Public Option and Capped Provider Payment Rate Proposals That Exempt Rural Areas

Brief

Public Option and Capped Provider Payment Rate Proposals That Exempt Rural Areas

Abstract

In this paper we consider options for a public option that would be apply only in urban markets, exempting rural markets. The concern is that providers in rural areas are often under considerable financial stress. Exempting rural areas would achieve much of the effect of applying the policy in all markets but protect rural providers from payment reductions. Moreover, more federal dollars will flow to rural areas if they are exempted from the reforms. While rural providers are better off, more rural residents would be uninsured and household and employer spending would generally be higher. 

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