The Trump administration announced hundreds of millions of dollars in new healthcare grants for all 50 states on Monday as part of a program launched by President Donald Trump’s One Big Beautiful Bill Act over the summer.
The law allocated $50 billion for a new Rural Health Transformation program to partially offset nearly $140 billion in cuts to Medicaid’s rural health spending over the next 10 years. The new “transformation” grants, set to be awarded over the next five years, are not meant to help states and local municipalities “pay off bills” but instead to “right-size the system,” according to Centers for Medicare & Medicaid Services Administrator Mehmet Oz.
Oz and other senior Trump administration officials briefed reporters on the grant disbursements, which this year will range between $145 million and $281 million per state, ahead of the announcement.
Half of the yearly allotments for the program, $10 billion, will be evenly distributed, with all 50 states receiving at least $100 million. The remaining funds were allocated based on the administration’s scoring of the “rurality” of each state’s population, its existing rural health infrastructure, plus individual applications in which states outline recent policy changes and future initiatives to supplement rural health. The federal government began accepting applications from states for the grant monies in the fall.
Administration officials said that they will “re-score” each state before distributing program funds in subsequent years and will claw back funds if states fail to follow through on their proposed initiatives and policy reforms.
“This is a massive effort to change the unfortunate reality that has occurred to rural healthcare in America, which is that your zip code has started to predict your life expectancy,” Oz stated Monday. “The rural parts of this country have fallen tragically behind in many areas, and part of the reason for that, we believe, were that systems that had been designed 50, 60, 70 years ago to support healthcare in rural parts of the country are no longer functioning at the pace and at the efficiency that one would have expected.”
“We’re beginning to work together to come up with best practices, and as states try these new ideas, one of the views of a federal system is states will succeed, some states will fail, and we’ll learn from that,” he continued. “Then, states can adjust what they’re doing to take advantage of what they’re doing successfully and what other states are teaching them as well. That’s, I think, part of the power of this process.”
The One Big Beautiful Bill Act notably sets a 15% cap on the grant funds that states can directly apply to paying healthcare providers, which critics say will limit workforce recruitment potential for underserved “health deserts.”
But senior administration officials stressed that there are existing federal programs to “support the basic operations of rural healthcare.”
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“We don’t want you building buildings, because you could use up all the money building these big hospitals, but you’re not actually changing the way that we talk about healthcare in rural America,” one official said, noting that “to bring more practitioners in [to underserved communities] is not just a matter of more money.”
“The goal there is really to not manipulate the existing fee schedules,” a second administration official added, “because we don’t want there to be a funding cliff for this program after the five-year life cycle of the program.”
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