"That means people taking care of themselves first and foremost (CDC estimates that between 70-80% of all health care is essentially avoidable through the expedient of healthy lifestyle choices) thereby reducing demand."
This is precisely why things have spiraled out of control. As long as "someone else" is footing the bill, there is no economic incentive for the consumer to take care of themselves.
There is a whole host of someone elses out there:
1. For the majority, it's the employer paying 75-100%.
2. For medicare recipients, it's current fica taxpayers paying about 75%.
3. For medicaid recipients, it's general taxpayers paying for 100%.
4. For the uninisured or underinsured, it's the majority making up their slack.
Let's not forget that medicare reimbursement levels are lower than the "market" price, so the shortfall between reimbursement and market is tacked onto the price paid by #1.
Re: #2 and #3, don't forget that for federal health care dollars, since the feds run such a high yearly deficit, the Chinese and Mideast bondholders are paying something like 25-40 of the shortfall.
The free market is the best available method (or to paraphrase Churchill, the worst method except for all the others) for allocating scarce resources. Yet shameless politicians continue to clamor for less and less and less of a free market in medical care. Each step they take makes the problem worse. Yet these a**holes continued to get voted back into office.