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Home / News / Health Care and Medicine

52 rural Iowa hospitals at risk of closing under public option, analysis shows

Michaela RammBy: Michaela Ramm Sep. 3, 2019 7:00 am Updated: Sep. 2, 2019 8:47 pm
52 rural Iowa hospitals at risk of closing under public option, analysis shows52 rural Iowa hospitals at risk of closing under public option, analysis shows

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.

Iowa's rural health care facilities long have faced challenges due to Medicare reimbursement rates. But the analysis said those hospitals could be confronted with an even bigger detriment if a public option is implemented using Medicare reimbursement rates.

While the analysis is concerning, one Iowa hospital official said the study merely lays out what the state already is experiencing and projects that impact for the rest of the country.

'I think Iowa currently is a test case for what this study says,' said Kirk Norris, president and chief executive officer of the Iowa Hospital Association.

Chicago-based data company Navigant released an analysis this past month that studies the impact of a public option, a proposal to create a government-run insurance plan to compete with private insurance companies. It's also a pitch that's become common — in various iterations — among Democratic candidates running for president.

The study was funded by an industry coalition that has been running ads against Medicare-for-all and other public option proposals pushed by Democratic candidates. Called the Partnership for America's Health Care Future, the ad hoc alliance is made up of pharmaceutical, insurance and hospital lobbyists working to curb support for expanding Medicare.

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.

Rural hospitals in the study include critical access hospitals and short-term acute care rural hospitals.

Researchers with Navigant studied the impact of public option on the nation's smaller hospitals under three scenarios:

• Scenario 1 — 85 percent of individually covered plans from the commercial exchange are moved to public option.

• Scenario 2 — In addition to 85 percent of individual plan holders, 25 percent of individuals with employer-based plans also shift to public option.

• Scenario 3 — 85 percent of individual plans and 50 percent of employer-based plans move to public option.

Under the first scenario, Iowa's rural hospitals could experience a loss of $77.7 million, putting 25 hospitals at high risk for closure, according to the analysis.

In scenario 2, rural hospitals in Iowa would experience a $276.9 million loss, putting 51 of 90 hospitals at high risk for closure.

Fifty-two rural hospitals would be at high risk for closure as a result of a $476.1 million revenue loss in the third scenario.

The total revenue loss for the 1,898 rural hospitals in the United States is projected at:

• Scenario 1 — $4.2 billion

• Scenario 2 — $14.9 billion

• Scenario 3 — $25.6 billion.

In the analysis' findings, Iowa is among the states with the highest number of high-risk hospitals nationwide in all three scenarios. In fact, in scenarios 2 and 3, Iowa had the second-highest number of closures nationwide, behind Kansas.

Michaela Ramm

Michaela Ramm

Reporter, The Gazette

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