage of the Medical scale.

So we virtually have a federal system already. One based on the federal medicare codes and pay scales. (With insurance companies paying an undisclosed percentage of the medicare scale).

We just don't have universal coverage and leave it to the insurance companies skim the cream then use opaque procedures to deny service and make the claims process so painful that people don't have time to get what the scale would pay.

Insurance companies have ceased to insure and have morphed into fraudulent scams. We need to daylight the process or for greater savings to eliminate it.