At a Glance
- $10B will be allocated to rural health next year.
- The program will inject $50B over five years, averaging $200M per state in 2026.
- Funding is tied to Trump-era health policies and can be clawed back if states miss targets.
- Why it matters: Rural hospitals face major cuts; this program could help or hurt them depending on policy compliance.
A new federal program will allocate $10B in 2025 to support rural health care, but the money comes with strings that could see it pulled back if states fail to adopt certain Trump-era policies. States applied for the funds, but distribution will not be equal, and critics warn the program may penalize those who do not meet specific health policy criteria.
Program Overview
The Rural Health Transformation Program, part of the One Big Beautiful Bill signed six months ago, aims to offset the Trump administration’s massive budget cuts to rural hospitals. Dr. Mehmet Oz explained that the fund was designed to encourage states to be creative in spending.
- Distribution:
- 50 % of the money is distributed equally to each state.
- 50 % is allocated by a CMS formula that considers rural population size, the financial health of a state’s medical facilities, and health outcomes.
- Policy linkage:
- $12 B of the five-year funding is tied to implementation of policies from the Make America Healthy Again initiative, such as nutrition education for health care providers, school participation in the Presidential Fitness Test, and banning the use of SNAP benefits for junk foods.
Dr. Mehmet Oz stated:
> “This fund was crafted as part of the One Big Beautiful Bill, signed only six months ago now into law, in order to push states to be creative.”
Dr. Mehmet Oz added:
> “Claw backs are not punishments, but leverage governors can use to push policies by pointing to the potential loss of millions.”
Dr. Mehmet Oz further said:
> “I’ve already heard governors express that sentiment that this is not a threat, that this is actually an empowering element of the One Big Beautiful Bill.”
States Adopting SNAP Restrictions
- Arkansas
- Iowa
- Louisiana
- Nebraska
- Oklahoma
- Texas
Critics and Concerns
Carrie Cochran-McClain, chief policy officer with the National Rural Health Association, warned that Democratic-led states refuse to include such restrictions on SNAP benefits, even though it could hurt their chance for more money. She said:
> “It’s not where their state leadership is.”
She also noted:
> “When you put that up against the $50 billion for the Rural Health Transformation Fund, you know – that math does not add up.”
And she added:
> “I would argue, almost impossible to do true innovation.”
Rep. Don Bacon, a Republican from Nebraska, highlighted the fund as a 50 % increase in Medicaid investments in rural health care. He said:
> “That’s why we added a $50 billion rural hospital fund, to help any hospital that’s struggling.”
He continued:
> “This money is meant to keep hospitals afloat.”
Financial Context
The program’s $50B is dwarfed by the projected $137B loss rural hospitals face over the next decade due to the federal spending law’s $1.2T cut from the federal budget, primarily from Medicaid. Millions of people are expected to lose Medicaid benefits.
| Category | Amount |
|---|---|
| Rural hospital losses (next decade) | $137B |
| Rural Health Transformation Fund | $50B |
The math, as Cochran-McClain points out, does not add up.
Key Takeaways
- $10B is earmarked for rural health in 2025, but distribution is conditional on Trump-era policies.
- The $50B fund may be clawed back if states miss policy targets, creating uncertainty for rural hospitals.
- Critics argue the fund is insufficient to offset the projected $137B loss from Medicaid cuts and that innovation may be stifled.
The debate over this program highlights the tension between federal support and policy conditions that could ultimately determine the future of rural health care.
