FWIW, some of it is down to government behavior. Example: Medicare. You'd think that splitting off the most expensive groups needing the most care would allow the insurers to do a better job for the remainder, maybe even reduce premiums to reflect reduced risk. Instead they have the highest premiums in the industrialized world and still offer terms that cause most of the bankruptcies in the country. Seems to me that regulations in 2009 to prevent discrimination and rescissions would save the taxpayer an expensive cleanup in a few years as well as being a reasonable exchange for insurers being allowed to charge huge "insurance" premiums while the taxpayer takes care of their biggest risks.

I'd also point out that in the absence of regulation, a public scheme may simply get all the rest of the biggest risks shunted to it, meaning it will cost more than schemes serving low-risk people- to the delight of privateers who already blame Medicare because people over 65 need more costly care than 22-year-olds. ;-)