WASHINGTON, D.C. – Tucked inside the One Big Beautiful Bill Act, is new funding for rural healthcare. It’s called the Rural Health Transformation Program. It’s a 50-billion-dollar one time funding program aimed at improving healthcare access in rural communities, but will it move the needle on transforming health care? Health policy experts are concerned with the estimated Medicaid cuts from the OBBBA, this funding might not be enough.
Half of that money will be distributed equally among all 50 states. The Centers for Medicare and Medicaid Services will have broad discretion over distributing the remaining 25-billion after states apply for it.
“This program’s major focus is to deal with the folks who are most vulnerable in rural America,” said Dr. Mehmet Oz, CMS Administrator. “Because for them, having insurance isn’t the big challenge. Usually, it’s getting access to care.”
Experts estimate the OBBBA will reduce federal Medicaid spending in rural areas by 155-billion in the next ten years. The reduction will not only have an impact on Medicaid beneficiaries, but these changes could negatively impact rural hospitals and rural health care consumers.
“For years, rural healthcare has been underpaid, underfunded, under resourced and they’ve been doing a fantastic job with not a lot,” said Carrie Cochran- McClain, chief policy officer for the National Rural Health Association. “Rural areas are disproportionally reliant on Medicaid for coverage of their individuals and payers for their facilities. So the context of the transformation fund was to support kind of those providers long term as we are making changes to Medicaid elsewhere. I think what we’re seeing actually play out in both the language that was passed in congress but definitely the interpretation from the administration has left a direct offset for the direct cuts anticipated due to the One Big Beautiful Bill Act and more of an infusion of resources into rural communities for much needed change. So, it’s an important investment to do innovation, infrastructure development and of course investments, but there is concern that the 50-billion won’t be enough to offset what the anticipated losses to payments in rural communities.”
Timothy McBride, a Bernard Becker Professor with Washington University in St. Louis School of Public Health, said the funds will help but they need to be put into context of other things going on with the OBBBA.
“You already had a rural health system that was challenged and then you put in 150-billion on top of that system, that’s going to make those challenges even more acute,” said McBride. “I’ve already started to see some hospitals and clinics close in the United States and the thing with the big bill is it’s expected to lead to many people dropping Medicaid coverage. Overtime they are not able to access their Medicaid coverage and just to put this in context, there are many rural hospital systems that rely more on 50 percent [of Medicaid repayments]. “I’ve seen numbers as much as 60 to 70 percent rely on some Medicare and Medicaid so if you cut that piece of Medicaid where the dollars come from – health systems have to use what we call ‘uncompensated care’ and if people become uninsured they have to come up with the dollars anyways. They will try to get it from the customers but basically most of that is never collected or it causes a lot of struggle for rural people who have medical debt.”
Another big concern is that this fund is just a one-time deal. Dr. Mehmet Oz, the CMS Administrator, hopes this program will train enough people and create enough systems that are independent of CMS’ presence in the marketplace that will make rural hospitals viable, healthy and thriving.
This new program does not apply to US territories.
