Big Beautiful Health Fund: Band-Aid For A Broken Arm?

Editors Note: The Concho Observer would like to hear your stories about rural healthcare. Please reach out to news@conchoobserver.com.

This is a continuation of The Concho Observer’s series on rural healthcare. You can read the previous installment here

Analysis and Commentary

Earlier this year, when the so called “One Big Beautiful Bill Act” was passed, certain senators promised a vote only if something was done to address the glaring issue of rural healthcare.

This issue was reportedly addressed with the establishment of a dedicated Rural Health Fund. Analysis of the Congressional Budget Office (CBO) and Center for Medicare and Medicaid Services (CMS) by the Kaiser Family Foundation (KFF) show that the issue might not be so cut-and-dry.

$50 Billion Doesn’t Quite Make Up Difference In Funding

Current estimates from the CBO say the new law will reduce Medicaid funding by $911 billion over ten years. Cuts to rural Medicaid funding are currently estimated around $150 billion. This means that the $50 billion health fund will only account for about a third of the estimated loss.

Funding Split 50/50

From the KFF report: “the law provides $10 billion per year through the rural health fund for fiscal years 2026 through 2030, a five-year period…all funds must be spent by October 2032.”

Of the $50 billion total, the fund is split 50/50. Half will be distributed equally among all states with approved applications.

A state that was approved for the fund would receive the same amount as any other state. Theoretically, if Utah and Texas both applied and were both approved, that means they would receive the same amount of money. So it doesn’t seem to take into account the fact that Utah has a population of 3.5 million, and Texas almost ten times that.

The other half is “distributed based on an approach determined by CMS within broad requirements”

Namely that CMS consider what percentage of the state population lives in a rural part of a metropolitan area, the share of rural health facilities in the state as a whole, and the situation of hospitals that serve a disproportionate amount of low income patients.

Thought the CMS is required to consider these, they are also required that it must distribute these funds to at least a quarter of states that have been approved.

States will have further discretion in how to distribute the funds among hospitals, and may be able to direct these to nonrural areas as needed.

Measure Has No Ability to Fund Itself

While the cuts to Medicaid and ACA marketplaces are not time limited, the rural health fund only provides $10 billion for the next five fiscal years. There is no provision for the fund to be replenished, and new legislation would be required for any additional funds.

States will begin applying this September, and will start receiving the money by the end of this year.

Transparency Might Be Major Issue

CMS is not required to publish information about how the funds will be distributed: the amount sent to each state or why certain state applications were approved or denied are up to their discretion to release.

States are required to submit annual reports to CMS about the use of the funds.

This will more than likely make reporting on this issue difficult.

How Much Does It Cost To Run A Rural Hospital?

CMS budget data on rural hospitals show that funding can vary wildly based on available services, though some generalizations can be made.

Critical Access Hospitals like those in Colorado City, Coleman, or Eden operate on budgets in the tens of millions. Larger hospital systems like in Sweetwater or Brownwood will have much larger budgets, fifty to a hundred million.

Lack of transparency in the plan set forth by the Rural Health Fund again fail to clarify what kind of amounts might be expected, but as healthcare and medicine costs rise, the amount of help that each hospital gets might start to be less effective as the years roll on.