The Trump administration on Monday formally launched a sweeping new federal effort aimed at stabilizing and reshaping healthcare in rural America, announcing the rollout of a $50 billion Rural Health Transformation Program that will begin distributing money to states next year.
The initiative was created under the One Big Beautiful Bill Act and represents one of the largest one-time investments in rural healthcare in U.S. history. All 50 states applied for funding, according to the Centers for Medicare and Medicaid Services (CMS), and every state will receive an allocation. Average awards are expected to be about $200 million per state, with individual totals ranging from roughly $145 million to $281 million annually over the program’s five-year span.
Mehmet Oz, administrator for CMS, said during a briefing that applications underwent an intensive review process focused on three core criteria. “Over the last roughly six weeks, there’s been an intense review of these applications, and it was based on three major criteria,” Oz said.
Half of the $50 billion fund will be distributed evenly among states, ensuring a baseline level of support regardless of size. The remaining half will be distributed using a weighted formula. According to Oz, 50 percent of that portion is based on how rural a state is, 20 percent reflects state healthcare policies, and 30 percent is tied to the quality and ambition of each state’s proposed reform plan.
Unlike traditional federal grants, the program includes enforcement mechanisms intended to ensure states follow through on policy commitments. Oz emphasized that funding is tied to performance and compliance. “If the state says they’re going to do these things as part of their policy, and they don’t do that, then we do have the ability to claw back the financial commitment that would have accompanied those state policy actions,” he said.
Administration officials describe the initiative as a direct response to years of mounting strain on rural healthcare systems, where hospital closures, staffing shortages, and long travel distances have become increasingly common. Health and Human Services Secretary Robert F. Kennedy Jr. framed the program as a shift away from federal micromanagement and toward local decision-making. “This historic investment puts local hospitals, clinics, and health workers in control of their communities’ healthcare. Thanks to President Trump’s leadership, rural Americans will now have affordable healthcare close to home, free from bureaucratic obstacles,” Kennedy said in a statement.
Still, the program has drawn sharp criticism from healthcare advocates and policy analysts who argue it does not compensate for broader cuts included in the same legislation. The One Big Beautiful Bill Act reduced Medicaid spending by an estimated $1 trillion, a change critics say will disproportionately affect rural communities that rely heavily on public insurance.
The health policy nonprofit KFF estimates that Medicaid spending in rural areas could fall by $137 billion in the coming years. According to the National Rural Health Association, roughly 20 percent of adults and 40 percent of children in rural America depend on Medicaid or the Children’s Health Insurance Program for coverage. Critics warn that temporary grants, even large ones, may not replace the stability of long-term Medicaid funding.
Supporters counter that the Rural Health Transformation Program gives states flexibility to innovate and tailor solutions to their specific needs, rather than relying on rigid federal formulas. As states prepare to receive their first payments in 2026, the program is widely viewed as a test case for whether performance-based funding can sustain rural healthcare systems amid major changes to federal health spending.
Texas is set to receive the largest allocation in the program’s first year. CMS data show the state will receive more than $281.3 million in 2026—about $81 million more than it requested. Alaska will receive the second-largest share at $272.7 million per year.
Despite the headline figure, Texas’ funding looks smaller when measured against its size and needs. Because half of the program’s money is divided evenly among states, Texas—home to the largest rural population in the country—will receive about $60 per resident in a rural county, the lowest per-capita rate nationwide.
The funding arrives as rural healthcare in Texas faces acute pressure. High uninsured rates, rising costs, and workforce shortages have pushed many facilities to the brink. According to the National Institutes of Health, 76 Texas counties have uninsured rates above 20 percent, most of them rural. The NIH has also found higher rates of death from cancer, heart disease, respiratory illness, and unintentional injury in rural Texas than statewide averages, with health outcomes continuing to worsen.
Gov. Greg Abbott welcomed the funding, saying in a statement, “Rural Texans across the state will benefit from this historic federal investment. We will strengthen our rural hospitals, expand access to critical mental and physical health care, and help reduce chronic disease through wellness and nutrition initiatives.”
Texas health officials say the money will be used to bolster rural clinics, expand wellness and nutrition programs, modernize technology, and recruit healthcare workers, with plans to add more than 1,000 rural healthcare positions.
For some hospitals, the funds could mean survival. Fourteen rural hospitals in Texas closed over the past decade, and more than half of those remaining are considered at risk. Many have already eliminated labor and delivery services, leaving large areas without nearby maternity care. Whether the new federal program can reverse those trends remains an open—and closely watched—question.
.png)
