Regarding health care, what about the concept of a voucher that citizens could use to pay for their own private care? I don't see why that would lead to inferior quality. Simply have the government pay for basic health care at private institutions.
Would the voucher be expressed in dollars or in services provided?
What I fear is that the person who pays the bills calls the tunes. If government is effectively setting prices for medical services and drugs, you will surely see a deterioration in the quality of care provided. That will be government's way of effectively rationing health care, as is done in other countries with socialized medicine.
What would then happen is that those with more money would opt out of the system by paying privately for services, and the middle class will be pulled down to the level of the poor. That is what happened to public education in certain areas (mainly urban) when government intervened in the name of "equality" and it will happen in health care too.
I don't deny there's a problem, but the solution may actually lie in the other direction - in bringing market forces to bear in the health care business to a greater extent. The HMOs, and government, have attempted to impose market discipline from the top down, but the consumer can impose it much better from the bottom up.
There is no perfect solution, but I fear greater intervention from a government that has demonstrated that it usually makes things worse when it gets involved. I think we need to examine a wide range of ideas very carefully. The majority of people who currently have decent coverage stand a lot to lose if reforms are poorly implemented.
I would also add that no fix to the system is possible without serious legal reform that sharply reduces the cost of frivolous lawsuits, which are currently destroying the system.