Of course, your analysis of the cost breakdown is pretty accurate. However there is another factor I think worthy of consideration: that price and cost are different in a heavily subsidized industry. When you look at the price change over the last four decades or so you see a striking pattern. The more fully something in medicine is covered by “health insurance” the higher the price increase is, versus the price decrease for things not covered.
To those versed in economics that isn’t surprising. Though it is clearly inconceivable to those who are more ideologically driven than reality driven. The classic example, if we can be said to have one, is laser corrective eye surgery. With virtually no coverage the price has had to come down over time. It has reached the point where you can get it very cheaply compared to even a few years ago. It went from being over ten grand for one eye to about a grand for both eyes.
Knowing that subsidizing medical procedures raises prices, it is folly to believe that subsidizing them even more will suddenly and somehow magically reverse the direction and magnitude of price change.
It is still true that preventative medicine is very overblown in the context of cost reduction. Indeed I would not be surprised if focusing on preventative medicine made things worse.
Preventative medicine in the short term is more intensive in terms of resources. The most critical resource in medicine is the supply of capable doctors. Preventative medicine require a doctor and patient spend a lot more time together. This would put even more pressure on the already insufficient supply of doctors. This is not a path to reducing cost or price.
But this problem doesn’t go to just price. Another key aspect of not having enough doctors is that adding more people to the list means people either everybody does not get the requisite treatment, or those at the front of the line do but every else doesn’t get in. This is another reason focusing on preventative medicine is not a viable solution to the problem of total cost.
Another clue can be found by learning that a surprising amount of doctors and offices offer lower, and often drastically lower, prices to people not using insurance. There is a lot of crap to deal with when dealing with insurance. This produces a financial burden as well as delays, uncertainty and just plain hassle to those who deal with it.
Nearly every doctor I’ve talked to about it would rather not deal with insurance at all. But the full court press from politicians, media, and the talking bobble heads pushes people into coverage they don’t need and in many cases don’t want.
The final primary aspect to the high cost I’ll address here is the conflation of insurance with “health plan” and “health care access”. In no other insurance industry do we conflate general care with emergency response. Life insurance is simply life insurance. Car insurance doesn’t cover preventative maintenance such as oil changes, light bulb replacement, and car washes.
That we have converted health insurance to “omg cover everything (but not really)” is one of the drivers of cost increases.