WASHINGTON – new study by Navigant Consulting, Inc. reveals that the “public option,” a new government run health insurance system outlined in several current proposals, could put more than 1,000 rural U.S. hospitals in 46 states “at high risk of closure.”

Navigant warns that “offering a government insurance program reimbursing at Medicare rates as a public option on the health insurance exchanges created by the Affordable Care Act (ACA) could place as many as 55% of rural hospitals, or 1,037 hospitals across 46 states, at high risk of closure.  The rural hospitals at high risk represent more than 63,000 staffed beds and 420,000 employees … Even those rural hospitals not at high risk of closure and the communities they serve face an increased threat.  The availability of a public option could negatively impact access to and quality of care through rural hospitals’ potential elimination of services and reduction of clinical and administrative staff, as well as damage the economic foundation of the communities these hospitals serve.”

A separate study released by Navigant in March 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, the study finds that “hospitals already are facing financial challenges given the aging population and the increasing share of Medicare patients,” and warns that such a system “would potentially accelerate those headwinds significantly,” said Navigant’s Jeff Leibach.

While in a story headlined “How a Medicare Buy-In or Public Option Could Threaten Obamacare,” The New York Times reported last week that the “public option may well threaten the A.C.A. in unexpected ways.”

A government plan, even a Medicare buy-in, could shrink the number of customers buying policies on the Obamacare markets, making them less appealing for leading insurers, according to many health insurers, policy analysts and even some Democrats … [A] buy-in shift in insurance coverage could profoundly unsettle the nation’s private health sector, which makes up almost a fifth of the United States economy.  Depending on who is allowed to sign up for the plan, it could also rock the employer-based system that now covers some 160 million Americans … Siphoning off such a large group of customers could also lead to a 10 percent increase in premiums for the remaining pool of insured people, according to the Blue Cross analysis.  More younger people with expensive medical conditions have enrolled than insurers expected, and insurers would have to increase premiums to cover their costs, Mr. Haltmeyer said.  Tricia Neuman, a senior vice president at the Kaiser Family Foundation, which studies insurance markets, said a government buy-in that attracted older Americans could indeed raise premiums for those who remained in the A.C.A. markets, especially if those consumers had high medical costs … Dr. David Blumenthal, the president of the Commonwealth Fund, a foundation that funds health care research, said a government plan that attracted people with expensive conditions could prove costly.  “You might, as a taxpayer, become concerned that they would be more like high-risk pools,” he said.

These growing concerns about the public option resemble those surrounding Medicare for all, as The New York Times reports that experts are 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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