Megan lists three reasons:
1) We pay more for our medical services. But though the pharma industry is important, the real action is in wages. Our medical personnel cost vastly more than their counterparts abroad in almost every category.
2) We consume more services.
Americans get shiny new facilities--my British colleagues once derisively commented that American hospitals are "like hotels". American hospitals don't have open wards for almost anyone. They staff at very high levels. Doctors conduct an inordinate amount of tests. We use an expensive machine rather than watchful waiting. And often, those expensive machines catch conditions that never would have turned into anything, which we then treat. Natasha Richardson probably would have lived if she'd had an accident here, because doctors would have done a cat scan, and there would have been a Medevac helicopter available. That's tens, maybe hundreds of thousands of dollars to save a single life.
3) There are inefficiencies. I don't mean "compared to other systems"--every system has some screwed-up illogicality that costs it money and makes patients worse off. But compared to what we could have. For example, Medicare pays for procedures, not wellness, which means that there's a chronic undersupply of geriatricians, because the specialty isn't particularly well paid even though the nation's largest healthcare provider is specifically designed for old people. This is madness. But every real-world system that has attempted to pay physicians for wellness has ended up giving up in disgust.