Why healthcare is expensive

I just stumbled across this post, about what appears to be a current debate in England regarding what type of medical care should be provided by the state (England has socialized medicine, so in theory, all medical care is provided by the state). Two issues are on the table:
1 - should the state pay for expensive medical care that is unlikely to yield much benefit?
2 - should the state pay for medical care that is needed due to the patient's own folly, e.g. a heart-lung transplant for a chronic smoker?
The writer of the post seems to think that the state should indiscriminately pay for these things. I disagree. But before I go intot he reasons why, I'd like to discuss why medicine is so expensive to begin with.

We have yet to figure out how to pay for all of medical care that people lay claim to. There are a few reasons for this.
* Many people are their own worst enemies when it comes to maintaining their own health. People eat too much of the wrong foods, and not enough of the right ones. People fail to get adequate exercise. People smoke, drink, and fill their bodies with all manner of noxious substances. The result, of course, is poor health.
* Much of modern Western medicine is expensive. CTs and MRIs are useful, but pricey. Lab work can be costly. Pharmaceutical costs can rival mortgage payments. And neither medical education nor malpractice insurance are cheap.
* More medical care is given than is needed. Reasons for this include defensive medicine and patient demand (e.g. demand for antibiotics to treat a common cold).
* Many people without access to a true primary care provider are left using the emergency room for all of their care. ER beds are among the most expensive beds in the hospital, so using one to treat a common cold is extremely wasteful.
* Similarly, the complicated nature of insurance sometimes makes a visit to the ER appear to be the easiest way to go.
* Some people delay seeking medical care (often because they can't afford it, or can do so only with real difficulty) until their problems become severe; severe problems are more costly to treat than minor ones are.

So, our medical costs are high, and in the forseeable future, they are only going to get higher (greying of the population, etc).

Next: the necessary choices we face (link fixed 5 Feb 2008 0207hrs)