Gary, with due respect what you write is by someone not all all familiar with the facts of research. I worked for Big Pharma for 16 years. I developed new medications but would have zero interest or ability to do basic research. conversely, the brilliant basic scientists had no interest in developing new medications and would have been complete and total failures. Different mind sets.
Same as saying baseball players earn more than football players so fire all the baseball players from MLB and replace them with football players. Two totally different skills and interest levels between basic research and applied science.
Your explanation is somewhat paranoid. We had to be efficient, government is paid not to be efficient. There are no middlemen, just different skills.
Your second paragraph is challenging. Check the facts in Europe. They too are going bankrupt. We have far higher life expectancies after a cancer diagnosis or heart disease diagnosis. Our problem is life style, violence, diet and automobiles. Medicine is irrevocably changing here. Fewer primary care physicians and more nurse practitioners and physician aids. Cheaper.
To compare what you are asking for think the post office. A public service. Costs going up and efficiency going down. Private enterprise can always do it better. That is doesn’t just requires more competiton, not less.