kollelman,
Your plan does sound terrible, I’m sorry. There is still a long way to go to improve health care and coverage in the U.S.
I agree that the fees that medical providers charge are often exhorbitant. I do not believe this is due to insurance companies blindly paying out, however. When I receive explanations of benefits from my insurance company, they pay out only a pre-negotiated amount to the provider, and I am responsible for a pre-negotiated co-pay, either a fixed dollar amount, or a percentage of the pre-negotiated amount. The excess amounts (sometimes crazy!) charged by the provider is disallowed, and the provider is forced by the agreement with the insurance company to accept the amounts negotiated. Patients who are uninsured do not have this protection, and are at the mercy of whatever the provider bills.
In your free market vision of health care, what is the role of insurance? Even if there is cutthroat competition among providers, the cost of care during a catastrophic event or prolonged illness is still going to be very high.