Here's an article talking about this same issue:
http://www.fff.org/freedom/fd0409g.asp
I'll group the main elements in that article of why costs keep increasing while accessibility to quality services declines:
1) Out of control and detached from market forces.
"Skyrocketing costs are due to the structure of health care in all these nations. All are mainly socialized, including America’s. This means they operate as top-down bureaucracies, out of touch with people’s real needs. Almost no market forces are allowed to operate for rational decision-making and cost control.
The results are predictable. In 2002, America spent $1.6 trillion on health care, up 9.3 percent from 2001. Drug costs increased 15.3 percent while hospital costs increased 9.5 percent. Out-of-pocket costs, the most market-related, declined.
A graph plotting the percentage of government payment for health care with the total cost of health care would turn almost vertical after the passage of Medicare and Medicaid in 1967. "
2) Irresponsive and beaurocratic
"All the above are funded from taxes confiscated from the people at the point of a gun, making this a less-than-compassionate system. All are insulated from the health-care marketplace and thus from rational decision-making. All are run as huge bureaucracies, with their inherent problems of fraud and high administrative overhead. Medicare rules alone are 133,000 pages in length. This makes the 10,000-page income-tax code look like a model of simplicity. "
3) Government intervention removes accountability
"An example of the dismal failure of the government sector in America is the “war on cancer,” which is administered by the National Cancer Institute. It has cost taxpayers some $30 billion over a 35-year period. After adjusting for a longer life span, between 1950 and 1989 the incidence of cancer rose by about 44 percent. Breast cancer and colon cancer in men have risen about 50 percent, while some others have risen 100 percent. A recent article in the Journal of the AMA was entitled “Are Increasing Five-Year Survival Rates Evidence of Success against Cancer?” The answer was “No.” "
4) Ineffective private competition due to government regulations
"The so-called private sector of American health care is better termed the regulated sector. It includes insurance companies, HMOs, and licensed pharmacists and physicians. To receive any government reimbursement they must “play by the rules” imposed by the socialized sector. As a result, this sector is mainly an extension of the socialized sector.
Insurance companies are burdened with a thousand state and federal mandates regarding what services they must supply. HMOs are also heavily regulated and are in fact creations of the U.S. Congress by virtue of the HMO Act of 1973.
Medical schools also receive government subsidies and grants. This means that what is taught is influenced if not dictated by these funding sources. Physicians are regulated by state licensing boards and, of course, must abide by Medicare and HMO regulations if they choose to work in those settings. To call any of these aspects of the health-care system “private” is a joke. "
5) Alternative solutions legally restricted (I'm skeptical of a lot of these but the claims that many health providers would prefer to treat a chronic problem than allow a cure seems to ring true)
Perhaps 2 percent of the health-care system is private or free-market. It is composed of the unregulated, non-mainstream holistic and alternative healing schools and practitioners. People pay cash for their services and products. Practitioners and suppliers must respond to people’s needs to stay in business.
I have a medical degree but have worked as an unlicensed nutrition consultant (not a dietitian) for 23 years. My attention is focused 100 percent on what clients need, not on getting grants or subsidies, receiving insurance reimbursement, or paying lobbyists to plead my case in Washington. In the free-market sector, costs for vitamins, for example, have decreased.
Sad to say, many alternative practitioners who are shut out of mainstream medicine have lobbied for licenses. There is no real need except they can charge more, keep out the competition, and perhaps force insurers or the government to reimburse their services. These include chiropractors, some naturopaths, acupuncturists, and physical therapists.
6) Lobbying and special interests allow monopolistic cartels
7) The FDA can make or break many companies simply by allowing or denying a company to sell their products.
The article concludes by saying that returning power to individuals and providing a freer market in the health services allows more options for people to address their needs while denying overpriced monopolies to continue their practices. I'll skip the details but here's the same sentiment I expressed earlier:
"Though we may not wish to admit it, American health care is only slightly less socialized than the single-payer systems of Europe and Canada. No wonder costs are out of control. Deregulating health care would benefit all Americans and restore a crippled system to sanity. Health care does not have to be costly or dangerous. "
We already have a socialized health industry and that's why most these problems have come to exist in the first place. Power corrupts and leaves those in that position detached from individual desires. It seems simple to me - To provide greater incentives for the industry to serve individual desires, you return the control (and resources directing the actions) of these instutions back to individual desires. There's nothing complex at all to it. Instead of trying to please government officials, they'd find the need to keep customers happy and willing to pay their bills.