Read this here for the difficulties facing US Health Care. The moral of the story is that it will not be easy to slow down growth in medical spending, nevermind cut medical spending.
You may also be interested in this essay on how to reform the US Welfare State. The author's plan is an attempt to harness competition in the presence of market failure. In the case the health care market is riddles with information problems, specifically adverse selection and moral hazard. His proposal resembles the voucher system I was discussing in class last night.