Doctors and medical facilities would need to make a lot less money. That is the source of most of the cost difference. The vehicle of payment is maybe a secondary cause. It might be good to change it, but if it's not directly responsible for the majority of the difference in what doctors are getting paid, it's not going to fix the problem.
My Uncle is a doctor, went the full 9 years at Tulane and everything. He had to close his own practice because Medicare paid dirt, insurers would delay payments for years, and malpractice insurance was thousands a month. He was running around a 2,000 a month deficit when he had to fire his secretary and close down. He now works in a general hospital as a surgeon, and is actually happier not having to try to haggle getting paid or getting people to pay more.
Some doctors may be profiting off this, but the principle beneficiary is private insurance companies, at least from my experiences. Doctors spend an eighth of their life learning some of the hardest science and discipline of any profession and you do want to compensate the good ones well. We need more people entering medicine, not fewer.
The overhead of insurance companies are minimal. Less than five percent of the overall spend (edit: this is wrong, it is more like 8%, see [1]).
As much as you prefer to think of your uncle as the good guy and faceless insurance companies as the bad guy, a big part of the problem is he makes between 150% and 200% what his European and Canadian counterparts make. http://economix.blogs.nytimes.com/2009/07/15/how-much-do-doc.... Ahmdahls law makes it nearly inevitable that we'll pay doctors less if we want to reduce our overall costs.
And I'm not saying his practice went under exclusively from insurance companies. And it wasn't how much they were taking, it was more that it took them months to actually pay him for services rendered, and it consumed tons of time to just keep track of who hasn't compensated him yet (besides copays). And medic___ were just as slow.
He might have made it all up, was living it lavishly and just lied about it, but it seems like that would be hard to hide from the extended family. He's had the same car for 8 years now, and his wife works. But he was still a general practice doctor in Augusta that closed his practice and went to work elsewhere for some reason, and if he was making a lot of money, it wasn't showing in how he was living (one house he had for 20 years).
