THere is some truth to what you say there... but I would argue that health care/health insurance has NEVER approximated a normal market (ie meets the requirements in your micro-economics 1a class for a functioning "perfect competiton" market). Health care is, by its nature, perverse. Lots of things have changed over the last 50 years, and adherents to one side of the debate, or the other, often want to throw it all on the doorstep of the OTHER side... but it just simply isn't that easy.
the damning feature of healthcare is that expense for it are so lumpy--- and what makes that lumpiness even worse, is that it is by no means "evenly spread" across the population. Old people need more health expenditure, as do people that know that THEY are chronically ill. AND perhaps most importanly, adequate healtchare is viewed as a semi "basic right".
the health inflation that took place over the last 50 years wasn't just it getting more expensive to provide basic serices (although some of that took place) but much more it was what people EXPECT (and get) from the system. EVERYBODY dies, and in most situations, the last year before you die is when 90% of the spending on healthcare takes place (before anyone challenges me to cite that figure, i just made it up--- !) Most people, even those with significant financial means, are not equipped to suddenly pay such huge lumpy expenses at one sudden point, and so we have "insurance" to pay for it, and smooth the expenses... but health insurance doesn't look much like any other "insurance" we purchase: largely BECAUSE we view health coverage as a "basic right" AND because people's health care needs ARE fairly easy to predict, statistically, but in the end prices paid for insurance bear very little relation to the prices that are actually paid out for the underlying healthcare--- which we as the consumers basically never see, or are completely indifferent to because we never have to pay THAT bill.
Auto insurance companies are able to jack up the prices for young kids, particularly those that have DUIs and have been busted for drag racing. As a society we don''t think it looks appropriate to jack up the prices of insurance for grandma just because we KNOW that the mere fact that she is 85 means it can't be long before she is going to kick it and is going to cost the system a boatload. Or likewise, cuting off Tiny Tim's coverage because, duh--- he is revealed to be sickly and will need lots of care.
Healthcare just, plain and simple is NOT a normal market. THe normal price and competition mechanisms just do not function very well here. IN order for it to start to look more like a real market, there would have to more freedom for prices to actually reflect services--- but the implications from that are not concequences that i think your average joe blow would be willing to stomache if they actually took place: each granny getting a $200,000 death bed bill, or alternatively having her coverage yanked because that type of bill is coming, or kicking the tiny tims out of the system, or whatever other slightly cartoonish over-dramatic characterizations of the very real underlying problem--- prices (of insurance) are too divorced from actual costs (of actual services) to provide any of the miraculous services the market/price mechanism USUALLY plays to ensure efficiency, and we aren't prepared to actually come to grips with what a truly price based system would look like...
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