The costs for the shuttle program were pretty much fixed per year at $5B. The refurbishment of the SRB's and ET's were pretty cheap. If the Air Force didn't bail on the Shuttle a realistic flight rate would be once a month with 4 orbiters which would be about $400m per flight. With the existing infrastructure of 3 OPS's, 3 Bays in the VAB, Two Pads, 3 MLP's and 2 Crawlers you could have added another orbiter at about $1B to ramp up the rate. Also the infrastructure at Vandenburg was nearly finished and that could have upped the launch rate even more.
After the loss of Challenger the Air Force bailed on the Shuttle and instead created and flew the Titan IV at the cost of about $400 m per flight. If that money was kept with the Shuttle program the costs per flight could have been even cheaper.
The costs weren't due to technical problems with the Shuttle but politics.