Feds award $10B to states in second year of rural health grants

Federal officials on Monday announced $10 billion in awards across all 50 states in the second year of the Rural Health Transformation Fund, grants created by Congress to bolster rural health in response to concerns about Medicaid cuts.

Texas received the largest grant for the 2027 fiscal year — almost $282 million — followed by Alaska, Montana, California and Oklahoma.

The five-year fund is providing $50 billion in grants meant to address rural healthcare access and health improvement, with $10 billion available each year until 2030.

Congress created the program in response to concern from rural health care providers — as well as lawmakers on both sides of the aisle — about the effects of sweeping Medicaid cuts in the One Big Beautiful Bill Act that President Donald Trump signed last year. Rural areas are expected to lose about $137 billion, according to health research organization, KFF.

Half of the annual funding is distributed equally among states, with each receiving $100 million in “baseline” funds. The other half is calculated based on a state’s rural population and healthcare facilities, as well as specific initiatives detailed in the applications, among other factors.

States hope to use rural health money to keep doctors, combat chronic disease

States applied for and developed their own programs, using the money toward  focus areas ranging from maternal and behavioral health, preventive health and chronic disease management, access to care and the rural healthcare workforce, and tech and health equipment investments.

All 50 states submitted annual reports documenting their progress from the first year. The Centers for Medicare & Medicaid Services said it reviewed the reports as part of determining each state’s award for this year. 

“States have already put these resources to work bringing better care closer to home for their rural communities, and CMS looks forward to helping them build on that progress in the coming year,” agency Administrator Dr. Mehmet Oz said in a news release. 

States must use the grants to test out and grow approaches toward making programs sustainable after the fund’s five years have ended, the agency said.

Rural healthcare leaders have said the infusion of federal dollars is welcome but won’t be enough to offset Medicaid cuts. Democrats, who won the majority in both the U.S. House and Senate in this month’s midterm elections, are aiming to push for a repeal of the law, which would still need Trump’s signature.

Stateline reporter Nada Hassanein can be reached at [email protected].