A few years ago I attended a panel discussion on health care reform at Princeton University. While a number of options were offered and often violently debated, there was one point on which every panelist concurred: our insurance companies waste shocking amounts of money (we’re talking Eastern European Communist levels here). In particular, they like paperwork. They really like paperwork, so much so the panelists agreed they choose to spend roughly 30% of every dollar on it (I’ve since read up on this and found that estimates vary as expected, but the lowest paperwork figure I located was 7.6% or well over $100 billion a year, which is horrible enough, thank you). Throw in the cash spent on TV ads and executive salaries and the like and they squander a huge amount of loot before they deliver any actual health care. Not to mention they’re determined to earn massive profits.

And profit they have (this article offers some of the numbers spouted by the Obama administration, as well as discussing the issue in more depth). So how do they pull off the trick of being bloated and wildly inefficient, yet still making bank? Quite simply, the U.S. throws frightening amounts of money at the problem. Check out our spending, both per capita and as a percentage of GDP compared to other nations. Is our health care service the best in the world? At these prices, it should be beyond a doubt. Pathetically, it isn’t (unless you don’t worry about things like “infant mortality”, whatever that is).

Of course, businesses don’t only make money by increasing revenue; they can also reduce spending. This is why insurance providers traditionally find reasons to dodge people with pre-existing conditions or seek to dump folk who take a turn for the worse. In strict economic terms, you can’t blame them: these patients don’t make fiscal sense. Likewise, with the short-term need to stay solidly in the black while pissing away a fortune on overhead, you can’t blame insurance companies for avoiding preventive care. Everyone agrees that proper preventive care saves money long-term — a gym membership’s cheaper than a hospital stay, even if it’s one of those gyms with the fancy climbing wall — but who has the luxury of looking past the next quarter?

This goes beyond the health care industry to reflect a concern I have for America as a whole: we seem to have created strange inefficiencies throughout our entire economy, where shifting paper around matters more than actually creating something. The entire investment banking biz can be looked at in these terms, where people earn massive incomes for…what? Occasionally almost bankrupting the nation and requiring huge amounts of tax dollars so they can stick around and try to finish the job? No disrespect to any Goldman Sachs-ers out there, but you’re a cancer: you’re not necessarily fatal, but any time you spread it’s cause for concern. Most depressingly, these pointless jobs pay so well they draw our nation’s “best and brightest”, who theoretically could have been doing something like, I don’t know, going into medicine and finding ways to keep the rest of us alive.

For those of you worrying about the health care bill killing free market efficiency, you can relax: we lost that long ago.

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