New Government-Controlled Health Insurance Systems Would Put Rural Patients At Risk

WASHINGTON – Ahead of next week’s presidential debate, it’s likely that some candidates will continue to advocate for a new government-controlled health insurance system, known as the public option, framing it as a “moderate” alternative to Medicare for all, despite evidence showing otherwise.  Among the public option’s many unaffordable consequences are the risks it would pose to rural Americans, whose access to care is often already at risk.

Last week, in a story entitled “‘Out here, it’s just me’: In the medical desert of rural America, one doctor for 11,000 square miles,” The Washington Post reported:

In the medical desert that has become rural America, nothing is more basic or more essential than access to doctors, but they are increasingly difficult to find.  The federal government now designates nearly 80 percent of rural America as “medically underserved.”  It is home to 20 percent of the U.S. population but fewer than 10 percent of its doctors, and that ratio is worsening each year because of what health experts refer to as “the gray wave.”  Rural doctors are three years older than urban doctors on average, with half over 50 and more than a quarter beyond 60.  Health officials predict the number of rural doctors will decline by 23 percent over the next decade as the number of urban doctors remains flat.

The story underscores the need for solutions that increase access to care, not diminish it – which is why calls for the public option, are so dangerous.  In fact, recent headlines and studies warn about the severe consequences such a government-controlled health insurance system would have on American families’ access to quality care, particularly in rural communities:

• The Gazette (Cedar Rapids): “Iowa’s rural hospitals could experience a loss of more than $476 million dollars under a public health insurance proposal, putting dozens at high risk for closure, according to an analysis … the analysis said those hospitals could be confronted with an even bigger detriment if a public option is implemented using Medicare reimbursement rates … If a public option plan would go into effect, the study found that between 25 and 52 of Iowa’s 90 rural hospitals would be at high financial risk for closure due to a loss of millions in revenue.”
• Las Vegas Review-Journal: “[H]ospitals lose money on Medicare patients … But if more people were on Medicare, those losses could be unsustainable.  An industry group estimates that more than 50 percent of rural hospitals would face a high risk of closure if a public option were in place.”
• Virginia Public Radio: “[A]s many as 10 rural hospitals in Virginia could close if the federal government starts offering a public option health plan – the kind of public option that’s now being talked about on the campaign trail by former Vice President Joe Biden and others.”

The study, conducted by Navigant for the Partnership for America’s Health Care Future, finds that the public option could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”  These hospitals serve more than 60 million Americans, and as Kaiser Health News and NPR report, hospital closures can have “profound social, emotional and medical consequences,” while RevCycleIntelligence also reports, “[p]atient access to care suffers when a rural hospital closes its doors for good, and consequently, patient outcomes can deteriorate.”

A previous study found that “[f]or hospitals, the introduction of a public plan that reimburses providers using Medicare rates would compound financial stresses they are already facing, potentially impacting access to care and provider quality.”

Another study found that government insurance systems such as “buy-in” or “public option” could force hospitals to limit the care they provide, produce significant “layoffs” and “potentially force the closure of essential hospitals.”

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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