A big piece of the puzzle...

Understanding our care health care issues perhaps begins with the health care providers. Houston, there may be a real problem existing and perhaps growing there.

In a fantastic article being widely linked around the blogosphere, The New Yorker's Atul Gawande carefully outlines how business models for physicians are changing, and how one huge hurdle is simply overutilization of health resources.

There is no insurance system that will make the two aims match perfectly. But having a system that does so much to misalign them has proved disastrous. As economists have often pointed out, we pay doctors for quantity, not quality. As they point out less often, we also pay them as individuals, rather than as members of a team working together for their patients. Both practices have made for serious problems.
Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.
This last point is vital. Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes. You get McAllen.
One afternoon in McAllen, I rode down McColl Road with Lester Dyke, the cardiac surgeon, and we passed a series of office plazas that seemed to be nothing but home-health agencies, imaging centers, and medical-equipment stores.
“Medicine has become a pig trough here,” he muttered.
Dyke is among the few vocal critics of what’s happened in McAllen. “We took a wrong turn when doctors stopped being doctors and became businessmen,” he said. [More - almost mandatory reading for understanding this problem]

[Update - link repaired]

I do not fault doctors to acting like market participants, but as the comparison between the Mayo and McAllen results show, there are some profound economic aberrations that make the health care market unrepsonsive to the usual counteracting forces of a market place.

One is third-party payers like insurance or government.  The other is a product for which there is unlimited demand, especially as we age. Throw in complications like malpractice abuse - although as the article describes some states seem to have a handle on that issue - and the health care economic system defies easy economic analysis.

There is growing evidence that other ways of approaching this problem are more successful. More and more detailed comparisons are pointing out  the inefficiency and extravagance of delivering too much care too to few arbitrarily chosen consumers.

Inevitably, perhaps, that means Americans are looking to European models, hailed by some, dismissed as socialized medicine by others. In truth, European health care is neither the nirvana of Michael Moore's imagination, nor the publicly funded money pits that so scare conservatives. For one thing, Europeans spend less — about $4,000 a person less, in some cases — than Americans on health care annually, and often with better outcomes. The good news is that without reassembling its entire health-care system, there are many relatively simple measures that could help the U.S. get a handle on soaring costs — and keep its population healthier, too. [More helpful suggestions]

Just as America can to appreciate the quality of Japanese cars, I think we will shed our prejudice against all health care ideas that don't have a "made in America" sticker on them in the face of obvious advantages.

It's simply a matter of of more of us being shifted to the losing side in the health care lottery and the costs growing to consume our economic future.