Rural health funding of $10 billion will go to all 50 states for the second year of the federal Rural Health Transformation Program, the Centers for Medicare and Medicaid Services said on Monday. The rural health funding awards cover fiscal year 2027 and are part of a $50 billion investment over five years meant to improve access to care and health outcomes for rural Americans. Texas received the largest award, nearly $282 million, while New Jersey received the smallest, about $142 million. The money arrives as rural hospitals prepare for far larger cuts to federal Medicaid spending.
Rural health funding is split two ways. Each state receives $100 million in equal baseline funding each year. The other half of the annual $10 billion is divided using factors that include rural population and facility characteristics, state policy actions and progress on implementation. For year two, the agency reviewed states’ annual progress reports and weighed policies such as adoption of the Presidential Fitness Test and nutrition focused continuing medical education for doctors. The Trump administration also rewarded some states and penalised others based on their 2025 record on its Make America Healthy Again priorities, Politico reported.
Rural health funding and the Medicaid cuts behind it
Rural health funding is dwarfed by the Medicaid cuts in the same law that created it. The Rural Health Transformation Program was created by the One Big Beautiful Bill Act, passed by Congress in 2025, which is expected to cut more than $900 billion in Medicaid funding for health care providers over the next decade. KFF estimates the $50 billion fund offsets only about 37 percent of projected federal Medicaid cuts to rural areas, and most of those cuts take effect after the program ends in 2030. One rural health advocate said the funding “in no way offsets or makes up for the nearly $1 trillion in projected federal healthcare spending cuts over 10 years under HR 1.”
The rural health funding awards came days after the agency missed its 31 October deadline to notify states of their 2027 allocations. Officials told states in an email on 30 October that they had found an additional administrative process requirement. State budget revisions tied to the new allocations are due to the agency by 30 November. The second year awards bring the total paid out through the program to $20 billion. All funds must be spent by 30 September 2032, or returned to the United States Treasury.
Rural health funding reaches hospitals still waiting
Rural health funding is reaching hospitals that are still waiting on first year money. Several rural hospital leaders told Becker’s Hospital Review in late October that state approved projects have yet to be paid. The program’s first year awards, announced on 29 December 2025, ranged from about $147 million for New Jersey to $281 million for Texas. States had to obligate their first year money by 30 October and must spend it by 30 September 2027. Payments made directly to providers are capped at 15 percent of a state’s award.
The administration presented the rural health funding program as a historic investment. “Rural Americans have life expectancies three years shorter than their urban peers, but President Trump’s Rural Health Transformation Program is funding the historic investments necessary to close that gap,” CMS Administrator Mehmet Oz said in the 9 November news release. Health and Human Services Secretary Robert F. Kennedy Jr. announced the awards with the agency. The program is meant to strengthen the rural health care workforce and improve access to care in rural communities.
Rural health funding will keep flowing through fiscal year 2030, with new allocations each year and a requirement that states show measurable progress to keep receiving money. The agency can reduce or withhold future funding if a state does not make satisfactory progress. For now, the $10 billion gives every state at least $100 million to work with, and the states with the largest rural populations get more. Whether that is enough to hold rural hospitals steady while Medicaid cuts take hold is the question the program will be judged on.