In the end, you just cannot have an effective free market when the main consumers happen to be chronically ill or dying.
In the end, the state and the church will run out of money. Charities could continue, as long as people feel wealthy (and generous) enough.
The ethical argument is problematic. You present it as ethically absolute, but not everyone sees it that way.
This to me is a major issue with politics in general; it's an argument that never ends (until everyone literally kills one another, of course). Everyone thinks they're ethically correct, despite the fact that that's a complete contradiction of the fact that everyone has different ethics.