Richard Posner has some very iconoclastic proposals to reduce excessive spending on health care.
reduce federal funding of medical R&D. This measure, combined with reducing patent protection for drugs and medical devices, would have the effect of slowing the rate of technological advance in the medical industry. Such slowing would reduce the amount of money that the government spends on Medicare and Medicaid because once an expensive new technology is developed, it is impossible for the government (or insurers for that matter) to refuse to make it available
...repeal Medicare. Medicaid would remain available for the indigent...There is no reason the taxpayer should pay for the medical care of elderly people who can afford to pay for it themselves.
...reallocate federal funding of R&D from diseases that afflict mainly elderly people, such as most cancers, and from diseases avoidable by behavioral modification, such as AIDS, cirrhosis of the liver, and most Type II diabetes, to diseases that are not avoidable by changing behavior and that afflict mainly children and young adults.
As long as we're being iconclasts, why not get rid of all medical licensing? Instead of having the government decide who may perform a strep test or an MRI, leave the decision to the consumer.
The latter idea is so radical that when I proposed including it in my book, the folks at Cato said, "You shouldn't say that. We don't want people to think we're moonbats." Yes, support for the free market has its limits.
UPDATE: I took a little too much poetic license in the preceding paragraph. The folks at Cato were not troubled by the idea. What they actually said was that it was an idea that might shock a lay audience, so that it either ought to be developed carefully at length or left out of the book.