Washington, District of Columbia — The Trump administration announced hundreds of millions of dollars in new healthcare grants for all 50 states on Monday, rolling out the first phase of a major rural health initiative created under President Donald Trump’s One Big Beautiful Bill Act.
The program allocates $50 billion over five years through a new Rural Health Transformation initiative, designed to partially offset nearly $140 billion in projected Medicaid reductions affecting rural healthcare over the next decade. According to the Centers for Medicare & Medicaid Services, states will receive between $145 million and $281 million this year, with every state guaranteed a minimum of $100 million.
CMS Administrator Mehmet Oz said the grants are not intended to cover existing budget shortfalls but to restructure how rural healthcare is delivered. Half of the annual funding will be distributed evenly, while the remainder is based on factors such as rural population density, existing infrastructure, and state-submitted reform plans. States that fail to implement proposed changes risk having funds clawed back in future years.
Administration officials emphasized that the grants are aimed at modernizing outdated systems rather than expanding payrolls or constructing new facilities. Only 15% of grant funds may be used for direct payments to healthcare providers, a limitation critics argue could hinder workforce recruitment in underserved areas. Officials countered that other federal programs already address operational and staffing needs.
Oz said the initiative reflects a broader effort to reduce disparities in life expectancy tied to geography, arguing that state-level experimentation will drive long-term improvements without creating future funding cliffs once the program expires.
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