States to Get $50 Billion for Rural Health Care: What to Know

Rural hospitals can apply for funds to upgrade technology, recruit staff, and develop new services to improve health care delivery.

A hospital in the city of Irvine, Calif., on July 8, 2025. John Fredricks/The Epoch Times

A hospital in the city of Irvine, Calif., on July 8, 2025. John Fredricks/The Epoch Times

Rural hospitals in all 50 states can apply for federal funding to help them provide better, more dependable care starting in 2026.

The Rural Health Transformation Program will provide $50 billion to “strengthen and modernize” health care for the more than 60 million Americans living in rural communities, according to a Dec. 29 statement from the Centers for Medicare & Medicaid Services.

The funding will be distributed over five years, with $10 billion available each year from 2026 through 2030.

First-year awards to states range from $147 million in New Jersey to $281 million in Texas.

“This historic investment puts local hospitals, clinics, and health workers in control of their communities’ healthcare. Thanks to President [Donald] Trump’s leadership, rural Americans will now have affordable health care close to home, free from bureaucratic obstacles,” said Health and Human Services Secretary Robert F. Kennedy, Jr.

Permissible Uses

States will have to spend the money for at least three approved uses.

Chronic disease prevention and management is one primary focus. This includes physical fitness and nutrition initiatives as well as promoting apps or digital tools to help patients manage their health outside the doctor’s office.

The funds can also be used for services such as mental health support and substance use disorder treatment, including opioid addiction services.

Additionally, states can help communities analyze which services, such as emergency care, maternity wards, or primary care, are most needed in their area.

Some of the money can be used to recruit and retain clinical talent in small towns. Any clinician receiving these benefits must commit to serving that rural community for a minimum of five years. Funds also support training programs, such as rural residencies for new doctors and educational opportunities for students starting health care careers in their own communities.

Modernizing technology and infrastructure is also a focus of the program.

Safeguards

One goal of the program is to create lasting change in rural hospitals, so direct payments to doctors for routine patient care are capped at 15 percent of the total award. That ensures the money is used to upgrade operations rather than to cover daily expenses.

Spending on physical infrastructure, such as building renovations or equipment upgrades, is capped at 20 percent.

States are limited to using no more than 10 percent of their allotment for administrative expenses.

Funds Distribution

Half of the money, $25 billion, will be distributed equally among all 50 states, with each receiving baseline funding of $100 million.

The other half of the total budget will be distributed based on how rural the state is, which will be determined through a variety of factors, according to a Notice of Funding Opportunity released in September.

The state’s rural factors, which account for 50 percent of the merit system, include the size of the rural population, the proportion of rural health facilities, and the amount of uncompensated care in the state.

Rural areas are defined as places outside big cities and their dense suburbs, as well as small, remote, or hard-to-reach pockets within metropolitan counties.

States in the Mountain West and Great Plains regions exhibit a pronounced rural character, according to a 2020 study based on three indicators: rural population percentage, rural land area percentage, and rural population density.

Alaska, Wyoming, Montana, South Dakota, and North Dakota rank as the most rural states. Highly urbanized states include New Jersey, Massachusetts, Rhode Island, Connecticut, and Maryland.

In the 2026 funding distribution, Alaska will receive $272 million, while New Jersey will receive $147 million. Connecticut and Rhode Island each will receive more than $150 million.

Uncompensated care in a state refers to the operating expenses incurred by all hospitals in that state. These costs tend to be higher in states that have not expanded Medicaid under the Affordable Care Act, such as Texas and Georgia, according to KFF.

Texas was awarded the highest amount, $281 million, for 2026. Georgia will obtain nearly $220 million.

Texas also has the highest number of rural hospitals, followed by Kansas and Iowa, which each will receive more than $200 million in funding.