This really doesn't seem to be such a bad idea, especially if put together with the idea of forming "cooperatives".I agree it needs to get out of the employers hands, but not to the government. Patients must be the employer of the providers.
When individuals get their coverage through an employer, they're not real concerned with how much it costs the employer. If they are spending their own money, they would be more attentive to getting the most bang for their buck & fully realizing the cost of this benefit.
I could even see employers giving some of the money saved to the employee as increased wages. Such a plan would not work if the employer is penalized for doing this by a tax, though. However, if relieved of one very large expense, it could make these companies more competitive in the world market. And the employee should get a tax credit for at least a percentage of what he spends for his own health insurance.
Keep the govt out of the business of health insurance. Use such an option only as a last resort if nothing else works.