> Imagine there's a single, private, insurance company, A. ... Wouldn't the natural interest of A be to maximize health costs ... ?
Sure, but as an insurer they don't have any control over health care costs. They could bid prices up, I suppose, but that eats into their profits; such a strategy would cost them more than they could possibly gain.
> And if there were more smaller insurance companies competing with A, wouldn't it make sense for A to just eat them up to eliminate competition ... ?
The smaller companies would have to agree to that. Some of them could be co-ops or other organizations structured to represent their members and not interested in being bought out by a company which doesn't share the same principles.
> ... wouldn't it make sense for them to collude and keep prices and profits high?
Cartels are notoriously unstable. Every member has an incentive to cheat on the cartel to gain market share. And then you have the aforementioned co-ops and others who wouldn't be interested in joining the cartel.
> ... isn't it their natural interest to spend on buying politicians ... ?
And here we come to the real issue. Not that companies are interested in buying politicians—that's only to be expected, under the circumstances—but rather that (a) there exist politicians with the power to forcibly interfere in the market without being branded as criminals, and that (b) these politicians are willing to be bought and to support laws actively harmful to their nominal constituents.
In order to have a private market for either health care or health insurance you must first get the politicians out of the market.
Sure, but as an insurer they don't have any control over health care costs. They could bid prices up, I suppose, but that eats into their profits; such a strategy would cost them more than they could possibly gain.
> And if there were more smaller insurance companies competing with A, wouldn't it make sense for A to just eat them up to eliminate competition ... ?
The smaller companies would have to agree to that. Some of them could be co-ops or other organizations structured to represent their members and not interested in being bought out by a company which doesn't share the same principles.
> ... wouldn't it make sense for them to collude and keep prices and profits high?
Cartels are notoriously unstable. Every member has an incentive to cheat on the cartel to gain market share. And then you have the aforementioned co-ops and others who wouldn't be interested in joining the cartel.
> ... isn't it their natural interest to spend on buying politicians ... ?
And here we come to the real issue. Not that companies are interested in buying politicians—that's only to be expected, under the circumstances—but rather that (a) there exist politicians with the power to forcibly interfere in the market without being branded as criminals, and that (b) these politicians are willing to be bought and to support laws actively harmful to their nominal constituents.
In order to have a private market for either health care or health insurance you must first get the politicians out of the market.