2. The USA subsidizes drug development for the rest of the world. All the R&D happens here, and the only reason so much money is spent on this R&D is because the drug companies can charge maximum price to Americans. Other countries negotiate as a block to lower prices. This is great for those countries (cheaper drugs) and the drug companies (marginally expanded markets), but it increases the fraction of money from the US going to that R&D.

Similar to broadband and mobile phone services, the free market hasn't been able to drive prices down as effectively as it theoretically should. I think it's because the incumbent providers have successfully lobbied for a network of regulations that protect their monopolies. What's actually needed is better regulations (a la net neutrality) to level the playing field.

Or alternatively, just run it as a free public service like many other countries do. That approach works pretty well.

People in the US aren't use to making those kinds of tradeoffs, which is why we spend half of our medical dollars on the last year of people's lives. We might decide not to operate, but financial considerations won't enter into the decision.

That's why I will be surprised if anything the government does short of rationing care will affect the cost of medicine in the US. It's about expectations.