Health insurance is a difficult thing to price. Do you know the probabilities that you will need treatment for any particular condition? Can judge how much more you should pay for a policy with a million dollar limit on total reimbursement than one with a $500,000 limit? Unlike most goods, we don't get lots of chances to evaluate the quality of the product and then switch providers if we're not satisfied. Once you realize your health insurance isn't good enough, you're probably already in trouble. There are a lot of factors required to ensure the proper performance of a free market, and health insurance fails to satisfy many of them.
Car insurance is simpler than health insurance. There are fewer types of covered conditions, and it's easier to make direct comparisons. Health conditions are more numerous and vary more depending on the individual in question. It's also easier for car insurance companies to make predictions about the expected costs for a customer. People buying health insurance individually face increased costs because of an assumption that those seeking coverage are more likely to need it. In general, this is an area in which the conditions required for an efficient free market do not exist. And, this is one reason why, as Friedman notes, those countries with universal single payer systems spend less than the United States, which is closer to a market system (however imperfectly).
I find it hard to believe that the government can make a decision that is better on any metric than the consumer whom it directly affects.
There is a fundamental problem with medical insurance though. Insurance only works because of uncertainty about the future. As information about individuals' medical conditions becomes more detailed, this uncertainty is reduced. For that reason, it seems like, ultimately, this has to lead to the distasteful prospect of some kind of universal insurance that people acquire at birth. As knowledge increases, every condition becomes a preexisting one. (Except for injuries due to accidents)
