At a Glance
- $10B will be shared among states for rural health next year.
- The five-year fund totals $50B, with an average 2026 award of $200M.
- Half the money is equally split; the other half is awarded based on a formula that rewards states adopting Trump-era health policies.
- Why it matters: Rural hospitals may receive crucial aid, but the program links funding to political policy choices.
Rural hospitals across the country are set to receive a new infusion of federal money, but the distribution is far from uniform. A program announced Monday will split $10B among all states, with the total five-year commitment reaching $50B. The average award for 2026 is $200M, yet states that adopt specific health policies could earn a larger share.
Funding Structure and Allocation
The initiative, part of One Big Beautiful Bill signed six months ago, aims to encourage states to be creative with their spending. Dr. Mehmet Oz, the agency administrator, explained that the program splits the money evenly between two methods:
- Half of the funds are distributed equally to every state.
- The remaining half is allocated through a CMS-developed formula that considers rural population size, the financial health of a state’s medical facilities, and health outcomes.
In addition, $12B of the five-year funding is tied to whether states implement policies highlighted in the Trump administration’s Make America Healthy Again initiative. Examples include:
- Requiring nutrition education for health care providers.
- Mandating school participation in the Presidential Fitness Test.
- Banning the use of SNAP benefits for junk foods.
Policy Ties and Potential Clawbacks
Several Republican-led states-Arkansas, Iowa, Louisiana, Nebraska, Oklahoma, and Texas-have already adopted rules that ban the purchase of candy and soda with SNAP benefits. The money that states receive will be recalculated annually, allowing the administration to “claw back” funds if leaders fail to pass the promised policies. Oz emphasized that these clawbacks are not punishments but leverage to push governors toward policy alignment.
Rep. Don Bacon of Nebraska, who voted for the budget bill that cut Medicaid, pointed to the fund when asked how the cuts would hurt rural hospitals. He said:
> “That’s why we added a $50B rural hospital fund, to help any hospital that’s struggling.”
Critics and Concerns
Carrie Cochran-McClain, chief policy officer with the National Rural Health Association, warned that Democratic-led states refusing to include SNAP restrictions could lose out on additional funding. “It’s not where their state leadership is,” she said.
Experts argue the fund will not offset the $137B loss rural hospitals could face over the next decade due to the federal spending law’s $1.2 trillion cut, primarily from Medicaid. An analysis by the Cecil G. Sheps Center for Health Services Research at UNC Chapel Hill estimates that as many as 300 rural hospitals were at risk of closure because of the GOP spending package.
| Distribution Method | Amount | Criteria |
|---|---|---|
| Equal share per state | 50% of $50B | N/A |
| Formula-based share | 50% of $50B | Rural population, facility health, outcomes, policy alignment |
Even though innovation is a stated goal, Cochran-McClain noted that hospitals struggling to break even before Medicaid cuts find it nearly impossible to innovate. “We talk to rural providers every day that say, ‘I would really love to do X, Y, Z, but I’m concerned about meeting payroll at the end of the month,'” she said.
Key Takeaways
- $10B will be shared for rural health next year, with the total program reaching $50B over five years.
- Distribution is split between equal allocation and a formula that rewards policy alignment with Trump-era initiatives.
- Critics warn the fund may not cover the projected $137B loss from Medicaid cuts and that hospitals may struggle to innovate under financial pressure.
The new rural health program promises much-needed money, but its tie to political policy and the looming impact of federal budget cuts mean that states and hospitals must navigate a complex landscape to secure and effectively use the funds.
