In addition to the items listed by Runner, a major contributing factor is Economics101. People want to live and be healthy no matter what the cost. Medical Science will do what it can to satisfy this insatiable demand, and squeeze every dollar it can out of people and insurance companies in the process.
Think about how costs would plummet if people said, "I'll try to stay as healthy as possible, and try natural cures if I get sick." Of course this isn't gonna happen, but reducing demand would likely reduce costs?
Last week a MedSup client showed me a bill she received for one night's hospital stay after she received an implant to help control her Parkinson shakes. The Bill didn't include surgeon charges, yet it was a whopping $79,875! The basic room and board charge for the 24 hour stay was $2,500. No wonder Medicare is going broke.