States jostle over $50 billion rural health fund as Trump's Medicaid cuts trigger scramble [View all]

Source: CBS News

October 16, 2025 / 5:00 AM EDT / KFF Health News


Washington — Nationwide, states are racing to win their share of a new $50 billion rural health fund. But helping rural hospitals, as originally envisioned, is quickly becoming a quaint idea. Rather, states should submit applications that "rebuild and reshape" how health care is delivered in rural communities, Centers for Medicare & Medicaid Services official Abe Sutton said late last month during a daylong meeting at D.C.'s Watergate Hotel.

Simply changing the way government pays hospitals has been tried and has failed, Sutton told the audience of more than 40 governors' office staffers and state health agency leaders — some from as far away as Hawaii. "This isn't a backfill of operating budgets," said Sutton, CMS' innovation director. "We've been really clear on that."

Rural hospitals and clinics nationwide face a looming financial catastrophe, with President Trump's massive tax-and-spending law expected to slash federal Medicaid spending on health care in rural areas by $137 billion over 10 years. Congressional Republicans added the one-time, five-year Rural Health Transformation Program as a last-minute sweetener to win the support of conservative holdouts who worried about the bill's financial fallout for rural hospitals.

Yet, the words used by CMS Administrator Mehmet Oz and his agency's leaders to describe the new pot of cash are generating tension between legacy hospital and clinic providers and new technology-focused companies stepping in to offer new ways to deliver health care. It's "what I would call incumbents versus insurgents in the rural space," said Kody Kinsley, a senior policy adviser at the Institute for Policy Solutions at the Johns Hopkins School of Nursing.

Read more: https://www.cbsnews.com/news/states-rural-health-fund-trump-medicaid-cuts/