Texas will get the biggest portion of the first rollout of the $50 billion Rural Health Transformation Program, which was created in tandem with legislation slashing Medicaid funding.
Texas will be receiving the biggest slice of the federal government’s first rollout of a $50 billion fund created to fortify rural health care across the country.
On Monday, the Trump administration announced how it plans to allot billions of dollars to states over the course of five years from its federal Rural Health Transformation Program — the fund Congress created earlier this year after approving the One Big Beautiful Bill Act. That legislation, in tandem with creation of the fund, slashed Medicaid funding by an estimated $1 trillion.
States made bids to receive portions of the one-time federal funding and Texas, according to the Centers for Medicare & Medicaid Services, is slated to receive more than $281.3 million for the first year of the program in 2026. That’s around $81 million more than what the state asked for in its application.
Alaska is getting the second biggest portion of $272.7 million a year.
While Texas is receiving the most funds, its rank lags compared to its population. Half of the federal dollars will be distributed equally to each state. Texas, which has the most rural residents of any state, will receive about $60 per resident in a rural county — the lowest rate in the nation.
“More than 60 million Americans living in rural areas have the right to equal access to quality care,” U.S. Health and Human Services Secretary Robert F. Kennedy Jr. said in a news release. “This historic investment puts local hospitals, clinics, and health workers in control of their communities’ healthcare.”
The funds come as budget shortfalls and rising costs have forced Texas’ rural hospitals and clinics into a significant health care crisis.
The need for health care in rural communities is also higher because they tend to have higher uninsured rates; 76 counties in Texas have uninsured rates over 20%, and 60 of those counties are in rural areas, according to a report from the National Institute of Health.
The NIH also found that “deaths from cancer, heart disease, respiratory disease, and unintentional injury are higher in rural Texas than Texas overall,” and that “indicators of health outcomes are worsening in rural Texas populations.”
“Rural Texans across the state will benefit from this historic federal investment,” Gov. Greg Abbott said in a press release. “We will strengthen our rural hospitals, expand access to critical mental and physical health care, and help reduce chronic disease through wellness and nutrition initiatives.”
The state’s health care agency said it will use the funds to strengthen rural health care clinics in a variety of ways, including: creating wellness and nutrition programs to rural providers; educating and attracting health care professionals to work in rural areas; and modernizing resources and technology in rural centers.
More specifically, it plans to “add more than a thousand rural health care” positions with the additional funds.
U.S. Sen. John Cornyn, who wrote a letter to CMS Administrator Dr. Mehmet Oz in December asking for the funds, said he was “proud to vote to create the new Rural Health Transformation Program to improve health care for the millions of Texans living in rural areas across the Lone Star State.”
Cornyn added that its “another example of the Working Families Tax Cuts benefitting all Texans.”
For some Texas hospitals, the funding may be a lifeline.
Erin Clevenger, CEO of Memorial Medical Center in Port Lavaca, southeast of Victoria, said in October to KERA that her hospital was on the brink of closing. “Every day is a battle to make sure we don’t become one of those statistics,” she said.
Fourteen rural hospitals in Texas closed in the last decade, according to a report from the Center for Healthcare Quality and Payment Reform, and over half of the remaining hospitals — 82 facilities — were at risk of closing. And 21 hospitals were at “immediate risk of closing.”
Rural hospitals have been pushed to cut their costliest services: labor and delivery services. Almost 60% of rural Texas hospitals don’t deliver babies, leaving large swaths of the state without a nearby place to give birth.
Between 2010 and 2022, Texas lost a dozen rural obstetrics units, according to the University of Minnesota Rural Health Research Center, and one-fifth of those that remain are at risk of closing.
Source: Colleen DeGuzman, The Texas Tribune
Photo Credit: The Seymour Hospital on June 30, 2025. The town of Seymour is about 50 miles southwest of Wichita Falls. Shelby Tauber for The Texas Tribune
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