The Medicare system made a lot of doctors rich. Unfortunately it made the wrong class of doctors rich, the specialist. The internist, the general practitioner, the doctor you see first is not doing very well. That's why there is a shortage of primary care doctors and the shortage is likely to grow. The reason the specialist can get rich is because he can structure his business model to get extra profit from things he orders. Yes, he is being paid the "average and customary" prices that Medicare pays but he also makes money on the related companies the specialist has set up to support his practice. That's why when you for example have surgery you get your rehab from the doctor recommended provider. Your surgeon has an interest in that company, either by ownership with other doctors or by finder fees. The doctor at the bottom of all this can't do much, perhaps he can setup a blood lab but he can't make money on the scale the specialist can. The insurance companies go along with it all because they get their cut.
The system has to have a reform which pays an incentive to the primary care doctor to keep you healthy. That's where the big savings are. Don't get sick. The other big savings would be in the administrative overhead. Ever wonder why there are so many paper pushers in doctors offices. It the burden imposed by insurance companies, in the belief that they can reduce claims by requiring pre-approval. It's an all paper based system. A doctor's office must replace a FAX machine every 6 months.
One of the early Obama administration bills tasked the National Institute of Standards and Technology to develop standards for electronic medical records. Using electronic records could greatly reduce the paper administration costs. But again there will be a lot of resistance to to status quo. Remember the CEO's make more money if their company has more employee's even it they are mindless paper pushers.