MANA 5334 Consulting & Research in Health Care Organizations A Presentation on Arnold King’s Crisis of Abundance: Rethinking How We Pay for Health Care

The Rise of Healthcare Costs Who is Arnold King, the CATO institute & what do they know anyway? What is the root cause of this rise in health care costs? What is the concept of Premium Medicine? What, if any, alternatives can be implemented? What does the future hold?

The Man, the Myth, the Legend Arnold Kling Earned Ph.D. in Economics in M.I.T. Economist with the Federal Reserve Board in Washington D.C. & later with Freddie Mac Founded Homefair.com in 1990’s – one of the first commercial internet enterprises, sold in 1999 Since then, volunteer teaching in high schools and adjunct professor most recently at George Mason University Contributing editor of TCSdaily.com & writes for Econlog.econlib.org Has written two other books and his website is arnoldkling.com

The MAN is keepin’ us down. The Cato institute will drop knowledge Founded in 1977, A public policy research foundation dedicated to broadening the parameters of policy debate to allow consideration for more options consistent with traditional American principles of a limited government, individual liberty and peace. Idea is to educate the lay public about questions of policy and roles of the government

BIG BROTHER is crushing us. Cato Institute is here to help. Named for Cato’s letters Despite achievements of fore fathers, virtually no aspect of life today is free of government encroachment Publications including the Cato Journal & the quarterly magazine Regulation combat the governments trampling of civil liberties The Cato institute accepts NO government funding Contributions are given by foundations, organizations and individuals Nonprofit, tax-exempt, educational foundation under section 501(c)3 code of the I.R.S. Location: 1000 Massachusetts Ave. N.W. Washington D.C Website:

Health Care Cost Rising The 3 economic Narratives -Private Insurance does not work -Health care providers over charge for services -PM medicine accounts for most of the problem Arnold Kling feels PM is the only plausible cause for increasing health care cost

Health Care Costs Rising Past 30 years, medicine has become more expensive. Today’s medicine could be termed “Premium Medicine” PM utilizes more physical capital (MRI machines) & more human capital (specialists) PM reflects cultural expectations that call for a high level of effort to diagnose correctly and treat effectively PM clearly has caused the rise in health care cost, evidence for a rise in health care BENEFIT is mixed Because of the triumph over many ID’s, must turn our attention to DD’s, this will cause more cost increase and less visible benefit

Growth of CT & MRI Scans in the United States from

Are the DOLLAR$ making a DIFFERENCE? Kling suggests NO WAY! Kling’s 3 options for treatment -do nothing -treat empirically -treat on the basis of a through diagnosis, ruling out minor possibilities (PM)

ALTERNATIVES & SUGGESTIONS Insulation v/s insurance Matching funding systems with needs Markets and Evolution Policy ideas -Medical Guidelines Commission -Single Point of Accountability -Lifting licensing restrictions

F U T U R E SOME GOVERNEMNT INVOLVMENT, BUT NOT TOTALLY CONTROLLED MORE BURDEN SHIFTED TO INDIVIDUALS GUIDELINES COMMISION DO AWAY WITH MEDICARE, MOVE TO SAVING ACOUNTS.

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