Because insurance companies, big pharma and other usual suspects lobbied the government (it wasn't even lobbying; rather, a "mutually beneficial agreement", which is beneficial to everybody except patients) to eliminate competition and lock their profits in various regulated obligatory payments. Being pro-free-markets in not the same as being pro-big-business. Revolving doors are real.
Ironically, free markets are fragile and require government protection to set the playing rules and step away. Usually, the government is not particularly interested in doing that.
(P.S. while the reason for healthcare inefficiencies looks clear enough for me, the case with education is more curious. I think that US education can be a genuine market failure. Compared to healthcare, it is relatively unregulated, and yet people seem to be OK with paying outrageous amounts for something that is not strictly necessary to choose any lucrative career they want. You don't need college education to become a software engineer or quant trader — I've been both without a completed degree, as there are more than enough materials for self-education in these matters these days. There are some exceptions like medicine, but they are that — exceptions).
Ironically, free markets are fragile and require government protection to set the playing rules and step away. Usually, the government is not particularly interested in doing that.
(P.S. while the reason for healthcare inefficiencies looks clear enough for me, the case with education is more curious. I think that US education can be a genuine market failure. Compared to healthcare, it is relatively unregulated, and yet people seem to be OK with paying outrageous amounts for something that is not strictly necessary to choose any lucrative career they want. You don't need college education to become a software engineer or quant trader — I've been both without a completed degree, as there are more than enough materials for self-education in these matters these days. There are some exceptions like medicine, but they are that — exceptions).