It's not a difficult puzzle: nobody in our system is incentivized to care about costs. The insured consumer never sees the cost, the physician is incentivized to be cost-blind when choosing treatment options, and the insurance companies pass the costs back to employers, who don't get any say in treatment. The only other people who know what health care costs are unemployed and/or poor, and well...screw them, right?

You couldn't possibly choose a worse economic model for allocating health care. Medicare is much cheaper and more efficient than employer-based healthcare, but it can't overcome the structural expenses created by a system dominated by people who are almost totally cost-insensitive when it comes to their health.

Of course it's going to be more expensive, with worse health outcomes, than a general population pool. That's how aging works.