A while back McKinsey and Co. did a study to figure out why US health care costs twice as much as most other countries, while leaving 47 million people uninsured and producing results that are worse or equivalent to those spending so much less (the only place the US excels is in waiting times for non-urgent surgery.) They didn't get everything, for example they don't deal with the cost of dividing up the insurance pool in volatility terms, nor do they deal directly with certain other issues like end-of-life care, but it's still a fascinating list.

The Post's Steven Pearlstein has a decent summary.

58 Billion for paying US doctors about twice as much as doctor's earn elsewhere. This comes mostly from the fact that US doctors do far more procedures than other doctors, because they get paid by procedure. Might seem like a good idea, but unfortunately the metrics don't bare it out - the US doesn't get better results than countries whose doctors aren't procedure (and fee) happy.

20 billion for insurance company claim paperwork just for doctors. There should be one set of claim forms, and one set of claim form only. My favourite anecdote along these lines is the doctor visiting a Canadian hospital. After seeing the surgical rooms, wards and so on, he asked to see "the billing wing." The Canadian host wasn't sure what he meant, but took him to see the billing room.

20 billion in malpractice costs. Quite a bit, but then US doctors have rather high rates of malpractice. The solution here isn't to forbid suing doctors who screw up, but to practice medicine in a fashion that reduces the number of screw ups.

244 billion in hospital costs. Seems it costs 4 times as much to keep a patient in a bed in a hospital in the US than it does elsewhere, which is why US hospitals kick people out faster than anyone else in the OECD. Care for the uninsured - according to Kinsey, not a significant cost for hospitals. This has a lot to do with capital costs, overhead, more nurses, and, actually - more serious illnesses. (There are costs to having the fattest population in the world.)

57 billion for drug costs. Much to my surprise Americans actually pop less pills than people overseas, but pay 60% to 70% more per pill. Lots of reasons for this, the most significant of which is that thre isn't a centralized buyer in the US and there is in most other countries. And if you don't play, well.... there's almost always an alternative medicine.

84 billion for private insurance administrative costs, of that 30 billion is straight profits and 32 billion is marketing costs.

77 billion the cost of universal health care if you don't fix any of the above.

477 billion is the total extra costs McKinsey found. As I say, I'm guessing this is an understatement, but it's still 3.6% of GDP, $1,645 per person, and about the same as the entire US military budget in 2005.

Sometimes you get what you pay for.

But sometimes you don't. This is one of those times. The majority of those extra costs are going to one thing, and one thing only - someone's profits.

Contrary to what the magical thinkers who believe that free markets are like fairie dust - scatter them on something and they automatically reduce costs, the fact is that private enterprise always has one major cost, and incentive, that no public enterprise does - the need to make a profit and the duty to make that profit as large as possible, no matter what the consequences of that profit are.

477 billion, 50% of all bankruptices and 47 million uninsured people are the consequences of having a profit driven medical system in the United States.

Because you do get what you pay for, it's just that you aren't paying for medical care.