IMHO, Medicare's problems are reflections of the problems of our overall healthcare delivery system.
1) We pay providers on a piece rate basis. If you built a house and paid a carpenter by the number of nails driven, the wood wouldn't be able to handle the load.
2) We allow Drs. to own the labs and cat scanners to which they then send patients. This is a fundamental conflict-of-interest. It is no wonder that costs are higher in areas where this is the dominant modality of operation.
3) In some areas single providers control the bulk of the facilities. In the Bay Area, Sutter has most. This makes it difficult for employers to negotiate costs.
4) Primary care drs. are underpaid, leading to an over supply of many specialists and resulting excess and unnecessary procedures.
5) Despite lots of evidence, Drs. are allowed to follow treatment regimes that are less than optimum.
6) Because Drs. are not effectively policed, errors and resulting lawsuits abound. Hospital errors kill thousands each year. We need a different process to handle these issues other than lawsuits.
7) Under the current system competition cannot work. It is effectively impossible for consumers to determine the costs/risks involved in a course of treatment. No one will give you an estimate in advance. You can't call around and price your bypass operation.
8) The poor are herded into emergency rooms where the cost of their problems is much higher than if they were treated on some other basis. This also produces very crowded emergency rooms and impacts people who really need urgent care.
9) We currently ration healthcare away from the poor and underemployed. Rationing is necessary in some form. Someone has to decide if $50,000 for an extra four months of life for a cancer patient is worth it. Left to themselves patients will always go for any chance of longer life.
10) If the population wants a system where every person can get knee replacements, hip replacements, lap band surgery, powered chairs, etc. etc. etc. then the cost of care as a percentage of GDP is going to keep going up, and taxes must also go up.