I agree with everything you said up until the very simple solution, David. The opacity of medical pricing means that it is not a market at all. And, yes, you’re right: insurance industry profits are relatively low. (Of course, the profits of the pharmaceutical industry are extraordinarily high — 4x the amount you cite for the HC industry. But you knew this).
Why do I disagree with the solution you offer? Because it directly contradicts what you describe above. How would anyone be able to audit their own bills if those bills are intentionally obfuscatory and opaque? Does this solution assume some sort of legislation that would make the pricing of all medical procedures transparent? Also, how are people — who may already be struggling with a difficult ailment — supposed to make decision after ornate, market decision about their health, when one’s health is not really a commodity and not subjected to “simple” economic laws? How would the lay person even know if a test is unnecessary or not?
Finally, can you imagine the lives that we would save —not to mention the reduction of existential stress, the mitigation of personal bankruptcies, the flourishing of entreprenurialism, the weight of employee premiums lifted from off the backs of small business — if people did not have to receive a grand bill for medical services, like you did a couple of months back?