What Exactly Are We Paying For?

Health care is one of those issues I'd like to understand better. Specifically, I'd like to know why this is happening:

Record Share Of Economy Is Spent on Health Care: "Rising health care costs, already threatening many basic industries, now consume 16 percent of the nation's economic output -- the highest proportion ever, the government said yesterday in its latest calculation.

The nation's health care bill continued to grow substantially faster than inflation and wages, increasing by almost 8 percent in 2004, the most recent year with near-final numbers."

And I don't buy the facile conservative explanation that it's all due to abusive trial lawyers -- even accepting that there is a strong link between, for example, the sharp rise in malpractice premiums and malpractice awards (certainly not an ironclad conclusion since the poor investments of insurance firms are also estimated to account for a large share of premium increases), the relative costs of malpractice insurance comnpared to the total health care bill are too small for tort reform to be a sensible approach to health care. Something else is going on here, and I haven't yet seen a good explanation for what it is. But whatever is causing health care inflation, the U.S. now spends more than twice as much as Europe as a share of GDP on health care, while our aggregate public health performance (i.e. infant mortality, life expectancy, etc) consistently ranks among the lowest in the industrialized world. In other words, we pay out the nose for substandard care, and yet Americans seem convinced that we have the best health care system in the world. Maybe more on this to come.