Ubiquitin,
1. There is a limit to how much one can squeeze from the taxpayers, as Rehavam ben Shlomo discovered. I would first cut costs by putting severe limits on the malpractice suits and awards. According Halacha if someone is certified (מומחה לרבים) he is only liable for gross violation of professional standards.
2. Group insurance is not limited to working people. It can be sold to members of a fraternal organization, for example (and originally, as De Tocqueville notes in Democracy in America this was the norm before the New Deal.
3. As “pure capitalism” simply means that there is only private ownership (except for certain public goods like police) limitations do not make a society non-capitalist.
4. Marx actually wanted a dictatorship of the proletariat and eventual withering away of the state. Capitalism implies a free society. In Marx’s society no one would be allowed to compete with the socialized businesses.