Iowa set to receive $216 million in second year of federal rural healthcare program

Iowa was awarded $216 million from the Centers for Medicare and Medicaid Services for the second year of the state’s rural health care improvement plan, “Healthy Hometowns.”

This funding comes as part of the Rural Health Transformation Program, the federal grant program created as part of the 2025 “One, Big, Beautiful Bill” Act in an effort to offset losses for healthcare providers caused by Medicaid cuts. The 2025 law is set to reduce federal Medicaid spending by $911 billion over ten years, according to Congressional Budget Office estimates.

The Rural Health Transformation Program is set to offer states a total of $50 billion in grants over five years. This will not be enough to offset the estimated funding losses, but Republican leaders have said these investments offer targeted funding to help address specific needs in states like Iowa, such as funding for cancer prevention services and expansion of rural healthcare access.

Iowa’s “Healthy Hometowns” received $209 million for Fiscal Year 2026 through the federal funding program, which was fully distributed by the end of October 2026. That yearly funding total grew by $7 million for the second year of funding, which a news release from the Iowa Department of Health and Human Services stated “reflects continued confidence in Iowa’s implementation of Healthy Hometowns and the state’s leadership in transforming rural health care delivery, expanding access to essential services including cancer treatment and prevention, and build long‑term sustainability for hospitals and clinics across rural Iowa.”

In the program’s second year, the state department stated in plans to continue working on projects that started in the first year of funding. This includes funding for cancer screening and treatment, improving the state’s system for sharing health records, and expanding the “hub-and-spoke” model of healthcare delivery in rural areas through the existing Centers of Excellence system.

Other efforts to increase rural healthcare access include investments in mobile Emergency Medical Services (EMS) care services that can go into communities without a nearby healthcare facility, as well as providing funding to allow multiple healthcare providers with different specialties to share space and coordinate services within a community.

“Year 2 is about building on the foundation we’ve established and continuing to turn this investment into meaningful results for rural communities,” Iowa HHS Principal Deputy Director Larry Johnson said in a statement. “We’re focused on working with health care providers and community partners to strengthen services, support the rural workforce, and ensure these investments deliver lasting benefits for Iowans.”

Overall, the federal program is distributing $10 billion across all 50 states for the upcoming fiscal year. Iowa is ranked 11th in how much money it is set to receive — Texas was granted the largest award of almost $282 million for FY 2027, while New Jersey is set to receive the lowest amount at $142 billion.

CMS Administrator Dr. Mehmet Oz said in a statement the program “gives states the resources and flexibility to bring care closer to home and build stronger, more sustainable health care systems for their rural communities.”

“As the program enters its second year, this next round of funding will help Iowa build on the progress made in year one and continue working toward lasting improvements in access, quality, and health outcomes for rural communities,” Oz said in a news release.