The Trump administration is rolling out a new Rural Health Transformation Fund amid criticism from Democrats about cuts to Medicaid and rural hospital funding — and continuing to deny that Trump’s signature tax cut package put hospitals at risk of closure.
The Rural Health Transformation Program was a last-minute addition to the reconciliation package after Democrats and Republicans expressed concerns about the effect of cuts to Medicaid. As those concerns persist, the Trump administration is now touting RHT as a key investment.
“Ten billion dollars is a lot of money,” Mehmet Oz, administrator for the Centers for Medicare & Medicaid Services, told reporters Monday. “This is a 50% increase in federal funding to cover what we would normally allocate through Medicaid. So this is a gargantuan commitment that came through this act.”
The $10 billion a year will be distributed to states between 2026 and 2030. According to Oz, the newly allocated funds increase the availability of funding for rural hospitals. The National Rural Health Association estimates that total cuts in Medicaid reimbursement for rural hospitals could total $70 billion.
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The reconciliation package made significant cuts to federal health spending to pay for an extension of the Trump tax cuts. As a result, the Congressional Budget Office estimates that the bill will result in a $911 billion reduction in federal Medicaid spending over the next 10 years.
Officials disputed that the legislation would put rural hospitals at risk. However, experts say the cut in federal Medicaid spending places a strain on state health care budgets, which in turn puts rural hospitals — many of which are already struggling — at risk of closure.
The cuts have become fodder for Democrats, who have increasingly used them in attacks on Republicans.
Oz said he expects all 50 states to submit applications for the Rural Health Transformation Fund, vying for a slice of the funds. Few specifics have been offered about how CMS will decide who gets funds and how much they will get.
“We believe we can use this as an opportunity to pivot from the crisis that we are currently living in to the comeback that America expects from us,” Oz said.
States have from Sept. 15 to Nov. 15 to submit applications. The Centers for Medicare & Medicaid Services will review applications and make award decisions by Dec. 31.
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