The government is not the only party at fault here - do not forget the real players here, the corporations that employ the doctors. The "dumbing down" you describe has already happened due to the control of the managed care organizations like Kaiser Permanente and the like. Such HMOs and PPOs have only a frank, unapologetic concern for their shareholders and making profits at the expense of MD's, nurses and patients. Just google the latest scandal discovered by the government that of all of the HMOs in the country were conspiring to keep reimubursement rates lower than actual costs. Of course, the private sector of medicine is not the only one destroyed by this "covert rationing".
In addition medicare and medicaid have been "hired out" to private subcontractors, because someone has deluded the American consciousness that private businesses are more efficient than the government. Meanwhile these more efficient private medicare subcontractors are profit making machines for their shareholders and CEOs (as any other business). This allows for over a third of the medicare (etc) budget, financed by the tax-payers, our money, to be bled into the pockets of the shareholders. This leaves our poorest mothers and their children, as well as our elderly to fight over the left-overs, while our wise political leaders just shrug and say, well, there is just not enough money for universal medicine.
Even the poorest European countries have universal healthcare and manage to provide care to everyone who needs it, regardless of ability to pay. Countries like Serbia, Bulgaria, Croatia, Romania, Hungary, we're not talking even France or Germany. It is outrageous that we have allowed our health-care system to become high-jacked by the interest of the shareholders at the expense of medical care. It is also outrageous to say that USA, the richest country in the world, does not have enough money to provide a basic human right.
The reason why we need the government involved in the healthcare business is to oversee that HMOs and subcontractors are actually not leaving people without medical treatment and throwing them out on the street because they do not have insurance.
http://articles.latimes.com/2007/may/16/local/me-dumping16 http://www.npr.org/templates/story/story.php?storyId=5298034
Just like the catastrophy with the banking industry and the subprime mortgages, the rampant greed and unquestioned power of the insurance companies and their like has to be brought to an end (doubtful despite the best intentions of our pres) before they bleed us to death. That is why we need the government - to protect our interests, because as we see, the "free market" has no interest in protecting our interests.