It’s a drop in the bucket as all 50 states apply for $50B in rural health funding

Close to one in five people in America live in rural communities.  These people tend to be older, less economically stable, and in worse health than their urban counterparts, with significantly constricted access to emergency services, primary care, and specialty care – a situation that is only getting worse over time.   

Rural residents are also notably more likely to depend on Medicaid coverage for their healthcare needs, with approximately 16% of rural residents receiving Medicaid benefits, including nearly 40% of children receiving Medicaid or CHIP.  

It’s not a big surprise, therefore, that rural health policy experts have been wildly ringing the alarm bells in the wake of the One Big Beautiful Bill, which gutted Medicaid to the tune of $911 billion over the next ten years.  

The impact on rural regions is expected to be profound. The Kaiser Family Foundation (KFF) estimates that about $137 billion of those cuts will directly affect rural areas, which are already struggling to keep basic services available with reimbursements shrinking and the few hospitals that haven’t closed yet likely to be running negative margins. 

Enter the Rural Health Transformation Program (RHTP).   

Hailed by the Trump Administration as an “unprecedented investment” designed to empower states to transformation their rural health infrastructure, the program makes $50 billion available over the next 5 years to support activities such as expanding access to preventive care, adopting patient engagement technologies, bolstering clinical and cybersecurity infrastructure, and investing in workforce retention. 

Half of the money will be distributed equally to all approved applicants, while the other half will be allocated based on specific applications that show the greatest potential for success.  

Last week, CMS announced that all 50 states have applied for funding (Washington, DC and US territories were not eligible), positioning the universal interest in the program as something that “shows the true character of our nation,” according to HHS Secretary Robert F. Kennedy, Jr. 

He might be right, but not in exactly the way he intended. 

That’s because the math doesn’t add up. $50 billion is a lot of money, but not in the face of $137 billion in anticipated losses specifically to rural communities.  There’s at least an $87 billion deficit to consider here, which could be substantially higher if other cuts around the ACA marketplaces, including the possible end of the ACA premium tax credits, are taken into account, KFF points out. 

In some states, the imbalance in the funds given with one hand and taken away with the other is likely to be extreme, since the One Big Beautiful Bill included several cost-cutting provisions specifically targeted at Medicaid expansion states, including enhanced work requirements, more frequent eligibility determinations, and additional cost sharing requirements. 

Kentucky, for example, is expected to take the hardest hit – down $11 billion over the next ten years – since it’s a Medicaid expansion state with a large rural population.  

At maximum, assuming all 50 states have their applications approved, Kentucky will only receive $1 billion from the Rural Health Transformation fund, leaving it short around $10 billion in rural health funding needs in the next ten years alone. 

Only a handful of states, including Florida, North Dakota, South Dakota Nevada, and Wyoming, have a chance of being in the black, leaving tens of millions of people in other states on the wrong side of the equation. 

So while it’s certainly notable that all 50 states have agreed on the need to participate in this funding opportunity, it’s not exactly the feel-good story that the Trump Administration is making it out to be. It’s more of a desperate grab for any lifeline available as the storm gathers on the horizon, even if it’s not likely to make enough of a difference in the long run to truly support a rural healthcare system already on the verge of collapse. 

CMS is currently considering the submitted applications, and will announce approved awardees by December 31, 2025. The funding will start making its way to states in Fiscal Year 2026 and will continue to be disbursed incrementally over the next five years. 

Jennifer Bresnick is a journalist and freelance content creator with a decade of experience in the health IT industry.  Her work has focused on leveraging innovative technology tools to create value, improve health equity, and achieve the promises of the learning health system.  She can be reached at [email protected].