The US government already spends an absolutely incredible amount of healthcare, comparable to Canada or the UK (per capita). Medicare (old people), Medicaid (poor people) and VA, funds for people who don't pay emergency rooms. It's actually a huge amount of total spending, and while the government gets discounts (like health insurers) it's not radically more efficient.
The problem is, I think, often one of over-treatment. If hospitals are paid per procedure (as they are in the US) they are encouraged to do procedures that are actually bad for patients. Insurers can try to reign in over-treatment (to the horror of people who think that more healthcare is always a good thing), but regulators and customers (and activists) fear they do so targeting costs, not patient outcomes. It's all just a mess.
Here's a few issues:
* Over-testing is the most innocuous problem, but even tests aren't "free". At best, it's annoying and makes you not want to go back to see the doctor unless you know it's urgent (especially if it's costing you money or time). Tests might also the emphasis away from immediate treatments (both things that the doctor can do, and things the patient needs to do) as it becomes more of a "wait and see" game.
* Drugs. Obviously they cost money, and they can have side effects. Over-prescription is widely recognised as a major issue.
* Cesareans when they're a bad idea.
* Heart surgery when it's a bad idea.
* Aggressive treatment (especially of cancer) that statistically decreases the quality-adjusted life years a patient has, but hey you have to do something right?
I could go on, but there's really a ton of things where a hospital should do nothing, but has a lot of pressure (from patients and profit motives) to act. While insurers can try to control this, I think it goes without saying that they're also not entirely the good guys, and giving them too much power to reject treatments is also a bit worrying. Confrontational systems might work in the legal system, but it's too slow and expensive to work in healthcare.
Let's look at the special interests the US has (it's not just corn syrup!):
* Caps on doctor training spots. Obviously this is not unique to the US, but a free market solution is hardly going to work when you cap supply.
* Existing players (insurers, hospitals) want high overhead (regulations, admin) to create a moat.
* Drug companies in the US want high drug prices. Australia will subsidise drugs, but only if the drugs are priced right (which creates an incentive for companies to offer deep discounts in Australia). In the US, this kind of bargaining doesn't happen to the same degree. People online keep telling me that the spending on drugs is good though, because it's driving research (it's fine with me if Americans want to spend all their money subsidising the rest of the world).