WASHINGTON – The public option could threaten over half of our nation’s rural hospitals with closure, according to a new study from Navigant Consulting, Inc.  As Becker’s Hospital Review reports today, the study finds that the proposed government run health insurance system could “have a significant effect on rural hospital closures across the country.”  They write:

… [A] public option could put up to 55 percent of U.S. rural hospitals, or 1,037 hospitals in 46 states, at “high risk of closure.”  The finding was based on Navigant’s study of various public option scenarios on the revenue of nearly 1,900 critical access and short-term acute care hospitals in rural areas.  Researchers found that: … A Medicare public option where employers move 25 percent to 50 percent of their covered workers to the option could put 51 percent to 55 percent of rural hospitals at high risk of closure, and 39 percent to 41 percent of rural hospitals at moderate risk.  Navigant estimated that Medicare would have to boost payments to hospitals for a public option 40 percent to 60 percent above current Medicare rates to prevent the financial consequences associated with public option scenarios.

Modern Healthcare added that “rural hospitals could lose between 2.3% and 14% of their revenue” under the public option.  And while profoundly negative health and economic consequences could be felt in rural communities across the country, Becker’s Hospital CFO Report also notes today that some states could be hit particularly hard by the proposed government insurance system, as the analysis shows that “states with the most high-risk rural hospitals” include Kansas (63), Iowa (51) and Minnesota (49).

This new research tracks closely with a separate study released by Navigant in March, which found that the “public option” could cause increased financial stress, force hospitals to limit the care they provide, drive significant “layoffs” and “potentially force the closure of essential hospitals.”  As POLITICO reported at the time, Navigant warned that “hospitals already are facing financial challenges given the aging population and the increasing share of Medicare patients,” and the study found that such a system “would potentially accelerate those headwinds significantly,” according to Navigant’s Jeff Leibach.

The risks to rural hospitals under the public option resemble those surrounding Medicare for all, as The New York Times reports that experts are also sounding alarm bells about the “violent upheaval” a Medicare for all system would cause hospitals: “Some hospitals, especially struggling rural centers, would close virtually overnight, according to policy experts.  Others, they say, would try to offset the steep cuts by laying off hundreds of thousands of workers and abandoning lower-paying services like mental health.”

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