A new study shows that a multi-billion federal initiative to fund rural healthcare systems won’t be distributed equally to places most in need.
The funds will be distributed to states this year by the U.S. Centers for Medicare and Medicaid Services (CMS) through Rural Health Transformation Program, a 5-year, $50-billion-dollar federal initiative intended to, according to the CMS website, “strengthen rural communities across America by improving healthcare access, quality, and outcomes.”
The U.S. Senate added The Rural Health Transformation Program at the last minute to Congress’ 2025 budget reconciliation bill in response to concerns that proposed Medicaid funding cuts would severely impact rural health systems.
In its first year, the $10 billion fund provides $100 million to each state as a baseline, plus additional funding which varies from state to state based on rural and proposal-based scoring systems.
But researchers in Pennsylvania analyzed the fund’s disbursements and found the program is not directing the most help to the rural places with the worst health and greatest needs. Looking at 2026 funding allocations, they found that the worse a state ranked in a variety of measures of health, the less funding the state was slated to receive per rural resident.
The researchers looked at state mortality rates — rates at which residents die, adjusted for age — and changes in rural hospital beds and physicians, as well as projected decreases in federal spending on Medicaid, an insurance subsidy program for low-income people and other high-need populations like children and pregnant women.
Dr. Paula Chatterjee, one of the authors of the study, said her team wanted to know if the program’s funding was going to reach rural communities that could most benefit from it.
“You want to know whether this huge investment is going to reach rural communities that might be suffering from some of the largest health challenges,” Chatterjee said.
Chatterjee is a clinician and health policy researcher in Philadelphia whose research focuses on what she calls the “healthcare safety net,” the delivery of care to low-income people.
Rural Americans face myriad health and funding challenges. Rural residents die younger and are more likely to die of natural causes than their urban counterparts. Rural communities are losing their hospitals and health services. The Cecil G. Sheps Center for Health Services Research at the University of North Carolina Chapel Hill has tracked 195 rural hospitals that have closed or stopped providing in-patient services since 2005.
“As a clinician, I often think that mortality rates are a good marker of overall health status,” Chatterjee said, arguing funding should be focused in “places where there are high mortality rates, where there might be greater gaps in access to care.”
KFF Health News previously reported an enormous variation in how much money each state will get per rural resident. The study conducted by Chatterjee and her colleagues estimates that baseline per-rural-resident funding ranges from $23 to over $4,300, and variable funding from $35 to almost $2,300.
KFF estimated the bill, referred to by President Donald Trump as the “One Big Beautiful Bill,” would reduce federal Medicaid spending by over $900 billion over the next decade, and that the $50 billion in the Rural Health Transformation Program accounts for just over a third of what rural areas are estimated to lose in federal Medicaid funding.
Rural residents rely more on federal assistance for their health insurance than their urban counterparts, which means rural hospital systems also rely more heavily on Medicaid reimbursements, making them uniquely vulnerable to funding cuts. The Sheps Center estimated that 338 rural hospitals across the country are at risk of closure following the Medicaid cuts. Health experts agree the Rural Health Transformation Program won’t help rural hospitals stay open.
The study conducted by Chatterjee and her colleagues shows no correlation between RHTP funds and metrics Chatterjee said “are important to ensuring viable rural health systems.”
“The great worry is that we have these RHTP funds, but are they actually going to get to supporting the things and the people and the programs that you want it to support?” Chatterjee said. “We’re hopeful that perhaps we can open up some opportunities to consider how the funds might be targeted differently.”
2027 funding levels will be announced in October.
The post At-Risk Communities Shortchanged by Rural Health Transformation Program, Research Shows appeared first on The Daily Yonder.
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