There’s still much to decipher and unwrap from the passage of the One Big Beautiful Bill Act (OBBA) and it’s impact on health care. While Medicaid funding cuts, work eligibility and reduction in health insurance coverage took much of the attention; more details about the “slush fund” for rural health care are coming out.
We Have A Name
Know labeled as the administrative sounding Rural Health Transformation Program. The rural dollars were added in response to Congressional Budget Office estimates and a widespread understanding that OBBA would cut health care spending more than $1 trillion dollars.
Unfortunately, the OBBA health care cuts meant that roughly half of all births in rural areas covered by Medicaid and nearly one in four people in rural communities with Medicaid coverage would be seriously impacted. Cuts to funds could be especially problematic as 70% of critical access rural hospitals operate in the red.
Rural hospitals are in danger of closing as 74% of rural hospital closures happened in states where Medicaid expansion was not in place or had been in place for less than a year. Other care locations like free clinics and out patient facilities could bear the burden of caring for more uninsured Americans and those with limited access to rural health care options.
Access to Funds
While $50 billion seems like healthy sum, it looks like those funds will be appropriated across five years starting in 2026. States have until December 31 to apply for funds with a detailed rural health transformation plan and then the federal government will distribute $25 billion equally among states with approved applications over the next half decade.
According to PBS, the remaining $25 billion will be distributed by CMS. Other news articles say $10 billion will be distributed each year for five years, but there seems to be disagreement on the funding allocation specifics.
Early State Estimates
Some states are already estimating the impact of the program. Early estimates from New Mexico’s state Health Care Authority says they could receive $175 million annually and would help the state with the highest percentage of Medicaid enrollees in the country.
Other states like Kentucky are slated to take the biggest hit from OBBA and would greatly the rural health care fund; the state could lose $12 billion in Medicaid funds across the next decade.
What does it mean for health systems?
Dr. Oz said on CBS that applications will for funding will open in early September and the money is designed for “workforce development, right-sizing the system and using technology to provide things like telehealth that can change the world.”
According to the Bipartisan Policy Center, the program will specifically cover the following activities:
- Payments to health care providers
- Recruitment and workforce training
- Purchasing new technologies
- Supporting access to opioid use disorder treatment and mental health services
- Promoting evidence-based interventions to improve preventive care and chronic disease management
It’s unclear what the application will include, where and how it will be shared and how final decisions will be made.
