Trump admin announces 2026 rural health transformation grants
the Trump administration announced that all 50 states will receive grants from a new Rural Health Transformation program created under the One Big Lovely Bill Act. The law set aside $50 billion for the program too help offset nearly $140 billion in planned Medicaid rural-health cuts; grants will be awarded over the next five years. This year’s disbursements to states range roughly from $145 million to $281 million each.
Officials said about half of the annual funding (roughly $10 billion) will be distributed evenly – guaranteeing at least $100 million per state – while the remainder will be allocated based on each state’s rural population, existing rural-health infrastructure, and the strength of state applications describing recent policy changes and planned initiatives. CMS Administrator Mehmet Oz described the grants as intended to “right-size” rural health systems rather than simply pay bills, and said the program will be rescored each year with the ability to claw back funds from states that do not follow through. Critics note a 15% cap on using grant dollars to directly pay providers, warning it could limit workforce recruitment in underserved “health deserts”; administration officials counter that other federal programs already support basic rural-health operations and urged states to focus on sustainable reforms rather than building large facilities or altering fee schedules in ways that could create funding cliffs after the program ends.
Trump administration awards rural health ‘transformation’ grants to all 50 states
The Trump administration announced hundreds of millions of dollars in new healthcare grants for all 50 states on Monday as part of a program launched by President Donald Trump’s One Big Beautiful Bill Act over the summer.
The law allocated $50 billion for a new Rural Health Transformation program to partially offset nearly $140 billion in cuts to Medicaid’s rural health spending over the next 10 years. The new “transformation” grants, set to be awarded over the next five years, are not meant to help states and local municipalities “pay off bills” but instead to “right-size the system,” according to Centers for Medicare & Medicaid Services Administrator Mehmet Oz.
Oz and other senior Trump administration officials briefed reporters on the grant disbursements, which this year will range between $145 million and $281 million per state, ahead of the announcement.
Half of the yearly allotments for the program, $10 billion, will be evenly distributed, with all 50 states receiving at least $100 million. The remaining funds were allocated based on the administration’s scoring of the “rurality” of each state’s population, its existing rural health infrastructure, plus individual applications in which states outline recent policy changes and future initiatives to supplement rural health. The federal government began accepting applications from states for the grant monies in the fall.
Administration officials said that they will “re-score” each state before distributing program funds in subsequent years and will claw back funds if states fail to follow through on their proposed initiatives and policy reforms.
“This is a massive effort to change the unfortunate reality that has occurred to rural healthcare in America, which is that your zip code has started to predict your life expectancy,” Oz stated Monday. “The rural parts of this country have fallen tragically behind in many areas, and part of the reason for that, we believe, were that systems that had been designed 50, 60, 70 years ago to support healthcare in rural parts of the country are no longer functioning at the pace and at the efficiency that one would have expected.”
“We’re beginning to work together to come up with best practices, and as states try these new ideas, one of the views of a federal system is states will succeed, some states will fail, and we’ll learn from that,” he continued. “Then, states can adjust what they’re doing to take advantage of what they’re doing successfully and what other states are teaching them as well. That’s, I think, part of the power of this process.”
The One Big Beautiful Bill Act notably sets a 15% cap on the grant funds that states can directly apply to paying healthcare providers, which critics say will limit workforce recruitment potential for underserved “health deserts.”
But senior administration officials stressed that there are existing federal programs to “support the basic operations of rural healthcare.”
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“We don’t want you building buildings, because you could use up all the money building these big hospitals, but you’re not actually changing the way that we talk about healthcare in rural America,” one official said, noting that “to bring more practitioners in [to underserved communities] is not just a matter of more money.”
“The goal there is really to not manipulate the existing fee schedules,” a second administration official added, “because we don’t want there to be a funding cliff for this program after the five-year life cycle of the program.”
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