Karen Davis’ Discussion
Karen Davis’s oral testimony before the Congress, as well as the figures and exhibits she presented, demonstrated the purpose of Medicare and Medicaid in an overarching demographic context. It helps to understand why healthcare reform is necessary to maintain high quality and standards of care while successfully balancing the budget. The primary argument of Davis revolves around how the Baby Boomer generation is retiring, threatening to significantly increase the overall expenditures on healthcare.
Exhibit 15 shows that by 2030, the number of beneficiaries of healthcare services and government spending will increase up to 80 million people, whereas the total number of workers per beneficiary will drop from 4.0 in 2000 to 2.3 in 2030 (Davis, 2012). Exhibits 1-3 also demonstrates that the population requiring Medicaid is largely composed of poor individuals with 22,000 dollars per capita. The difference between vulnerable groups and financially stable individuals is also drastic – while a poor family spends up to 15% of its income on medical care alone, the expenditures are below 5% in well-off families (Davis, 2012).
Davis’s assessment of the situation indicates that transferring the increased expenses on the beneficiaries is not going to yield a positive result, as the overall percentage of yearly healthcare bills is going to increase, and the number of individuals capable of affording healthcare will decrease. Exhibits 7 and 8 make an argument that Medicare and Medicaid programs are inherently more efficient than private care plans because the compensation of providers depends on the quality of treatment and the lack of re-hospitalization efforts afterward (Davis, 2012). In addition, Davis claims that the expenditures related to healthcare can be reduced even more by increasing efficiency and cutting bureaucratic costs, thus enabling the government to balance the budget without reducing the quality of care.
There are several issues with this kind of rhetoric. Davis’s address to Congress happened in 2012, in the wake of adopting Obamacare and expanding it to encompass more individuals. As a result, 25 million Americans became eligible for healthcare (Baal, Meltzer, & Brouwer, 2016). However, that came at a significant increase in the healthcare budget. Since 2012, healthcare expenditures have nearly doubled, and the costs of individual treatment are expected to grow even further. At the same time, the quality of care in an individual hospital did not improve much despite various reforms (Pant, Burgan, Battistini, Cibotto, & Guemara, 2017).
Such a trend indicates that there is a limit to optimization and improvement within the existing framework of operation. In my personal view, I believe that Davis’s address is attempting to salvage the situation. No amount of cutting costs and making healthcare more efficient will be able to handle the dramatic drop in a worker-per-beneficiary rate. As such, healthcare would need to seek out other sources of funding. Many areas in the US budget could be reduced in spending to provide healthcare benefits for the population, such as the military. The US has no immediate threats at its borders and no longer needs 183 military bases to contain the USSR.
References
Baal, P., Meltzer, D., & Brouwer, W. (2016). Future costs, fixed healthcare budgets, and the decision rules of cost‐effectiveness analysis. Health economics, 25(2), 237-248.
Davis, K. (2012). The future of Medicare: Converting to premium support or continuing as a guaranteed benefit program. Web.
Pant, S., Burgan, R., Battistini, K., Cibotto, C., & Guemara, R. (2017). Obamacare: A view from the outside. Hawaii Journal of Medicine & Public Health, 76(3), 42-44.