This is the main problem. American health industry (doctors, pharmaceuticals, etc) cost a vast amount more than in other countries, thus insurance is also high to compensate for this.

I've heard that a big part of this cost is due to the highly litigious culture in America that requires doctors to carry very high malpractice insurance, which they must then pass on in their patient costs. Americans love to sue, and this drives prices up.

I don't know if this is true, but its the one argument I've heard over the years that makes the most sense to me.

I once had a worldwide health insurance plan while living in Asia, and it covered all countries EXCEPT the USA, because of the absurd costs there.

Strangely enough my primary income is writing software for the healthcare industry. A significant portion of my firm's income goes to insurance and lawyers to ensure compliance/protection in the event of a lawsuit.

But why does it cost more, and how are employers able to provide health insurance anyway?

One reason it costs more: people with serious conditions may delay presenting because they fear the cost of healthcare.

And unfortunately, many serious conditions are dramatically more expensive, and potentially more lethal, when presenting late. It's a nasty piece of positive cost feedback inherent to the current US system, and one that disproportionately affects patients from lower income brackets.

Other reasons include the massive costs of running and staffing the billing infrastructure, cost of compliance & provider insurance, and uncontrolled drug pricing.

These factors are not present in most other first-world healthcare systems, or are present but minimised by effective regulation.