We need to step back from this debate about the details of reform and realize that our current system is not so broken that we need to transform the American economy. Here are some interesting facts about the uninsured, the ones who are the object of all this effort. I've summarized some key points from an article by Michael Cannon, and he's sourced all his facts if you want to check.
The claim that 46 million are uninsured is grossly misleading and very possibly fraudulent. The CBO has acknowledged that 40 million may be uninsured on any given day, but the number of Americans who are uninsured for an entire year is more like 20-30 million.
15% of those 20-30 million chronically uninsured are effectively insured because they are eligible for existing government programs.
As many as 75% of the chronically uninsured could afford coverage but choose not to purchase it.
13% of the uninsured are illegal immigrants.
43% of uninsured nonelderly adults have incomes greater than 2.5 times the poverty level.
60% of the uninsured are under 35, and 86% are in good-to-excellent health. Government intervention has made health insurance unnecessarily expensive for them, so these folks quite sensibly don’t want to be ripped off. Mandating that they buy coverage is really about hunting them down and taxing them.
To me, this fails the test of a crisis that is grave enough to justify a sweeping reform and government takeover of a major portion of our economy.
The biggest problem with healthcare is the way it's treated by the tax code. Only employers can deduct the cost of health insurance, so tax efficiency says that everyone will attempt to get their insurance from their employer, and employers will be pressured to offer policies that cover the maximum amount of things, in order to take advantage of the tax subsidy. The vast majority of Americans now have what they perceive to be free medical care, and no one has an incentive to reduce costs. Meanwhile, doctors and hospitals have an incentive to inflate costs whereever possible since the consumer of their services could care less. This is the "third party payer" problem that Milton Friedman warned us about decades ago.
So the first thing to change to fix this problem is the tax code. Either allow everyone to deduct the cost of health care insurance, or no one. This would eliminate the pressure for employers to provide healthcare, and put consumers back in charge of spending their own money. It would solve the portability problem, since the healthcare policy you purchase belongs to you no matter where you work. It's a proven fact (just look at the rest of the economy and how well it functions) that when people spend their own money they tend to do it intelligently and carefully. The cost of healthcare would become very transparent, whereas now only insurance companies and the uninsured really know how much things cost.
The next step would be to free up the market for healthcare insurance, by eliminating state-mandated benefits and restrictions. Let consumers buy any policy they want from any insurer in the country. I can envision the healthcare version of Progressive auto insurance coming out of nowhere with innovative solutions. Unleashing the power of 200 million healthcare consumers would surely transform the healthcare industry for the better.