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Imagine starting the new year with the promise of at least a $147 million payout from the federal government.
But there are strings attached.
In late December, President Donald Trumpās administration announced how much all 50 states would get under its new Rural Health Transformation Program, assigning them to use the money to fix systemic problems that leave rural Americans without access to good health care. Now, the clock is ticking.
Within eight months, states must submit revised budgets, begin spending, and show the money is going to good use. Federal officials will begin reviewing state progress in late summer and announce 2027 funding levels by the end of October.
The money ā divided into unique allocations for each state, ranging from $147 million for New Jersey to $281 million for Texas ā represents the first $10 billion installment from the five-year, $50 billion program. Congress created the fund as a last-minute sweetener in Trumpās One Big Beautiful Bill Act last summer to offset the anticipated in rural communities from the statuteās nearly $1 trillion in Medicaid spending cuts over the next decade.
Federal officials crafted the fund to give states āspace to be creative,ā Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, said on a call with reporters after announcing the funding Dec. 29. āSome states will fail, and we will learn from that.ā
The money was divided according to a complicated formula.
In 2026, each state will receive an equal $100 million share for the first half of the money, plus additional funding from the second half. Ozās staff steered payouts from the second portion based on each stateās rural score, as well as results from a ātechnicalā scoring system for project proposals.
Within hours of the announcement, academics and researchers began to parse the awards to better understand why some states received more than others, including whether the awards reflected any partisanship or political favoritism.
At first glance, total awards do not appear to favor states governed by either Republicans or Democrats. But teased out the amount awarded for each stateās technical score, which is the part determined by the discretion of agency officials.
The analysis was performed at the University of North Carolinaās Cecil G. Sheps Center for Health Services Research, which specializes in rural health. A Ńī¹óåś“«Ć½Ņīl Health News review of the Sheps Center data found that states with Republican governors tended to receive more money for the parts of their application based on the technical score. Democratic-controlled states crowded the bottom quarter of those technical score awards.
Overall, though, the state awards reveal wild variation in how much money each state will get per rural resident, almost a hundredfold difference between the top and bottom.
In an emailed statement to , a spokesperson for Arizonaās Democratic Gov. Katie Hobbs accused the administration of shortchanging rural residents in the state, which was awarded $167 million this year from the program.
CMS spokesperson Chris Krepich said in an emailed statement to Ńī¹óåś“«Ć½Ņīl Health News that āpolitics played no role in funding decisions.ā
On the December call, Oz pushed states to start working on policy actions championed by the administration ā such as approving presidential fitness tests and restricting food benefits ā that could require legislative approval.
Half of states promised to mandate the presidential fitness test, Oz said. Many states also proposed food waivers under the Supplemental Nutrition Assistance Program, known as SNAP, which would limit low-nutrition items such as soda. He also said some states promised to teach health care professionals about nutrition. And others confirmed they will repeal , which require companies to prove that new health facilities they want to open are necessary.
Regulations meant to prevent unfettered health care expansion are withholding needed hospital beds in a rural part of North Carolina. Here, as in communities around the country, some officials and health care providers are contesting such ācertificate of needā laws.
Krepich said CMSā new Office of Rural Health Transformation is hiring program officers to serve as point people for three or four states. Many states are setting up their own offices to oversee the new funding.
Oz highlighted Alabamaās ābig maternity initiative with robotics doing ultrasoundsā and said states are tackling issues ranging from behavioral health to obesity.
A Ńī¹óåś“«Ć½Ņīl Health News review of state āā and āā released by CMS shows that many states plan to address the workforce challenges in rural areas. Delaware, for example, plans to use its funding to create the stateās first four-year medical school with a rural primary care track.
A third of states said they want to improve electronic health records, and every state mentioned telehealth.
Many state legislatures to distribute the funding to their state offices. Meanwhile, state officials are hiring staff, , and .
āIām excited about whatās next,ā said Terry Scoggin, former interim chief executive of the Texas Organization of Rural & Community Hospitals, or TORCH. Texas was awarded the biggest allocation. The money will bolster a rural hospital funding bill Republican Texas Gov. Greg Abbott signed last year, Scoggin said.
More than two dozen cash-strapped rural hospitals in Texas to clinics since 2005, a nationwide trend that hit the Lone Star State particularly hard. The state has the largest rural population in the United States. Texasā allocation amounts to about $66 per rural resident, . By contrast, Rhode Island was granted about $6,300 per rural resident.
Scoggin said he has āa ton of concernsā about companies taking the money instead of it helping rural hospitals and residents. āI was blown away about how many for-profit companies reached out.ā The companies have also called rural hospitals and asked to work with them to apply for state money, he said.
The awards should be judged on how they benefit rural residents because āthe stated goal of the program is to improve rural health,ā said Paula Chatterjee, an assistant professor of medicine at the University of Pennsylvania who co-authored on the transformation fund.
Researchers at the Sheps Center conducted the analysis to estimate how much money states received from the technical score, which is the portion of funding based on the quality of their proposals and state policy actions that align with “Make America Healthy Again” priorities.
New Mexico won the least amount of technical funding, with less than 10% of its award based on the discretionary metrics. Alaska won the largest technical award, according to the Sheps Center data.
Texas, Nebraska, New Hampshire, and Hawaii rounded out the top five recipients of technical funding. In addition to New Mexico, the other lowest technical awards went to Michigan, New Jersey, Arizona, and California.
Mark Holmes, director of the Sheps Center, declined to comment on whether he saw any political bias in the awards but said the nuance in the final portion of discretionary awards based on technical scores is important because those dollars can be redistributed and potentially clawed back in future years.
āWe can be fairly certain that every state will get at least a slightly, if not a vastly, different amount next year based on this re-pooling and reallocation piece,ā Holmes said.
States now have a limited time to show theyāre using the money effectively to secure future funding.
But they canāt start spending yet. CMS followed standard grant procedures and is requiring each state to submit revised budgets before they can draw down money, Krepich said.
States have until Jan. 30 to resubmit their budgets, and CMS then has 30 days to respond, according to the standard . Under that timing, some states may not have cash in hand until March.
āCMS is working closely with states to complete this process as efficiently as possible,ā Krepich said.
