On December 29, 2025, the Facilities for Medicare & Medicaid Providers (CMS) introduced state allocations for the primary yr of the $50 billion Rural Well being Transformation Program (the “rural well being fund”), which will probably be administered by a brand new Workplace of Rural Well being Transformation. The Rural Well being Fund was created as a part of the July 2025 Price range Reconciliation Act, also called the One Massive Lovely Invoice, to assist offset the regulation’s impression on rural areas – which incorporates an estimated $911 billion in federal Medicaid spending over ten years, together with an estimated $137 billion in rural areas. All fifty states utilized for the Rural Well being Fund and each state obtained an award. CMS can pay out $10 billion every year from fiscal years 2026 by means of 2030, beginning this yr.

State awards for 2026, the primary of 5 years, common $200 million, starting from $147 million in New Jersey to $281 million in Texas (Exhibit 1). The variations in complete advantages amongst states within the first yr (and most probably in future years) are modest relative to the massive variations in rural populations and rural well being wants general. For instance, Texas has about thirty instances as many rural residents as New Jersey (4.3 million versus about 140,000), however solely receives about twice as a lot funding within the first yr ($281 million versus $147 million). The variations in complete advantages amongst states are comparatively modest, particularly since half of the agricultural well being fund (50%) is distributed equally among the many authorized states no matter want, as required by regulation. As a result of all states have been authorized for funding, every state will obtain $100 million from this half of the fund in 2026 and every year from 2027 by means of 2030.

Texas, Alaska and California obtain the most important prizes within the first yr. Whereas Texas and California have the most important and fourth largest rural populations within the nation, respectively, Alaska has the fifth smallest rural inhabitants. Alaska probably obtained a comparatively giant award, a minimum of partly, as a result of a part of the fund was distributed among the many 5 largest states based mostly on land space. New Jersey, Connecticut and Rhode Island obtain the smallest awards of their first yr. These are all states with comparatively small rural populations.

Determine 1

First yr costs per rural resident range extensively from nation to nation, starting from lower than $100 in ten states to greater than $500 in eight states in response to the KFF evaluation (see Determine 2). State awards are partially, however not intently, tied to rural populations, that means they’re first-year awards per rural resident are usually comparatively small amongst states with the most important rural populations. For instance, Texas has the most important rural inhabitants within the nation – and the most important complete first-year payout – however will obtain the smallest cost per rural resident ($66 in 2026). In distinction, states like Rhode Island, New Jersey, and Alaska, with far fewer rural residents, will obtain considerably larger quantities per rural resident ($6,305, $1,069, and $990, respectively, with Rhode Island being an excessive outlier). Solely 1 / 4 of the $50 billion fund is distributed based mostly solely on measures of state wants, whereas solely 5% of the fund is predicated on rural inhabitants. Different metrics CMS says are wanted embrace the variety of rural services, the land space, the share of hospitals receiving a disproportionate share of hospital funds (DSH) from Medicaid, and different components.

Whereas lawmakers created the fund partly to assist offset the impression of Reconciliation Act cuts on rural hospitals, CMS has made clear that the funding is meant to learn rural communities extra broadly by reworking well being care programs. Examples of state initiatives based mostly on the subset of state functions obtainable to the general public and summaries posted on CMS’s web site embrace initiatives associated to Make America Wholesome Once more (MAHA) (comparable to bettering entry to wholesome meals and stopping and managing persistent circumstances), increasing telehealth companies and distant affected person monitoring, rural workforce improvement packages, and supporting regional collaboration amongst suppliers.

CMS specifies that funds to hospitals and others for affected person care could not exceed 15% of complete funds, though suppliers may benefit in different methods, comparable to by means of investments in present buildings and infrastructure (restricted to twenty% of complete funds). It’s unclear how a lot of the cash will immediately or not directly profit rural hospitals and to what extent it’s going to offset hospitals’ losses underneath the reconciliation regulation. As well as, it isn’t but clear how a lot data will probably be obtainable to the general public to trace the circulate of funds from states to rural suppliers and different entities and to guage the effectiveness of state initiatives.