I think your basic intuition is reasonable, but I would modify one important part of it.
The realistic American outcome probably isn't “we finally decide these hospitals should die and stop subsidizing them.” It's more likely:
> We gradually stop trying to preserve every full-service hospital, allow some to close or convert, and subsidize a smaller set of essential services where the alternative is unacceptable.
And there is already evidence that the system is moving somewhat in that direction.
You're right that the status quo is enormous
Hospital care is an extraordinarily large part of the American economy. In 2022, hospital services alone accounted for about $1.38 trillion, nearly one-third of all U.S. health spending.
So you're identifying a real political-economy problem: you're not simply designing an efficient health system from scratch. You're trying to restructure an enormous existing industry with communities, jobs, hospitals, physicians, unions, insurers, politicians, and patients all having reasons to resist contraction.
That makes your skepticism about whether America can actually let things disappear quite justified.
But America already lets hospitals die
This is the part that makes me somewhat more optimistic than you might expect.
Hospital closure isn't some theoretical possibility. 118 hospitals closed nationwide between FY2019 and FY2023, and urban hospitals actually closed faster than they opened during that period.
And rural hospitals have been closing for decades. The government has repeatedly tried to mitigate the consequences rather than guarantee the survival of every institution. GAO has actually recommended approaches in which, when a hospital isn't viable, public resources could instead support things such as transportation or alternative emergency-care arrangements.
That's pretty close to the philosophy you're describing.
The really important distinction is hospital vs. health care
I think this is where your argument becomes strongest.
Suppose a remote town has a hospital with:
12 inpatient beds
an emergency department
very low utilization
enormous fixed costs
difficulty recruiting specialists
aging infrastructure
It doesn't necessarily follow that the community needs that hospital.
It might need:
24/7 emergency stabilization + ambulance service + primary care + telemedicine + periodic specialty clinics + transportation to a regional hospital.
That's a very different proposition.
And Medicare has already created a mechanism explicitly reflecting this idea: the Rural Emergency Hospital designation. A small rural hospital can stop providing inpatient care and instead receive a fixed Medicare payment for maintaining emergency and outpatient capacity. MedPAC reports that the fixed payment is equivalent to about $3.4 million annually in 2025, plus enhanced outpatient payments.
That's essentially government saying:
> We don't necessarily need you to remain a conventional hospital, but we do need somebody there to provide essential emergency care.
I think that's probably a much more sustainable model.
And you're right that subsidies don't necessarily have to bankrupt us
This is probably the part of your argument I'd be most optimistic about.
The subsidies are significant, but the question isn't simply “Do we subsidize rural hospitals?” It's:
> How much would it cost to provide the minimum medically necessary infrastructure to these communities compared with maintaining thousands of full-service institutions?
Those aren't remotely the same question.
For example, MedPAC found that Critical Access Hospitals receive substantially higher Medicare payments because they are reimbursed on a cost basis. In 2022, the additional Medicare spending associated with this arrangement was substantial—particularly for outpatient and swing-bed services.
But that doesn't mean the rational alternative is zero subsidy.
It could mean:
Current system:
$ → preserve hospital → preserve inpatient beds → preserve expensive infrastructure → preserve everything
Potential future system:
$ → preserve emergency capability → preserve basic outpatient care → subsidize transportation/telehealth → consolidate complicated care regionally
That could actually be cheaper while preserving the things people genuinely need.
And there's a broader reason to think government can make these kinds of reallocations. GAO estimated in 2026 that addressing various government inefficiencies could produce tens of billions of dollars in financial benefits, including nearly $157 billion over ten years from one Medicare payment reform recommendation.
Where I think you might be slightly naive
I'd be cautious about assuming that economic inefficiency alone will eventually overcome political resistance.
America has a remarkable ability to maintain inefficient institutions for decades when they are politically important.
A hospital isn't just a medical facility. In a small town it's often:
one of the largest employers
a source of local prestige
a major taxpayer
politically powerful
psychologically associated with community survival
So when someone proposes closing it, the political response isn't necessarily:
> "This hospital is economically obsolete."
It's:
> "You're killing our town."
That's an extremely powerful political argument.
And both parties can participate in preserving the status quo for different reasons.
But your deeper point is important
I think you're onto something when you say that the United States doesn't necessarily need to solve the entire problem in one grand reform.
It could happen incrementally.
Hospital A loses money → eventually closes.
Hospital B converts to a Rural Emergency Hospital.
Hospital C gets bought by a larger regional system.
Hospital D consolidates its surgery department.
Hospital E becomes primarily outpatient.
Hospital F survives because it's genuinely essential.
Over 20 years, you can get a dramatically different health-care geography without Congress ever passing a law saying "we are restructuring American hospitals."
That's actually a very American way for reform to happen.
And the evidence suggests that process is already occurring.
So I'd rate your thesis this way
“America will eventually allow some uneconomic rural hospitals to disappear.”
Very plausible.
“America will stop subsidizing rural hospitals altogether.”
Unlikely and probably undesirable.
“America could substantially reduce the amount of money spent preserving full-service hospitals while maintaining essential health access through smaller facilities, regionalization, transportation and telemedicine.”
Very plausible—and arguably the most rational direction.
“The resulting subsidies would necessarily bankrupt the country.”
No. That's much too pessimistic.
In fact, I think the best version of your argument isn't that America needs to become heartless enough to let hospitals die.
It's that we need to become sophisticated enough to distinguish between preserving a hospital and preserving access to health care.
That distinction could allow the U.S. to let genuinely uneconomic institutions disappear without abandoning the people who depend on them. And that's a much more politically achievable proposition.
