There’s an unstated assumption in the continuing health care debate that health insurance should cover most, if not all, of health spending. To many, even a modest co-pay of $20 or $30, or an annual deductible of $2,000, are considered hardships.

Overlooked in this conversation is the fact that every dollar paid by an insurer has to come from premium-payers; that is, employers, individuals or government (meaning, taxpayers). In fact, owing to administrative and other costs, a dollar paid to a hospital or doctor costs the premium-payer more than a dollar.

I submit that we have too much health insurance.

Most people understand insurance costs when matters other than their health are involved. That’s why auto and homeowners’ policies don’t cover routine, predictable maintenance costs. We pay for those things ourselves. As a result, auto, homeowners’ and renters’ premiums are much lower than health insurance premiums.

If we paid for routine medical expenses ourselves—doctor visits, simple screenings and shots—health insurance costs would be lower as well.

Having too much health coverage also costs us in other ways: by making the entire system less sensitive to value and cost.

As an example, consider hearing aids, which many elderly use, but are not covered by Medicare.

A newspaper story a little more than a year ago related the experience of a woman who had broken the shell of one of her hearing aids. Shocked at the price that private audiologists charged—$2,000 to $3,000 for a set—she sought another solution. Learning that about 70 percent of the price is retail markup, the woman searched online and found reliable hearing aids available for as little as $399. Searching a little more, she found an audiologist who offered to repair her old hearing aid for $100, so that’s the choice she made.

Today, a year later, my own online search found hearing aids available for even less: $299 from a very reputable company, with a full 60-day money-back guarantee.

More changes are on the horizon. Not only are online vendors and innovative hearing-aid manufacturers cutting costs and improving quality and service times, but digital developers are offering online hearing apps via iTunes and other virtual stores for as little as $3.99.

It has taken time, but the price of hearing aids—unlike virtually anything else in the health care arena—is falling.

How has this happened, and why?

Part of the answer is technological innovation, of course, but there’s more. There’s no shortage of technological innovation in U.S. health care: new medical devices, new procedures and new life-saving drugs. However, because third-party bill-payers, that is, health insurers and government, largely determine prices, there is no mechanism for customers—patients—to signal value to providers. Seemingly, we just go along for the ride.

Hearing aids are different. Seniors who want highly personalized service from an audiologist in private practice can get it; and they will pay more for such service. Those who want to order online, meanwhile, can save money by doing so. Those who want to get their old hearing aids repaired can make that choice. The most adventurous seniors, who don’t mind running an earpiece into an iPhone, can get a functional hearing aid almost for free.

We are on the verge of enjoying universal access to hearing aids, but only because this is one of the few medical areas where the government hasn’t inserted itself. Instead of interfering, it lets the market operate.

If we weren’t inoculated by over-insurance, medical innovation generally would follow a similar path.

Instead of Obamacare, we need government to get out of the way. As John Goodman suggested in his recent book, “Priceless: Curing the Healthcare Crisis,” the right way to reform health insurance would be to give every American a tax credit to spend directly on medical care, relying on insurance only for unpredictable or expensive accidents and illnesses.

The cost of insurance would fall. The same for routine medical expenses—for office visits, the annual flu shot, simple screening exams—since we’d be paying for these things ourselves, and the market would respond accordingly.