Calling homosexuality mental illness might be going too far. If I have sex with a lot of prostitutes and that ends up correlating with higher rates of STD infection and lack of self control from hedonistic habituation, am I mentally ill or just choosing debauchery?
Homosexuality has a psychological origin, to be sure, but that doesn't necessarily mean it's a mental illness. Every degenerate behavior that breeds rotten fruits isn't mental illness. One can't explain away degeneracy that way: it strips agency and responsibility from those who do wrong.
why would anyone spend a penny on a parcel of land in a video game
Speculation. They might want to sell it later when the price goes up. Now, videogames are one of the riskiest investments and speculating in digital goods inside a single game is really irresponsible, but people do it.
Without any real scarcity this so-called "property" has no value.
The makers of the "game" wouldn't let it be infinite and have no value, obviously.
is there any place where it actually works fine then?
State healthcare generally sucks in all countries, although in different ways. Whatever the USA's health insurance details are, it has made healthcare prices skyrocket with time. Other countries may not have made those decisions, but they may have less capacity, longer waiting lines, or less modern implements.
Everywhere else the state does more, not less.
The key is how things are done. In the USA, student loans you can't bankruptcy out of and federal funding have made it so Universities increase tuitions beyond the value of the education offered. Health insurance stuff have increased healthcare prices so that a sore throat drop that costs pennies is billed for $10. Tax law is maddening in its complexity.
The USA's decision-making is polluted with lobbying and special interests. If the USA can't meddle in an industry without worsening things, perhaps sweeping overarching federal programs are a terrible idea. The state simply won't be able to not make a clusterfuck of it.
I think the price of healthcare in the US is messed up in a similar convoluted way as university tuition. In both cases, something the state did ruined things. Considering that, perhaps further state encroachment would have counterproductive results.
Government should be as local as practical: subsidiarity is perhaps the one thing one can salvage out of Distributism.