Rural Health Fund Awarded To All 50 States, But Trump Admin Can Still ‘Claw Back’ Cash

Rural health systems had already been struggling for years when, earlier this year, they became a legislative focus for President Donald Trump and some GOP congress members. As the president prepared to make the most sweeping cuts to Medicaid and Medicare in the programs’ histories, a handful of GOP senators initially withheld their support for Trump’s major tax cut and defense spending package until Senate Republican leadership did something to make up for the devastating cuts to health care for low income and elderly Americans, especially those from states with large rural populations. Republican leadership added a provision to the “Big, Beautiful Bill” that created a Rural Health Transformation Fund. The fund directed $50 billion of the $3.4 trillion reconciliation package, or about 1.5% of the bill’s total cost, to rural health initiatives over five years. The first year of payments were announced Monday.

The first iteration of the $50 billion fund saw all 50 states receive money, with states receiving an average of $200 million, according to a release from the Centers for Medicare and Medicaid (CMS). 

And despite concerns that the CMS could use its scoring rubric to disadvantage blue states and benefit states that voted for Trump, initial awards show a seemingly apolitical distribution of funds. 

Since half of the fund will be distributed equally among the states, those with smaller populations received more money on average than the most populous states. Five of the top 10 states that received the most money per capita are blue states, with Alaska receiving the most money per capita at $368. That’s key, since Sen. Lisa Murkowski (R-AK) was among the most vocal GOP senators expressing concern about how Medicaid cuts would impact her constituents. Maine is also among the top 10 states receiving the most money per capita. Though Kamala Harris won the presidential election there, its GOP Sen. Susan Collins (R-ME) was another GOP legislator heavily involved in rural healthcare negotiations last summer.

A TPM analysis using U.S. Census Bureau data on states’ rural populations and rural hospital data from the Center for Healthcare Quality and Payment Reform through October 2025 shows:

• Blue states on average received a larger share of funding per rural hospital than red states.
• Rhode Island, which has one rural hospital and an about 10% rural population, received the most money per rural hospital.
• California received the least money per capita, at $6 per resident.
• There is a slight correlation between a state’s rural population and the amount of money the state received per capita.

Before the program was rolled out, healthcare stakeholders told TPM that its parameters could disadvantage certain states and benefit others. The CMS scoring system distributed the funds based on a complex weighted formula which included a range of partisan policy-based factors, including whether states restrict SNAP users from buying “non-nutritious foods” and whether states plan to require Trump’s “Presidential Fitness Test” in schools. State scores could also be impacted if the state restricts certain health insurance plans, sometimes called junk plans, which don’t comply with Affordable Care Act coverage standards.

“We have an administration which just says right out, ‘We’re gonna cut money to blue states and blue communities,’ and it is doing it,” Adam Searing, an attorney and research professor at the Georgetown University McCourt School of Public Policy, told TPM in November. “If you happen to live in a community that we disagree with politically, too bad.”

While initial award amounts suggest nonpartisan fund distribution, there are still concerns about strings attached to the Rural Health Transformation Fund. 

Since the funding will be recalculated annually over the life of the five-year program, CMS Administrator Mehmet Oz reportedly said in a call with reporters that the administration could  “claw back” funds if a state doesn’t enact policies it committed to in its application. Searing suggested that was a possibility in November, telling TPM that CMS “can do pretty much what they want and the states can’t complain about it.”

There’s also the issue that the fund hardly covers the day-to-day operations of struggling rural health facilities. Only 15% of the fund’s cash can be used to cover uncompensated care, which experts have said will become a significant issue when health care cuts in the “One Big Beautiful Bill Act” hit. None of the money can help supplement underpayment from other insurance sources including private plans. And just 10% of the money can be used to cover administrative costs. The rest of the money must be designated for three or more approved initiatives, including workforce recruitment and retention, support for substance use treatment and mental health services, chronic disease management and prevention, and technology improvements.

And ultimately, healthcare experts have told TPM, $50 billion is a drop in the bucket compared to the impending health care cuts and rural hospital deficits. 

“It’s $1 trillion in cuts over a decade and $50 billion to help try to shore it up,” Rob Davidson, an emergency physician in rural West Michigan told TPM in July. “That’s 5% of the problem in a 5 year span. That math doesn’t work out.”

In a statement following the award announcements, the National Rural Health Association, a nonprofit professional organization, applauded the Trump administration and called the funding “unprecedented.” Despite this, the organization’s statement highlighted that the fund is hardly enough. 

“While this one-time funding grant is significant,” the statement reads, “NRHA reiterates that long-term policies guaranteeing sustainable funding for rural health care are needed to support providers and maintain access to care.”