Imagine if the Government ended 90% of its muckraking about in the Healthcare industry. Insure across state lines, go right ahead. Medicaid and Medicare ended tomorrow.
Here we go
Government quit dictating care, demanding doctors file tons of paperwork (they do, a lot of it's FOR those programs) and so forth.
In replacement, each city, each population area had a free "hospital" and more locally regionally as population needed, free clinics.
How large are the cities that get free medical services? 1 million people? 500k? 100k?
What happens to the people who live in remote towns, with no free hospital or medical services nearby?
You do understand that what you propose is pretty much how the VA works? VA care generally works well, but also has some well-known challenges, including limited access in remote / rural areas, and getting overwhelmed by needs. (E.g. during a recession, this free hospital system will need to expand rapidly; and as it recedes, it may need to pare back -- not an easy thing to do with health care.)
Are you going to set the eligibility standards the same as, or looser than, or tighter than, Medicare and Medicaid?
That said, this system could work out well
if we are aware of the challenges, use it to address issues (e.g. providing more general care to low-population areas) and don't hold its budgets hostage on a regular basis.
But... what happens to everyone else? Yeah, they get screwed.
The problem with health care in the US isn't regulation. It's the profit motive.
For most goods and services, markets and profit motives work reasonably well. It's not a perfect system (hence regulation) but works well for most things, including critical goods like food, housing and clothing.
However, markets don't work well for health care, because "patients" are not the same thing as "consumers." If you go to the supermarket, you can almost always make a free choice between bell peppers and tortilla chips, or between candy bar and carrots, or between beer and soda, and so on. You can comparison shop between brands, you can make a choice based on a multitude of criteria -- cost, nutrition, branding, packaging, color, whatever you like.
In comparison, what happens if you have....
• a heart attack? You can't call up a half-dozen hospitals and select based on price, or rating, or the food. You don't have time for that.
• cancer? You aren't likely to get the best outcome if you choose a course of treatment based on price.
• diabetes? You have the time to change doctors, but you won't do well if you select your medication based on price. Plus, in an unregulated environment, any insurer can blackball you because you have a chronic condition.
• a Daraprim situation? In your unregulated universe, someone can jack the price of a life-saving drug from $13.50 per pill to $750 per pill overnight, with no changes in cost to justify the increase, and everyone just has to lump it for a year until a generic can be manufactured and approved (at a higher cost than $13.50 per pill...). And that option isn't available as long as the drug is patented.
In other words:
The issue is that with essentials like food or housing or transportation, you can make a free choice. With health care, you can't. Health care is not a normal market. There are too many monopolies, too little choice, too much urgency, not enough elasticity for that to work.
We also know that unregulated environments turn into nightmares. Insurers redline customers, or find excuses to refuse to cover expensive conditions. Hospitals jack up their base prices ("chargemaster lists") as a negotiating tactic with the insurers. Insurers raise rates by double digits, and make it impossible to understand what they offer. Pharmaceuticals jack up their prices with impunity, and flout the patent process by making minor tweaks to re-establish a monopoly. It emphasizes services that are far less useful as they seem, like MRI scans or excess tests. It doesn't have a viable way to set standards, and obviously there is minimal oversight.
Deregulation and laissez-faire do no work for health care. This is why pretty much every nation, other than the US, has adopted a single-payer, socialized or hybrid health care system.