Medicare public option could put 55% of rural hospitals at high risk of closure, analysis finds

A Medicare public option, meaning adding a government-sponsored health insurance option into the marketplace, could have a significant effect on rural hospital closures across the country, according to a new analysis.

The Navigant Consulting analysis, supported by the Partnership for America's Healthcare Future, found that 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 applying to uninsured people and existing individual ACA market participants could put 28 percent of rural hospitals at high risk of closure.
  • 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.

Navigant's complete findings are available here.


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