Should the healthcare sector be based upon a free market model?

The quest has been for the medical care sector to be based upon a market model. 

That would mean that patients ought to be treated as customers involved in a market-based transaction.  However, society does not (as evidenced by the passage of the health care bill) think anyone should be denied the ability to obtain the product if they cannot afford it, i.e. the customers (i.e. patients) should be subsidized.  Customer subsidies, in a market-model, cause an increase in demand which, against a fixed supply, will result in a rise in price.

In a market-based model, hospitals would compete for their customers.  Now since the product is something like a successful surgery or recovery from a deadly virus, there is not really much product improvement that can occur.  So how do hospitals compete? Hospitals increasingly compete by differentiating the environment in which the product is sold - differentiating that environment in ways that actually lead the customer to have to pay more for a product that is still the same: plasma TV’s in carpeted rooms, lobbies that rival the best hotels, gourmet foods, etc.  But, if the customer cannot afford the product that is now more expensive because it is wrapped in a better package, society seems to think that the hospitals ought to provide it at a reduced rate.

In a free market system, providers offer to work for a price that they consider fair.  If no one is willing to pay that price, the provider either changes jobs or lowers their price.  The market-based solution for the medical care sector will work best only when doctors, nurses, techs, hospitals, pharmaceutical companies, and medical supply companies are allowed to charge what they think is right, not what society thinks is fair.  I have heard PhD's complain that MD's have no more education that they have, so why should MD's get paid so much more than a PhD?  A constant lament is that drug companies make too much money.  Why is Apple praised when it earns large returns to its owners, why is McDonald’s criticized if profits are not larger than the previous quarter, but drug companies are acting unethically when they earn a positive return on invested capital?

If doctors cannot earn an income that they, not society, thinks is appropriate to the costs of becoming and the risks of remaining a doctor, then the number of doctors will decrease.  If hospitals and drug companies cannot earn a return that satisfies their owners, those owners will pull their money out of the hospital and drug sectors, decrease the number of hospitals available and diminish the pipeline of new drugs, and open up something more profitable, like a McDonald's franchise or microbrewery.

Will we, as a society, in our efforts to force the healthcare sector into a market-model, be forced into requiring people to become doctors and refusing to let doctors retire? 

Or will we wise up and realize that the market-model is not always the best for all industries?

The "Law" of Demand?

Has anyone really stopped to critically examine the idea of the "Law of Demand"?  Now we are not asking about questioning that there seems to exist an inverse relationship between price and quantity, ceteris paribus.  No, we are asking about the axiomatic foundations from which the "Law of Demand" arises.
For example, one of the more fundamental assumptions about human behavior is that of the independence of economic agents.  The independence assumption states, basically, that economic agents are not influenced by other economic agents; there is never any behavior in which a person buys something simply because someone else has that same thing, there is no "keeping up with the Jones".  To have economic agents who are socially embedded, who exhibit relational behavior violates the independence assumption which is fundamental to the "Law of Demand" having any validity.
Consider also how economists view the preferences of economic agents.  The "preference ordering" of a set of consumption possibilities is assumed to be

1. complete: i.e. consumers can rank all possible combinations of all possible goods, 
2. transitive: that is, if A is preferred to B and B is preferred to C, then it must always hold that A is preferred to C, and
3. convex: this is a mathematical concept that says, more or less, that a consumer is willing to obtain more and more of good A if and only if it involves giving up less and less of some other good.

A fourth assumption exists that deals with how much an economic agent wants of any good, and that assumption is that more is always preferred to less, that non-satiation is the rule.  There is never a time when an economic agent can have enough of any good.

Now the "Law of Demand" exists as a scientific law only if all four of these assumptions are met.  Should any one of these assumptions not be true, the law of demand collapses and loses its scientific creditability. 

So if the general behavior of people is such that they make their purchases based upon habit because they cannot really take the time to evaluate and rank all possibilities, if there are some goods which they purchase even if required to give up more and more of other desirable goods, it there are individuals out there who are happy with what they have and simply do not care to buy more of something they like and can afford, then the idea that there is a "Law of Demand" has to be seriously questioned.  Or even discarded. 

Think on these things.