The promise and reality of the rural health fund

Transcript

Part I

PRESIDENT DONALD TRUMP [Tape:] As part of the great big beautiful bill, we’re increased and we have increased funding for the healthcare by an unprecedented $50 billion. That’s rural healthcare. Nobody thought that was going to happen and we got it done.

MEGHNA CHAKRABARTI: That’s President Trump on January 16 at a White House event on rural healthcare. Just before the new year, the federal government announced the funding allocation that each state will receive this year in 2026. Under the new Rural Health Transformation Program. That funding averages out to about $200 million per state.

TRUMP: With the Rural Health Transformation Program, we are getting rural communities the health support they need, and we’re getting it immediately. These funds will go to empowering rural hospitals, strengthening their workforce, modernizing facilities and technology, and ensuring that rural Americans get world-class healthcare in their own community, right smack in their own community, like they’ve never had it before.

CHAKRABARTI: While the One Big Beautiful Bill Act included this $50 billion investment in rural healthcare, that same budget bill also included cuts to rural healthcare. According to estimates by the Kaiser Family Foundation, Medicaid cuts in the budget will lead to a $137 billion loss in federal dollars for rural healthcare. That’s nearly three times the amount those areas are expected to receive through the new Rural Health Transformation Fund.

So this hour we wanna explore the impact of this massive injection of federal dollars into rural healthcare alongside that backdrop of massive looming Medicaid cuts. And we’re gonna start today with Zachary Levinson. He’s a project director on hospital costs at the Kaiser Family Foundation. That’s a non-partisan nonprofit that focuses on health policy.

Zachary Levinson, welcome to On Point.

ZACHARY LEVINSON: Hi, Meghna. Great to be here.

CHAKRABARTI: I wonder if we could actually just start by getting a even bigger backdrop about the current state of rural hospitals specifically, and why they, it seems like they’re basically fighting for every dollar they can get.

LEVINSON: Sure. So, you know, there’ve really been longstanding concerns about the finances of rural hospitals. These facilities are more likely to be operating in the red than urban hospitals. There’s been an ongoing trend of rural hospitals closing their doors or eliminating certain service lines like maternity wards. And rural hospitals face a number of unique challenges that have kind of driven this trend.

So, you know, generally these tend to be smaller facilities serving smaller populations with lower occupancy rates. All of that can make it harder to operate as efficiently as some of their urban counterparts. And at the same time, a kind of challenge for rural areas more generally is that these areas tend to have a harder time attracting rural healthcare workers, which can also have implications for rural hospitals.

CHAKRABARTI: Okay. So a whole sweep of things are going into the dire financial state of hundreds, in fact, of rural hospitals. Um, KFF your organization actually has this statistic that says that a larger share of rural hospitals, larger share than of urban hospitals, had negative margins in 2023. So there’s a stark comparison. How many rural hospitals are in fact at risk of closure, as you said?

LEVINSON: I think it’s, you know, hard to say exactly there. I mean, our group hasn’t put this out, but other groups have said, you know, there’s something like 300 hospitals that are risk of closure based on various measures that they use. But I don’t think I can give you a number that our organization has put out there.

CHAKRABARTI: Okay. Well, in fact, your 300 number is pretty accurate. Because there are, we see one number of 338 at-risk rural hospitals at least.

So that’s the important backdrop here, Zachary. Now tell me: How did the Rural Health Transformation Fund come to be? Especially because it’s right in that, you know, in the One Big Beautiful Bill Act from last year.

LEVINSON: Right, and I think you provided some great context for this fund. So this was included as part of the tax and spending law that was passed last summer. That’s also often known as the “one big beautiful bill.”

And as you mentioned, that law included substantial reductions to federal healthcare spending. That includes an estimated $911 billion in cuts to federal Medicaid spending over 10 years. And as you mentioned, by our estimates, that number includes $137 billion in cuts to rural areas alone. So the rural health fund was really added to this bill as a political compromise, and the the intent was really to offset these large cuts and their impacts on rural communities, and particularly on rural hospitals.

CHAKRABARTI: A political compromise between whom?

LEVINSON: So there were, this law eventually passed by a fairly narrow margin. There were some members of Congress, particularly from rural states or rural congressional districts, that were key votes for this legislation. So there were, you know, obviously concerns among those groups of how this law would affect their constituents and their constituencies tended to be disproportionately rural.

CHAKRABARTI: Okay, but tell me, were these members of Congress Republicans?

LEVINSON: Yes.

CHAKRABARTI: Okay. Because the reason why I’m asking is that the many rural states are represented in Congress by Republicans, and every Republican member of Congress voted in favor of the bill, if memory serves. I’ll double check that in a second. And at the same time, so while they knew, knew they were gonna vote for almost a trillion dollars in Medicaid cuts over 10 years, they felt satisfied with a compromise of $50 billion for their rural healthcare facilities?

LEVINSON: Yeah, and there was at the time negotiations around how large this pot of money would be. Originally, it started out much smaller. I believe Representative Col — or Senator Collins was pushing for a much larger amount of funding for rural areas, and she ended up voting against the bill. But yeah, $50 billion is what they settled on and was what was eventually enough to track key votes that was necessary to pass this legislation.

CHAKRABARTI: Okay. So now tell me a little bit more about, um, what it is intended for. Because healthcare is a very large word. There are many aspects of it. It’s the Rural Health Transformation Fund. What is it trying to transform?

LEVINSON: Sure. So, you know, the law and the administration have laid out a wide variety of activities that this funding can be used for. Really broadly speaking, the administration has said that these funds are meant to support investments that transform how healthcare is being delivered in this country.

And again, that includes a huge range of activities and states apply to use these funds for a huge range of activities. Some examples include investing in telehealth, attracting more healthcare workers to rural parts of the country, supporting regional collaboration between rural hospitals and other providers, and among other things, various initiatives that are intended to advance the administration’s Make America Healthy Again agenda, so that includes things like improving access to healthy foods.

CHAKRABARTI: So hospitals need better technology, right, and healthcare delivery systems. This seems like actually then a good thing. I mean, if we wanna deliver better healthcare to rural Americans, having the hospital itself run more efficiently or more effectively would be a significant way to get closer to that goal.

LEVINSON: Right. And I think you’re also touching on a key trade-off, which is that, you know, part of the motivation for this fund was really to benefit rural hospitals in particular. But this fund isn’t being targeted solely to rural hospitals. It’s really being used for a much broader range of purposes, some of which could benefit rural hospitals directly or indirectly, some of which may be totally unrelated to rural hospitals and have only some very indirect long-term implication for these facilities. And in fact, there are also certain restrictions that the administration placed on how these funds could benefit rural hospitals in particular.

CHAKRABARTI: Mm. And so tell me more about that.

LEVINSON: Sure. So first of all, the administration has made clear that this is really not meant to be a temporary source of relief for rural hospitals. So a hospital that’s today at risk of closing its doors isn’t gonna get a sudden infusion of cash to balance their finances. This is really, again, intended for these transformative, innovative initiatives that will lead to sustained changes in how healthcare is being delivered.

So the administration has said they can be used for those purposes; they can’t be used to simply cover the costs that are incurred by hospitals or other providers on an ongoing basis. There’s also a restriction that no more than 15% of the funds can be used to pay for patient care that’s being provided either by hospitals or other healthcare providers. And there’s some other restrictions as well.

Now, there’s certainly many ways in which these funds could benefit rural hospitals, states could use these funds to invest in the infrastructure of rural hospitals within certain limits. They could, again, use these funds to support regional collaborations between rural hospitals and other providers that could help rural hospitals operate more efficiently and bring down their costs.

They could to support new, innovative ways of paying rural hospitals that could benefit these facilities as well. But at the same time, all that’s within these restrictions on how the funds are being used that may not be geared towards more of the short term and more immediate needs of, for example, a rural hospital that’s at risk of closure.

CHAKRABARTI: Oh, okay. So maybe you just answered my question because I was gonna ask you how much of the things that you just just described in terms of, let’s say technological improvements for a rural hospital would, would help these hospitals that are an immediate risk of closure. It doesn’t sound like — well, I mean, you basically said it wouldn’t.

LEVINSON: I mean, they could have  some sort of benefit. I imagine a lot of the benefits of these initiatives would be more in providing long-term help for these facilities. But again, in terms of just like providing a straight lump sum of money to these hospitals so they can keep their doors open, that’s really not what this fund is intended for.

CHAKRABARTI: Okay, because I was just wondering like, you know, the reasons why some of these many rural hospitals are at risk of closure have to do with lack of money coming in. It doesn’t necessarily have to do with the fact that  they may not be as efficient as they could be right now. Is that another way to put it?

LEVINSON: Well, I would say that, again, these programs are intended to make the healthcare delivery system more efficient, and that includes hospitals.

CHAKRABARTI: Mm-hmm.

LEVINSON: And if these funds, if these initiatives do make hospitals more efficient, that could bring down their costs and potentially help improve their finances. So there is a real potential benefit for hospitals, but again, I think one of the key takeaways is that these are not short-term sources of relief. They’re really intended to be these transformative changes in how healthcare is being delivered.

CHAKRABARTI: And just quickly, Zachary, you said that 15% of the rural transformation fund can be used for patient care, a maximum of 15%. How much is it in Medicaid?

LEVINSON: Well, Medicaid is primarily covering patient care. So that, you know, is kind of a separate beast. But this is, you know, again, restricting how much these funds can be used to patient for patient care directly, no more than 15%.

Part II

CHAKRABARTI: Before we continue the conversation, I had said earlier about my vague memory regarding the actual vote in Congress over the One Big Beautiful Bill Act, and I’ve got it here now. In July of 2025, it passed the House, 218 ayes to 214 nays. Two Republicans voted against it in the House and all the Democrats voted against it. So those 218 ayes were from Republicans. And over in the Senate it was. Also similarly, an almost entirely party-line vote, 51 to 50, with Vice President JD Vance casting the tie-breaking vote.

Okay, so let’s go now to Cindy Samuelson. She is the Vice President, senior Vice President at the Kansas Hospital Association. She joins us from Topeka.

Cindy Samuelson, welcome to On Point.

CINDY SAMUELSON: Hello. Thanks for having us.

CHAKRABARTI: Well, you heard Zachary describe sort of the broad financial picture for rural hospitals specifically. Tell me about how that’s playing out for Kansas hospitals. What’s the financial health of the rural hospitals there?

SAMUELSON: So in Kansas we have 124 community hospitals and 83 of them are very small. They’re called critical access hospitals, so they’re 25 beds or less. And we also have three what is a newer classification, a rural emergency hospital, which is really a hospital that has transitioned to focus more on outpatient services versus inpatient services.

And we are one of the states that is experiencing on many studies the most at-risk hospitals for closure. So if you have looked at any of those studies, um, you can see Kansas at the top. And in the last three years, you know, our hospital expenses across the state have increased by more than 35%. And really the big issue Zachary hit on earlier is lack of reimbursement. So stagnant reimbursement from Medicare and Medicaid and even commercial payers in our state have really hit hospitals hard.

CHAKRABARTI: Mm. Well, in fact, we have looked at some of those studies, quite a few of those, Cindy. And just to buttress what you’re saying here, for example, in 2022, there’s evidence that the median operating margin, so that’s ostensibly money made or lost by Kansas hospitals, was negative 12.7% — and that was the median, right? — net negative margin. National average is negative 3.8%. So these hospitals that you’re talking about in Kansas are losing much more money than hospitals that are in the red elsewhere.

SAMUELSON: Yeah. And we mentioned earlier in the show, hospitals operating at a loss. We have 89% in the red, according to some surveys. So financial challenges and the the financial environment in Kansas are — it’s a tough environment and we’re working to help our hospitals be more stable.

CHAKRABARTI: Okay. Before we get to the funding from the Rural Health Transformation Fund, lemme ask, can you tell me more about those critical care facilities that you said that had 25 beds or less? Because to be frank, I’m actually quite surprised that they’re still open since there’s been such ongoing consolidation, for example, of healthcare facilities, especially in rural America.

SAMUELSON: Yeah, so critical access hospitals, they have less than 25 beds. And the smaller than that are the rural emergency hospitals. And we have three of those. So they are challenged. And I will say one of the things that helps them stay afloat is their community.

It’s unfortunate, but today in Kansas, our hospitals rely on more than $78 million in additional county, city or district taxes to remain open. So if you will, that’s the local community saying, “Hey, this is important to us. We need a local hospital, so we’re going to put our money out there to keep that hospital open.”

CHAKRABARTI: Mm.

SAMUELSON: So that’s how they’re staying afloat.

CHAKRABARTI: Okay. The need there. I’m curious if some of these facilities that we’re talking about were to close, for some of these, for some Kansans, how close would the next hospital or significant healthcare facility be? How far would they have to drive?

SAMUELSON: It depends on what part of the state you’re looking at. I think the most important thing to focus on is that you want that emergency room close to home and you wanna be able to get care close to home. It’s really better for the patient.

Hospitals, as Zachary mentioned, I think we’re more at risk even for closing service lines than full hospitals, if you will. But that’s still essential. If you can’t deliver your baby close to home, like mentioned, OB services are very expensive, and so if you can’t afford to have those essential services close to home, you may not close as a hospital, but you may close a service line, which is also impacts everybody and is really hard for rural communities.

CHAKRABARTI: Got it. Okay. So Zachary, you may have mentioned this before, but maybe we need to go over it in a little bit more detail. For the Rural Health Transformation Fund, states had to apply and obviously all 50 did because money is going out the door from the federal government pretty soon here. But there were quite a few stipulations within how the money would be apportioned. Can you tell us a little bit more about what those stipulations were, Zachary?

LEVINSON: Sure. And maybe, maybe it’d be helpful just to provide an overview of how much funding was ultimately distributed. And then I can go into kind of the details of how that worked.

CHAKRABARTI: Yeah, sure.

LEVINSON: So as you mentioned, all 50 states applied for this funding. All 50 states were approved, which actually wasn’t a guarantee. The administration announced the first year of funding for this program, and funding will be announced each year over the next four years as well.

And the awards ranged from $147 million in New Jersey to $281 million in Texas. Now, even though that’s a wide range of awards to states, the differences are actually pretty small when you consider. The huge difference is across states in the rural population and in their rural health needs. So for example, Texas is receiving about twice as much funding as the same New Jersey, but Texas has 30 times as many rural residents.

Now, part of that’s based on how this fund was constructed. So the law said that half of this $50 billion fund, so $25 billion, had to be distributed equally across states regardless of the rule population or how much they might be losing as a result of the Medicaid cuts or any other consideration.

Now, the law also gave the administration a substantial amount of discretion in how it distributed the second half of the fund, so the second $25 billion, and the administration did base the distribution of those funds on certain measures of rural health need, including rural population, and there might be some debate about whether those were the best measures to use or not.

CHAKRABARTI: Mm-hmm.

LEVINSON: The administration also tied some of the funding to whether states implemented certain policies that are priorities of the Trump administration, including certain —

CHAKRABARTI: Such as? Oh yeah, go ahead.

LEVINSON: Yeah, so I was gonna say, so for example, some of these policies are related to the administration’s Make America Healthy Again agenda. So for example, whether states have waivers that restrict the use of food stamps so that beneficiaries aren’t allowed to use them to purchase non-nutritious foods like soda. Whether states have required the adoption of the presidential fitness exam. Whether states require as part of continuing medical education a segment on nutrition. Those were all certain policies that if states implemented, they’d get extra funding through this pool of money.

And then there are also various other policies that are presumably priorities of the Trump administration. That includes some things around competition. So for example, restricting the regulatory requirements for opening a new healthcare facility in the state. If states had relatively lax rules for that, they would receive more funding through this pool of money.

CHAKRABARTI: Mm.

LEVINSON: And so those are kind of the policy components of this distribution. And then finally, most of the remainder was based on how the administration ended up scoring state applications.

CHAKRABARTI: Okay.

LEVINSON: And that was something that was decided by a merit review panel that was established by the administration. I think we don’t really have much insight into how states were actually scored, or the extent to which the administration was involved in the scoring of those applications.

CHAKRABARTI: Okay. Let me ask you one more thing about the conditions in terms of states having to implement priorities of the Trump administration. That’s not unheard of, right? I mean, previous administrations have done similar things for various other, you know, big pools of federal funding. So that’s not out of step, is it, with kind of how the federal government generally operates?

LEVINSON: I mean, you know, it is something that’s been done before. I would point out that, you know, something that’s relatively unique is that this, these policies aren’t, you know, specific to rural communities. These are statewide regulations that I’m sure from the perspective of the Trump administration are beneficial to the healthcare of the state population, but they aren’t really specific to rural areas in particular or rural health needs.

So, you know, I could imagine on the other hand, some critics of the bill arguing that these were things that weren’t totally related to addressing or specific to addressing rural health needs, which is really the focus of the fund.

CHAKRABARTI: Okay. Thanks for that background, Zachary. Because it helps us  understand what Cindy’s about to tell us. Because Cindy, I wanted to ask you, how do these stipulations as Zachary has pointed out, how did Kansas manage its way through them during the application process?

SAMUELSON: Yeah. So it was a very fast process, but we worked with the state of Kansas who did our application. And we were really pleased to learn that Kansas got the sixth-highest amount award in the program, so $221 million. And that’s just for that first year, obviously. And if we do well hitting the goals we set in our application, you know, there’s potential that that’ll be, you know, you could get more or less every year, as Zachary mentioned.

So we actually had a plan that really had five goals in it. And I think that’s, and very detailed, a lot of details behind how we would do it. But really to look at outcomes in Kansas. We were talking about transformation and how we can transform our delivery system here to really focus on preventative health and root causes of disease. We’re also gonna look at efficiency and sustainability in rural areas.

Workforce was brought up. And so attracting and retaining a high skilled workforce is very important to our rural areas. So that’s gonna be a focus area, as well as growing innovation and other models of care. Like we talked about this, regional collaborations to really look at improving quality and cost.

And then lastly, fostering these innovative technologies to really increase access to rural areas. So our plan has those five goals and we think that we have a lot of great ideas in there to implement those five and be able to hopefully continue to hit the deliverables and retain these funds annually for the next five years.

CHAKRABARTI: It sounds like you’re actually in an awkward situation, Cindy, if I may say. Because receiving this money is good, right? I mean, I just heard you list all the things that Kansas will be able to do. But as Zachary said earlier, there’s also many hospitals in Kansas that may not be able to stay open during the time period in which all of these improvements due to the transformation fund are implemented.

I mean, do you have a ballpark in terms of how much money Kansas might lose from those Medicaid cuts in the bill?

SAMUELSON: Well, it’s important to know Medicaid cuts are huge and they’re gonna have a big impact. And we have to continue to advocate for improvement in reimbursement for Medicaid. But also there is Medicare and there are payers, and we’ve done a study in our state to really look at what the impact of commercial payers is in Kansas as well.  And we really have to look at a lot of different solutions in regards to stagnant reimbursement.

That has to keep happening. Even though we’re being innovative here with these funds and potentially, as was mentioned earlier, there could be some efficiencies gained, it does not fill the gap of the lack of reimbursement. So we still have to work on that front as well.

CHAKRABARTI: I mean, just to drive the point home more clearly, we are still talking about not just lack of reimbursement, but that could lead to the closure of some of the facilities that we began our conversation with you with, right?

SAMUELSON: Yeah. If you’re only getting paid 69 cents on a dollar for every Medicaid service and 65 cents for Medicare, you’re not, or 69 for Medicaid and 65 in that range, you’re just not getting enough money to continue to provide healthcare services. And it’s a fact that potentially service lines could be closed if we don’t have the money to keep them going.

CHAKRABARTI: Mm-hmm. And so the other thing, you talked about private payers, so let’s put Medicare aside also, including putting Medicaid aside. Again, could private payers actually end up paying more if rural Kansans, as they lose these lines of service, or even entire facilities, as you’re saying, their only other option might be to go to, you know, another emergency room?

SAMUELSON: Well, emergency rooms are the highest place to get care, so we hope that does not happen. We hope people don’t drop their coverage and seek care in emergency rooms. We want people to be insured.

And so that’s a really important part for the people in Kansas to know, it matters what they have for coverage because that impacts the hospitals that are serving them. And they need to go to the right location to get the care they need.

But we have to work with insurers to make sure insurance is affordable. And that the out-of-pocket costs aren’t too much. A big driver in our state that’s been going up and up is uncompensated care because people come into the hospital, they have insurance, but their out-of-pocket cost is so high they can’t pay their bill. So that becomes, if you will, bad debt and it never gets paid. And that’s for insured patients. And we really just need to help make sure that that doesn’t continue to grow.

CHAKRABARTI: Oh, so to be clear, the insurance pays its part, but what the patient still has to pay is so much that they can’t afford to pay it?

SAMUELSON: Yeah.

CHAKRABARTI: Got it. Okay. I mean, Zach, reflect on me with that. Because again, there’s so many avenues and that go into figuring out, you know, what the health, if I might put it that way, of a healthcare system, is that, again, this is one of those stories that it’s like both good news and yet not enough good news. Do you get what I mean, Zachary?

LEVINSON: In terms of, you know, the Medicaid cuts versus the rural health fund?

CHAKRABARTI: Well, yeah. And then also, as Cindy just said, they have to also think about maybe many people can’t even pay their deductibles, for example. Adding that into the equation and perhaps that problem, I don’t know, but perhaps that problem’s even more intensive in rural areas.

LEVINSON: Yeah, I mean, uncompensated care in general has been a real challenge for hospitals. It’s actually been historically a larger challenge in states that have not expanded the Medicaid program as part of the Affordable Care Act Medicaid expansion. Precisely because there are more people without insurance, hospitals have fewer paying patients. That means that they’re providing more compensated care and that that’s a hit to their finances.

CHAKRABARTI: So actually, Cindy, we’ve got about a minute to go here before our next break. There’s Medicaid, there’s Medicare, as you pointed out, and also private health insurance. Even with all these three on the scene now, as they are, we still have all these struggling facilities or lines of care, as you said, in Kansas. I mean, what would be like a bigger and more effective solution that might work to strengthen Kansas hospitals, you think?

SAMUELSON: Well, I think improving reimbursement. And it could be from all three of those. We could really work on strategies to improve Medicaid reimbursement and address these cuts as well as look at Medicare.

And Medicare Advantage plans as well, which isn’t Medicare, but those are commercial payers that are tapping into Medicare patients that had traditionally been a better payer to hospitals but now is with private insurance. And we have seen Kansas has been fortunate that we’ve stayed a little flat, but across the country that’s been a big impact, too.

So I think really advocating for better reimbursement from all groups and making sure patients understand that they have a part to play to in this.

CHAKRABARTI: Did you say that Medicare Advantage is paying less to hospitals now? Is that what I heard?

SAMUELSON: Medicare Advantage plans do not reimburse our rural hospitals adequately. This is, that’s something we’re seeing.

CHAKRABARTI: Okay. Cindy Samuelson, senior Vice President at the Kansas Hospital Association. Thank you so much for joining us.

SAMUELSON: Thank you.

Part III

CHAKRABARTI: Let’s move to another state here briefly. Because as we mentioned earlier, every single U.S. state received some money from this fund, averaging about $200 million per state.

Now, Oklahoma was awarded the fifth-largest amount with more than $223 million for the first year of this Rural Health Transformation Fund. And that happens to be more than the state actually asked for in its application.

RICH RASMUSSEN: We talked a lot about the importance of networking. We talked about the importance of workforce. We talked about making sure that our trustees that lead many of these rural community hospitals have the education they need so they can help drive the transformation. Educating up and supporting executive leadership in all of these organizations because they’re gonna have a tough job, A, to ensure that they have success in these grants, but also to sustain themselves over the next decade.

CHAKRABARTI: That’s Rich Rasmussen, president and CEO of the Oklahoma Hospital Association. Since 2010, 10 hospitals in Oklahoma have closed and an estimated 29% of the state’s rural hospitals are at an immediate risk of closing within just the next three years. That’s according to a study from the Cecil G. Sheps Center for Health Services Research. But as we mentioned earlier, the Rural Health Transformation Fund is not designed to help keep hospital doors open.

RASMUSSEN: What’s important to note is that these dollars aren’t earmarked for hospitals. I mean, this is rural health dollars. So hospitals are gonna be competing with FQHCs, which are federally qualified health centers. They’re gonna be competing with mental health providers. They’ll be competing with EMS providers. They’ll be competing with universities, community colleges, and other higher ed for these dollars.

CHAKRABARTI: Rasmussen says that as a result of the Medicaid cuts included in the One Big Beautiful Bill Act, Oklahoma is expected to lose about $6.7 billion in federal funding in the next 10 years. That’s from the Medicaid cuts, and if the state receives the same level of funding through the Rural Health Transformation Program that it received this year, and if they receive that for the next five years, that inflow comes to a total of about a billion dollars.

RASMUSSEN: Now, let’s put that back into perspective. That billion dollars over five years does not offset the $6.7 billion that we’re gonna see reduced. And so one does not replace the other. And I think many folks feel that, “Wow, this is a great win.” And it is for our state. It does not replace the dollars we’re gonna lose. In fact, we have, I believe it was a little over 90 hospitals have negative operating margins in our state.

And what does that mean? It means that when a hospital delivers care. They’re losing money on the delivery of that care. The only way in which they can have a margin at the end of the year is through these special Medicaid programs that Congress cut. Losing that as we look into the future is very frightening.

CHAKRABARTI: In 2020, Oklahomans voted to expand Medicaid access. Now more than 300,000 people are on the program today.

RASMUSSEN: So not only do we lose money, but now we lose coverage at the same time. And if you look at a lot of rural communities, particularly, you know, in our state we have large numbers of our population are on Medicaid in our rural communities.

We have one hospital we visited with them last week where 90% of their patient days are Medicare and Medicaid. And so for them, how do they do that if they’re gonna have a significant reduction in their Medicaid?

CHAKRABARTI: Rasmussen is grateful Oklahoma was awarded so much funding through the rural health fund. But he’s also worried that with those looming Medicaid cuts, it will be hard for rural hospitals to continue to offer the services they currently do and those services that communities need.

RASMUSSEN: If we want to continue to support rural communities in America, we need to make sure that we have the compliment of those services that are growing, vibrant, rural community needs. So if you want your children to come back to the ranch to run it, and they wanna start a family, that they have access to important services to support their family.

So it’s gonna mean maternity service, primary care services, things like that. If you want mom and dad or grandma or grandpa to remain in a rural community, you wanna make sure you have the services to sustain that. And if you don’t, they’re leaving and they’re coming to our urban core. And so that in and of itself creates real unique challenges all across rural America, as people leave to go where they need to go to receive healthcare.

CHAKRABARTI: Rich Rasmussen. He’s the president and CEO of the Oklahoma Hospital Association.

Well, I’d like to invite Carrie Cochran-McClain into the conversation now. She’s chief policy officer at the National Rural Health Association.

Carrie, welcome to On Point.

CARRIE COCHRAN-McCLAIN: Thanks, Meghna. It’s a pleasure to be here.

CHAKRABARTI: Okay, so we’ve heard from Mr. Rasmussen there from Oklahoma, obviously Cindy Samuelson was with us a few minutes ago from Kansas. Every state is not the same and every rural location is not the same either. But broadly speaking, across the nation, are you hearing similar things about this, the sort of financial health of rural hospitals?

COCHRAN-McCLAIN: Absolutely. Kansas and Oklahoma are two of our states that have higher numbers of rural hospitals, but regardless of where you are in the country, rural hospitals are facing the same struggles in terms of those negative operating margins and having to make some really difficult decisions around the types of services they’re keeping locally.

CHAKRABARTI: So actually, can you tell me more about what some of those decisions are? I mean, we heard Cindy talk about full and potential closure and then also more decisions around, she talked about service cuts. Is that similar to elsewhere?

COCHRAN-McCLAIN: Yes. So, you know, when a hospital is going through this, they don’t close their doors overnight. You know, there are a number of really difficult conversations and decisions that have to be made around what services are you gonna be able to provide to your community. And there are certain services that are just known loss leaders like OB care. And communities have to decide that they want to invest in it, and the hospital needs to find the resource.

What we’re seeing trends of OB closures nationally, we’re also seeing trends of certain services like chemotherapy not being available locally as much. And then the other area where we’re really seeing a trend of closures is in the new designation that Cindy mentioned, the rural emergency hospital.

What that is is that is a previously small rural hospital that has given up their ability to have inpatient capacity. So they can still operate an emergency department, they can still operate outpatient services, but if you needed to be hospitalized, that capacity is no longer available locally. So we think of that as almost a closure of your inpatient service as well. All of which is when we’re thinking about needing to go to the hospital for care in your local community, I think we think hospital and we think, you know that ability to stay local if you need to, that also is disappearing across the country.

CHAKRABARTI: Oh, interesting. Zachary, would you like to add to that?

LEVINSON: Yeah, I’ll just say that, you know, I think part of the motivation of the the rural emergency hospital was also recognizing that some of these communities might not be able to sustain inpatient services, but they, Congress created this program, I think, in part, to try to sustain certain essential services, that that hospital had been providing, like emergency care in particular.

CHAKRABARTI: Well, let’s listen to briefly another CEO of a rural healthcare system. This is Josh Martin. He’s CEO for Summit Pacific Medical Center. It’s a critical access rural hospital located in Elma, Washington. And Martin says the things the Rural Health Transformation Fund prioritizes are in fact things his hospital has needed to invest in for years.

JOSH MARTIN: Paying for modernizing hospital and clinic technology. So being able to stand up infrastructure to protect us from cybersecurity because rural hospitals are always threatened by cybersecurity and a significant risk. But we don’t have the funding to invest in the infrastructure.

Strengthening rural workforce, we saw that through COVID. My hospital didn’t even have enough nurses to keep my hospital open during COVID. And another one is an example of mental health. So I’m gonna get, let’s just say a million dollars a year to do all that stuff. Well, A, it’s a little too late. We should have been making those investments as a country probably 10 years ago or five years ago, or coming out of COVID. And so I think it’s the right funding at the wrong time.

CHAKRABARTI: Carrie Cochran-McClain, give me your view on this. Because there hasn’t been any disagreement here in this hour or even in the research that we’ve done that says that people are saying, well, this $50 billion is a bad idea. Right? Because there are essential things that healthcare systems more broadly need that maybe rural areas have been struggling to get. What do you think?

COCHRAN-McCLAIN: I think you hit the nail on the head in the sense that these dollars are backfilling what I see as decades of underfunding. Josh had touched on that, where we have continued to struggle with access in rural communities for a range of reasons, including those that we talked about today.

That’s resulted in worse outcomes for healthcare and health status in rural communities. We actually have a worsening life expectancy that is years shorter in some places, some rural places in our country. And so these funds are that infusion that in my mind, really bring us almost to a baseline level to be able to have the kind of access we have in other parts of the country. In addition to that, the funds are an opportunity to do some of that innovation that we’ve talked about today to really think about how we provide healthcare better in a rural setting.

What these funds won’t do, and I think others on the on the call have made this point really clearly, is that these funds are not going to fill the hole that inadequate reimbursement policy and upcoming cuts to Medicaid will make. It’s almost apples and oranges. And in my mind, while it’s all lumped in one conversation, because it all passed in the same bill, there really are two different sets of issues here that we need to be looking at.

So, innovation’s great. Getting us to a baseline is fantastic. This money is a once in a lifetime opportunity to do that. But we absolutely are going to be struggling and continuing to struggle until we deal with our reimbursement and payment policy and how we are paying for care in rural hospitals.

CHAKRABARTI: I think you told our producer Paige — you had an analogy that has to do with 401Ks and retirements, Carrie?

COCHRAN-McCLAIN: Right. Right. So, you know, I think in, in one sense that the Rural Health Transformation Fund can be looked at as your 401k. It’s your investment in the future. You need to be focused on that. You need to be putting dollars into that.

But if your employer is not also offering you a paycheck or reimbursement for the surfaces that you’re providing day to day, that investment in the future is great, but it’s not gonna mean anything if I don’t have a job or if I’m a facility that has to close my doors and have that immediate impact not addressed or that immediate need not addressed. So that’s kind of one way to look at this. And we need to be doing both in our healthcare policy in the country.

CHAKRABARTI: Need to be doing both. Okay. That’s interesting because again, these two things sitting side by side in the One Big Beautiful Bill Act are the opposite of doing both, in terms of how you just described it.

Zachary, let me come back to you because I’m still thinking about these stipulations, right, and the rules under which the money is being distributed. I think you’ve mentioned in the past that some members of Congress might be surprised by that? Why?

LEVINSON: Well, at the time that the law was being debated, you know, there were a variety of concerns about how these cuts would play out and the political implications for members of Congress and concerns about how this would affect their communities. Rural hospitals came up a lot in the conversation.

And, you know, I don’t know for sure, but I could imagine some members of Congress being surprised that there wasn’t more of an emphasis on rural hospitals in how this fund was ultimately implemented. Now the law itself lays out a lot of the activities that the funding could be used for. The Trump administration also had discretion in setting up this program. And the Trump administration is where we got some of the restrictions on how the funds could be used to support rural hospitals.

CHAKRABARTI: Well, let’s hear one more time from hospital CEO Josh Martin. Again, he’s out in western Washington state. And here’s what he had to say about what it will really take to build overall healthier rural communities.

MARTIN: The way that we want to build a healthier community isn’t by cutting costs to Medicaid, because what will happen is those patients will lose coverage. They won’t be able to retain that enrollment and they’re gonna flood our emergency departments. The past tells us that without health coverage or with challenges in enrollment and maintaining that coverage because of the administrative burden, people just don’t go in for care.

Well, if you postpone or prolong that care, then it’s gonna wait til it’s a crisis, right? A heart attack, a stroke, back pain, and then they’re gonna come into the ER. And that’s gonna accelerate and raise the cost of care in total. So what we need to do is invest in expanding more primary care. So the reality is they’re chasing pennies. When really we should be, you know, chasing dollars.

CHAKRABARTI: Carrie Cochran-McClain, my last question to you is obviously, we’ve been focusing on Medicaid funding, this Rural Transformation Fund, Medicare, these are like huge sources of funding for all hospitals and private payers as well.

The bottom line that I’ve heard from both you and Cindy and other people in the world of rural hospitals is that reimbursement rates need to go up. Is there any other area that we should be looking for to help strengthen or stabilize rural healthcare if reimbursement rates, you know, stay the same, or it’s challenging to get them them higher, especially from the federal government?

COCHRAN-McCLAIN: Yeah, I think two opportunities there. One is coverage. We, in our rural areas — and this came up earlier in the call — our rural providers are much more reliant on Medicare and Medicaid and coverage through the health insurance, having their populations covered through the health insurance marketplaces than other parts of the country.

And that’s because we’ve got more self-employed. We’ve got more small business employees. We’ve got more folks who are lower socioeconomic income, more reliant on public payers. So we need to make sure that our patient population continues to stay coverage. So there’s the conversation we’ve had around HR 1 —

CHAKRABARTI: And the second thing? Because we only have a few seconds left.

COCHRAN-McCLAIN: Yes. Sorry. The second thing is I think there are opportunities in the Rural Health Transformation Fund if states are able to really look at using those dollars at true transformation. One space of that is around value-based payment and population health, where we’re paying for health outcomes rather than by service.

CHAKRABARTI: Ah, that’s interesting. Okay. Well, Carrie Cochran-McClain, chief policy officer at the National Rural Health Association, thank you so much for joining us. And Zachary Levinson, project director on hospital costs at the Kaiser Family Foundation. Zachary, thank you as well.