cut the waste - I expect this is closest to cut the cost of services in your three options given

Waste in the U.S. Healthcare System Pegged at $700 Billion in Report from Thomson Reuters - Thomson Reuters

Here are some of the study's key findings:

  • Unnecessary Care (40% of healthcare waste): Unwarranted treatment, such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.
  • Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.
  • Administrative Inefficiency (17% of healthcare waste): The large volume of redundant paperwork in the U.S healthcare system accounts for $100 billion to $150 billion in spending annually.
  • Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account for $75 billion to $100 billion in unnecessary spending each year.
  • Preventable Conditions (6% of healthcare waste): Approximately $25 billion to $50 billion is spent annually on hospitalizations to address conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.
  • Lack of Care Coordination (6% of healthcare waste): Inefficient communication between providers, including lack of access to medical records when specialists intervene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 billion annually.

Journalists may request a copy of the report from David Wilkins at (734) 913-3397 or [email protected].
And no, I didn't order the report, so I have not rigorously researched

This from Messiah Obama on July 22 '09:
We have estimated that two-thirds of the cost of reform to bring health care security to every American can be paid for by reallocating money that is simply being wasted in federal health care programs.