Offering a government insurance program reimbursing at Medicare rates as a public option on the health insurance exchanges could place as many as 55% of rural hospitals, or 1,037 hospitals across 46 states, at high risk of closure, according to an analysis released today by Navigant Consulting Inc. The authors estimate that 28% of rural hospitals would be at high risk of closure if only uninsured and current individual market participants shifted to the public option, and that more than half of rural hospitals would face high risk of closure if employers shifted 25% to 55% of their covered workers from commercial coverage to the public option. “To keep hospitals whole from the financial consequences of any of these scenarios, Medicare would have to increase hospital payment levels for a public option between 40% and 60% above present Medicare rates, costing between $4 billion and $25 billion annually (depending on the severity of the employer shift),” they said.

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