Posted on September 2, 2025
Riyah Myrie
Summer Intern
When Congress passed the One Big Beautiful Bill Act earlier this summer, most headlines focused on the sweeping tax cuts, new family incentives, and large-scale federal investment. However, the reconciliation bill included a provision from the Senate: a $50 billion commitment to rural hospitals, known as the Rural Health Transformation Program.
What Does The Transformation Look Like?
The bill set aside $10 billion per year from fiscal years 2026 to 2030, creating a pool of $50 billion to be distributed. Of the $50 billion, half ($25 billion total, or $5 billion per year) is to be distributed by the Centers for Medicare and Medicaid Services (CMS) equally among all states with an approved application. They must submit detailed plans to the CMS by December 31, 2025, outlining how they will use the funds to stabilize and strengthen rural health systems. The remaining half is to be allocated by CMS within the broad requirements.
Rural hospitals account for roughly a third of all community hospitals nationwide, but many of them operate with thin or negative margins. Between 2017 and 2024, hospital closures in rural communities outpaced openings, leaving many families without local access to emergency rooms, maternity care, or even primary services. Even with the existing special Medicare payments, about half of rural facilities were still struggling as of 2023.
What Does “Rural” Mean?
In the bill, “rural hospitals” encompass the following:
- Hospitals physically located in rural areas
- Critical access hospitals certified under Medicare
- Sole community hospitals (often the only facility within 35 miles)
- Medicare-dependent small rural hospitals
- Low-volume hospital that serves remote populations
- Newly designated rural emergency hospitals
Through capturing these categories, the program ensures hospitals serving isolated areas or sparsely populated areas are eligible for support. However, it does not guarantee support due to the loss of federal Medicaid funding, putting over 300 hospitals at risk of closing.
Impact on New Jersey
The densest state in the nation, New Jersey, also currently has no federally designated rural hospitals. This raises questions about whether the state will see any direct benefit from the $50 billion fund.
Technically, all 50 states may apply for funding, but the provision will directly affect rural-heavy states such as Texas, Montana, and Mississippi. For New Jersey, this likely means no new dollars flowing directly into local hospitals.
Nonetheless, the policy may have indirect implications. If rural facilities in other states become stable, federal lawmakers might experience less pressure to further reduce Medicaid, a program that finances many births and assists low-income families throughout the state.
Impact on Children
The stakes are especially high for children. Across the country, Medicaid covers nearly half of all rural births, with the vast majority of them occurring in hospitals. When rural hospitals close, pregnant people must travel farther for delivery, increasing their health risk. For children, losing rural pediatrics or emergency services often means delayed care and higher costs imposed on parents, with the addition of travel expenses.
Even in New Jersey, though rural designations are scarce, the debate underscores a broader truth: children’s health outcomes are tied to the financial stability of hospitals everywhere. If rural health collapses in one region, it strains referral networks and specialty care nationwide.
Every state will not benefit equally from the $50 billion Rural Health Transformation Program, and New Jersey may see little direct impact, but it underscores that rural health is on a fragile path and in serious need of support. For families across the country, the program could mean the difference between local hospitals staying open or shutting their doors, making the One Big Beautiful Bill Act more than just fine print.
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