[briandear]

The expensive gloves problem is due to cross subsidization and cost recovery. A good portion of the problem is due to under-market Medicare reimbursement rates; another part of the problem is that certain demographics that aren't eligible for Medicaid due to their lack of legal status incur expensive care (via the emergency rooms) that goes unreimbursed. This problem is especially accute in places like Texas.

I would suspect that more free primary care clinics could take some of the burden off of emergency rooms in terms of cost and those free clinics could even be funded by insurance companies from the money their saving from not having to pay for $5000 gloves anymore.

A cash-payment medical system would also solve some of these problems. With opaque pricing, hospitals get away with solving budget issues by overcharging. If you actually saw the menu of what things would cost and you were paying out of your pocket, nobody would ever tolerate $5000 gloves. Market forces would fix the cost overages very quickly. As it is now, very few people actually directly pay for their own care and thus are less motivated to care about price. "Insurance covers it," is all many people care about.