August 8, 2019 | Updates

Public Option Could “Could Decimate Rural Hospitals’ Finances”

WASHINGTON – new study from the Partnership for America’s Health Care Future and Navigant Consulting, Inc. “warns adding a government-run insurance plan could decimate rural hospitals’ finances,” POLITICO reports this morning.

“That argument centers on the conclusion that millions of enrollees would move off their commercial plans and into a public plan that pays hospitals at Medicare rates that are typically lower than private insurance — cutting rural hospitals’ revenues between $4.2 billion and $25.6 billion … ”

The study finds that as a result, “55 percent of rural hospitals could be at high risk of closing,” The Washington Post reports.

Yesterday, the Partnership for America’s Health Care Future hosted a press conference call to offer a closer look at the study’s findings and discuss the consequences the proposal could have on rural patients and communities.

During the call, the Partnership’s Lauren Crawford Shaver explained how this study demonstrates that, despite efforts to cast the public option “as a much more moderate alternative to ‘Medicare for all,’ the truth is the public option would be also damaging, potentially putting the health and well-being of our rural communities at risk.”  Highlighting the study’s key findings, Shaver noted:

“… [U]nder a public option our nation’s already struggling rural hospitals could face severe cuts with over half at 55 percent or 1,037 of U.S. rural hospitals across 46 states at a high risk of closure.  These hospitals represent over 63,000 staffed beds and over 420,000 employees across rural communities throughout the country.  Even rural communities whose hospitals are not at high risk of closure could face diminished quality of access to care.  The study finds that 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 which these hospitals serve.”

Shaver was joined by Jeff Leibach, director of Navigant Consulting, Inc. and one of the authors of the study, who stressed that, “rural hospitals are essential to the health and economic well-being of communities across the U.S., and often represent these communities’ largest employer.”  Leibach added:

“The implications for rural hospitals and their communities could be very significant if these proposals were to go forward and these hospitals were not to be kept whole through higher reimbursement rates.  In this analysis, we also conducted a sensitivity test to see how high rates would need to go to keep these hospitals whole in the event of them shifting from commercial-based insurance to a public option.  And in our analysis, we found that between 40 percent and 50 percent increase above Medicare rates would be necessary to keep these hospitals whole.  In the event that they are not kept whole, given their thin margins, and already trends around closures, we would expect additional hospitals facing financial difficulties to close or significantly reduce their services, affecting the availability and access of health care in their communities.”

  • To read Navigant’s complete findings, including state-by-state breakdowns, CLICK HERE.
  • For additional information, CLICK HERE.


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