AUSTIN, Texas — U.S. Health and Human Services Secretary Robert F. Kennedy Jr. joined Governor Greg Abbott at the Texas Capitol on Thursday to discuss the financial challenges facing rural hospitals and announce new federal funding aimed at preventing further closures.
The event comes at a time when rural healthcare providers are confronting mounting pressures from patient demographics, rising costs, and limited reimbursements. According to the Texas Organization of Rural and Community Hospitals, 20 rural hospitals closed in Texas between 2010 and 2020, with one more closing in the following four years. Hundreds more across the state remain at risk of shutting down, including facilities in Marble Falls, Burnet, Caldwell, and Fredericksburg.
“Rural America is in a crisis, and rural hospitals are absolutely critical for them,” Kennedy said following a roundtable discussion with Abbott and local healthcare leaders.
Federal Commitment to Medicaid Expansion
Kennedy announced that the federal government will increase Medicaid funding for rural hospitals from $19 billion annually to $50 billion annually under new legislation referred to as the “Big Beautiful Bill.. The funding will be distributed in two phases. The first $25 billion will be allocated evenly among states. The remaining $25 billion will be awarded through a competitive application process, with states required to submit proposals by December 1.
“This bill has the capacity to give them the chance to stabilize themselves, to right the ship, and then to adopt innovation and workforce changes so they can survive for the decades into the future,” Kennedy said. He noted that the funds could be directed to infrastructure projects such as expanding telemedicine and hiring additional medical staff.
When asked about the immediate concerns of patients in rural areas — such as a pregnant woman in Fayette County or a cancer patient in Llano County who may already face limited care options — Kennedy emphasized the urgency of the funding rollout. “That’s why we want to get the money out the door as quickly as possible. This is an unprecedented fast pace,” he said.
ALSO| One dead after crane tips over at NW Austin construction site
State Funding Already in Place
Abbott highlighted the state’s recent investments in healthcare during the news conference. He said the Texas Legislature allocated more than $300 million for rural healthcare initiatives and $500 million for mental health services over the past two sessions.
“The goal has to be to ensure that every corner of our state is going to be prepared to respond to the healthcare needs of their community, however unique they are. The rural parts of the state represent the majority of the state,” Abbott said.
According to Abbott, Texas is set to receive $100 million annually for five years under the new federal bill, with the ability to apply for additional support through the December 1 application process.
Challenges Facing Rural Hospitals
Rural hospitals often serve patient populations that differ significantly from those of metropolitan facilities. A higher proportion of their patients are older, sicker, uninsured, or reliant on Medicaid. These factors strain their financial sustainability, particularly when combined with staffing shortages and the rising cost of medical technology. Earlier this year, a survey conducted by the Sheps Center for Health Services Research reported that hundreds of rural hospitals across the country are at risk of closure. Texas has been identified as one of the states most vulnerable to widespread loss of rural healthcare facilities.
The consequences of these closures extend beyond emergency and inpatient care. In many rural communities, hospitals provide essential services such as maternity care, cancer treatment, and mental health support. The closure of a single hospital can leave residents traveling dozens of miles to access basic services.
Outlook for Rural Healthcare
Kennedy stressed that the legislation is designed not only to stabilize hospitals in the short term but also to foster long-term changes that will strengthen rural healthcare delivery. “This bill has the capacity to give them the chance to stabilize themselves and then to adopt innovation and workforce changes so they can survive for the decades into the future,” he said.
Abbott echoed the need for sustainable investment. “The goal has to be to ensure that every corner of our state is going to be prepared to respond to the healthcare needs of their community,” he said.
Despite the funding commitments, neither Kennedy nor Abbott provided a specific timeline for when residents in rural communities will begin to see expanded services. For patients in counties where hospitals are already struggling or have closed, the uncertainty remains significant. Still, both federal and state officials expressed confidence that the influx of resources will provide rural hospitals with the opportunity to adapt and endure. As Kennedy put it, the funding represents “an unprecedented fast pace” intended to meet “the dire need that people have.”
link