Congress allotted $50 billion to support rural hospitals over the next 5 years; many advocates say it won't be enough

Rural hospital often care for sicker patients with lower
incomes. (Photo by J.B. Morris, Unsplash)

The newly approved federal budget includes a $50 billion purse to help rural hospitals address current and future needs; however, many experts warn that the money, which will be managed through the Rural Health Transformation Program, may not be enough to cover foreseeable Medicaid and budgetary reductions. 

The plan "calls for federal regulators to hand states $10 billion a year for 5 years starting in fiscal year 2026," reports Sarah Jane Tribble of KFF Health News. "But health advocates and researchers doubt it will be enough to offset expected cuts in federal funding."

Meanwhile, many rural hospitals require additional financial support now and are likely to face shortfalls when federal cuts begin to take effect. "Nearly 1 in 4 people in rural America use Medicaid, the state and federal program for low-income and disabled people," Tribble explains. "People who live in the nation's rural expanses have more chronic diseases, die younger, and make less money." 

Out of the $10 billion allotted each year, "half of the money will be 'distributed equally' among states that apply to and win approval from the Centers for Medicare & Medicaid Services," Tribble explains. "States are required to submit a 'detailed rural health transformation plan' by the end of this year, according to the law."

The current CMS administrator, Dr. Mehmet Oz, "will determine how to distribute the other half, or $25 billion, using a formula based on states’ rural population and need," Tribble writes. The law says funds should be used by states and the CMS administrator "for such things as increasing use of robotics, upgrading cybersecurity, and helping rural communities to right-size their health care delivery systems.'"

While the plan is intended to fill funding gaps in rural health care, stakeholders are unclear about who creates state proposals and what measurements are required after funding is received. Sarah Hohman, the director of government affairs at the National Association of Rural Health Clinics, told Tribble, "There’s just some confusion about who actually gets this money at the end of the day. . . and what it is actually going to be used for?"

As health advocates review the program, some believe that politics, rather than the health of rural constituents, will drive how the $50 billion fund is spent. Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank headquartered in Washington, D.C., told Tribble, "As long as it’s a government slush fund where politics decides where the money goes, then there’s going to be a mismatch between where those funds go and what it is consumers need."