The question assumes two things that simply are not true.
First, the lack of a scheme of rationed medicine does no put "Detroit" at a disadvantage, but at an advantage. And GM is just as broke in Canada (and for that matter its largest market, communist China) as it is in the USA. GM was a worldwide company making cars in 35 countries, with vastly different laws on that and many other subjects.
Second, in a Market the customer is always right, and thus can never be at fault, and in any event a Toyota made in Kentucky with and engine and transmission made in West Virginia is just as "American" as any Rust Belt Three vehicle. More than most.
In any event the fault lies with three entities.
The governments made three mistakes.
First, it generally passed extreme environmental laws that made the manufacture of ANYTHING in North America more expensive. It placed domestic manufactures at a disadvantage with, particularly Asian but even European, manufactures, in terms of cost.
Second, it passed particular laws, again often about environmental extremism, that made the "new" model inferior in the respects that most customers wanted, to their "old" car. There were plenty of eras in the 70-mid 90s where one really did not "trade up", because the new model was over-burdened with devices no one wanted. Further, intelectual capital that could have been used to improve the product was wasted on preventing non-existant things like global warming.
Third, it created a labor environment discussed below.
The unions are at fault, because they simply valued their labor over that of their fellow laborers in other industries. They thought, incorrectly, that they could demand more and more at the customer would simply pay more and more, while all the while the same issues discussed above were pushing other industries off-shore. Further, the unions, by protecting the dead weight and the laggards into a situation where quality declined, thought, again incorectly, that the customer would accept this in the face of superior products from "foreign" sources. They tried to sell the customer garbage at a high price. The customer balked.
Lastly, management simply did not do its job. Its job is to insure that the product is of a high quality and at a reasonable price. It refused to stand up to the unions. If signed deal after deal for more and more pay and benefits and to make workers less and less responsible for their poor workmanship. And it watched well runs companies run rings around them.
it was too late! 
