Adam Searing, a health researcher at Georgetown University, grew up dividing his time between these communities if you drive far enough east across North Carolina, past the towns where the main street hardware store closed ten years ago and no one replaced it, and past the point where the interstate gives way to two-lane roads lined with pine and scrub oak. Locals refer to it as “down east.” There, the accent is so old that it can be traced back to Elizabethan English. The health problems—too few hospitals, too few doctors, and too far away from everything—are also ancient. More people are covered by Medicaid per capita here than practically anywhere else in the state. That’s precisely why the events that took place in Washington last July were so shocking.
President Trump signed the One Big Beautiful Bill Act into law on July 4, 2025. A 15% cut to Medicaid spending, or about $1 trillion over the following ten years, was one of its numerous provisions, according to KFF. The implications are real for rural America, which depends more on Medicaid than urban areas. Between 2017 and 2024, sixty-two rural hospitals closed. Currently, one in three of those who are still alive are in danger. In the last ten years, 257 communities have lost access to obstetric care as a quarter of all rural hospitals have ceased to deliver babies. Prior to the cuts, the system was brittle. It is now being asked to absorb a much bigger object than it is capable of carrying.
| Category | Details |
|---|---|
| Legislation | H.R. 1 — One Big Beautiful Bill Act, signed into law July 4, 2025 by President Donald Trump; includes Medicaid restructuring and creation of the Rural Health Transformation Program (RHTP) |
| Rural population affected | Approximately 60 million Americans — 20% of the U.S. population — live in rural communities; over 16 million rural Medicaid beneficiaries directly impacted by provider tax changes |
| Medicaid cuts (rural impact) | Estimated $155 billion reduction in federal Medicaid spending in rural areas over 10 years; KFF analysis puts rural-specific cuts at $137 billion; the RHTP offsets only ~37% of those cuts |
| Rural Health Transformation Program | $50 billion total; $10 billion per year from FY2026–FY2030; half distributed equally to all states with approved applications; half allocated by CMS based on rural population and need |
| Key funding restriction | Provider payments — including to rural hospitals — capped at 15% of total awarded funds per state; undermines the fund’s stated purpose of shoring up rural hospitals |
| Hospital closures (2017–2024) | 62 rural hospitals closed in the U.S. between 2017 and 2024; one in three remaining rural hospitals currently at risk of closure |
| Obstetric service loss | Between 2012 and 2022, approximately one quarter of all rural hospitals stopped providing obstetric services — affecting maternal care access in 267 communities |
| EMS response gap | Rural EMS response times are nearly double those in urban areas; some patients wait up to four hours for transport; in some communities, five EMS personnel cover 70% of all shifts |
| Expert voice | Kimberly MacPherson, Health Policy & Management lecturer at UC Berkeley School of Public Health; co-director, Berkeley Center for Health Technology; warns that $50B is “insufficient to close the gap” created by Medicaid cuts |
| Workforce threat | Proposed $100,000 H-1B visa fee would make recruiting foreign-trained doctors to rural hospitals significantly harder; Iowa, West Virginia, and North Dakota have the highest share of foreign-trained physicians in the U.S. |
| Nebraska workforce model | BHECN (Behavioral Health Education Center of Nebraska), operating since 2009, produced a 44% increase in Nebraska’s behavioral health workforce; Nevada and Illinois have replicated the model |
| Fund duration vs. cuts duration | RHTP funding is temporary — five years only; Medicaid cuts under H.R. 1 are permanent — a structural mismatch that analysts say makes long-term rural health planning nearly impossible |
By including a $50 billion Rural Health Transformation Program in the same bill, Congress at least partially acknowledged this issue. Some lawmakers are arguing that the fund, which will be allocated at a rate of $10 billion annually from 2026 to 2030, will significantly mitigate the harm caused by the Medicaid cuts. A more balanced perspective comes from the Bipartisan Policy Center, which has worked closely with state legislators from both parties and leaders of rural hospitals for years. Simply put, the optimism is not supported by the math. According to KFF’s analysis of the Congressional Budget Office scoring, over the course of the decade, the rural fund could offset about 37 cents of every dollar cut from rural Medicaid spending. The remainder, which is estimated to be around $100 billion, vanishes. forever. It is a short-term fund. The cuts aren’t.
Observing this development gives the impression that the fund was created at least as much to counteract political criticism as to address the underlying issue. The $50 billion is “highly inadequate” to replace what is being taken away, according to Georgetown’s Center for Children and Families. Furthermore, defending the situation is made more difficult rather than easier by the specifics of how the money can be used. The CMS funding instructions contain a restriction that limits payments to rural hospitals, which are the organizations most obviously at risk, to only 15% of what a state receives. Congressmen who referred to the RHTP as a “rural hospital fund” seem to have greatly exaggerated the policy’s objectives.
The requirements of the application process, in addition to the funding calculations, have drawn criticism that goes far beyond the typical partisan boundaries. States are more likely to be approved if their legislatures enact specific laws, such as prohibiting the purchase of food stamps for items that are considered to be inadequately nutritious and permitting short-term health insurance plans that do not cover mental health services, maternity care, or prescription drugs. Critics have questioned how much of this program is actually about improving care in small-town America and how much of it is leveraging rural need to advance a broader agenda because these are longstanding conservative policy priorities that were included in a rural health funding application.
This does not imply that the fund is worthless. According to the Bipartisan Policy Center, states could use the funds in genuinely beneficial ways, such as bolstering emergency services in rural areas where EMS response times are already almost twice as long as in urban areas, training behavioral health professionals in states that have demonstrated their ability to do so, and developing telehealth infrastructure for patients who currently travel an hour or more to see a doctor.
Since its implementation in 2009, Nebraska’s behavioral health workforce model has increased the number of providers in the state by 44%. That type of focused investment is effective. While the larger Medicaid floor falls beneath people’s feet, the question is whether five years of partial funding, administered under politically charged conditions, can replicate those results at scale.
According to Kimberly MacPherson of UC Berkeley’s School of Public Health, rural communities already struggle with a lack of workers, higher rates of chronic illness, and hospital systems that are on the verge of collapse. All of those pressures are made worse at the same time by the Medicaid cuts. The workforce crisis could get worse due to a proposed $100,000 supplemental fee on H-1B visas, which are used by many rural hospitals to hire doctors with foreign training. States like Iowa, West Virginia, and North Dakota, where the majority of rural jobs are filled by physicians with foreign training, are already advocating for an exemption. Whether they will receive one is still up in the air.
It’s difficult to ignore the pattern. Throughout both parties’ administrations, rural America is frequently asked to accomplish more with less. The issues are old, genuine, and well-documented. There has never been enough political will to deal with them on the scale that they truly need. The most recent effort is the Rural Health Transformation Program, which could have some real short-term benefits. However, it is a disservice to the sixty million Americans who rely on it to be a solution when the data shows otherwise.
