Why Healthcare Costs So Much

Medical costs are outrageous because people don't understand the concept of insurance. Let me break it down for you:
Insurance is at its core a pool.

Lots of people put money in and a few take money out. After all the people who needed to take money out have done so, what is left goes to the person offering the insurance and that's what they pay their employees and stock holders out of (think of it as their net revenue).
The problem with health insurance is that basically everyone needs to take some money out all of the time, which means that if the service was offered at the costs we had in the past, there would not be enough money to go around.

So, the insurance companies raise the cost of the service to make sure that there is enough money in the pool for all of the users and also enough left over afterwards for their own salaries and profit margins (which is why they offer the service in the first place, profit is not evil, it is what makes people offer goods and services).
The problem is that as it is structured now, preventative care costs money, so people don't use it. They prefer to just let their health slide and use the pool when they really need it. The problem with that is simply that if you were to add up the cost of the preventative care, it would not be as high as the cost of the emergency care. So, we should make preventative care cheaper or free (maybe not free, free always ends up with some fat chick beyond stomped to death in a Wal-Mart over some complementary toaster that comes with a TV).

The problem is that the insurance companies do not do anything to reward people for going to the doctor to get checked up or maintaining a higher level of health. They penalize the fat people. So, they use negative reinforcement instead of positive reinforcement. Unfortunately, insurance rates are not a "switch" and the American people are not toddlers, so negative reinforcement will not work here (I do advocate corporal punishement for young children where reason might not work).

What this bill should have done is encourage preventative care. Provide free preventative care to the really poor and they don't need to come in for heart surgery as often (I'm pretty sure you can have 1000 GP visits for the cost of every 1 open heart surgery).

Anyway, I just wanted to explain my thoughts on insurance.  If you share them or disagree, leave me a comment and we can discuss this further.