States apply for historic $50 billion investment to rescue rural health

By HPN staff

All 50 states want in on the federal government’s new $50 billion Rural Health Transformation Program — a sweeping effort the Centers for Medicare & Medicaid Services (CMS) says will be the largest rural health investment in U.S. history.

The initiative aims to rebuild America’s rural health backbone by expanding access, improving quality and strengthening outcomes for the one in seven Americans who live in rural areas. 

The program is a major federal push built around five core priorities: aiming to revamp rural care by boosting prevention, securing reliable access points, growing the local workforce, piloting new delivery models and expanding the use of modern health technology. CMS plans to announce funding decisions before Jan. 1.

Why it matters

Rural hospitals carry an outsized share of the nation’s medical needs. They make up one-third of all community hospitals, yet fewer than 10% of U.S. physicians practice in rural areas, a mismatch that has widened access gaps and strained local services.

Since 2015, at least 108 rural hospitals have closed or ended inpatient care, according to the American Hospital Association. Nearly half of those still operating are running at a loss, the National Rural Health Association reports. These closures and financial pressures have serious consequences for rural residents.

“HHS data shows that rural areas experience lower life expectancy and higher mortality, including elevated rates of avoidable or excess deaths from the five leading causes: cancer, chronic lower respiratory disease, unintentional injury, heart disease and stroke,” said Tom Morris, associate administrator for Rural Health Policy at HHS’s Health Resources and Services Administration. 

“Geographic isolation, aging infrastructure and persistent workforce shortages make it difficult for rural residents to receive timely, coordinated care…These realities leave too many communities without consistent access to primary care, specialty services, or coordinated systems of support.” 

The big picture

States are treating the program as a rare chance to stabilize rural health systems that have been stretched for more than a decade.

“It’s a massive amount of funding,” Eunice Medina, director of South Carolina’s Department of Health and Human Services, told the SC Daily Gazette. “It’s truly a once-in-a-lifetime opportunity.”

Each state is automatically eligible for $100 million annually. The remaining $25 billion will be awarded through a CMS “data-driven merit review,” a process led by rural health experts and senior federal reviewers. 

The goal: funnel the biggest grants to states that can show concrete plans to curb closures, expand access and build healthier, more sustainable rural systems.

“This is not just a funding opportunity — it’s a turning point for rural health. Together, we’re delivering the largest rural health investment in American history — and building a foundation for healthier communities for generations to come,” CMS Administrator Dr. Mehmet Oz added.