Oregon will receive $197.3 million in 2026 to improve rural health care and could receive more in the following four years, the U.S. Centers for Medicare and Medicaid Services announced on Monday.
Yet very little of the money the state is being awarded can go directly to help rural hospitals cover their losses on patient care or make up for reduced Medicaid payments. In Oregon, 14 out of 37 rural hospitals lost money caring for patients last year, according to the state’s funding application.
According to rules published by CMS, in a given budget period, no more than 15% of a state’s total award can be used to pay health care providers.
Instead, states have been told to direct the money to investments in new technology for rural areas, the rural health care workforce pipeline, and preventative health programs for rural areas, among other priorities.
State officials said Monday that they were pleased with the amount Oregon received.
Republican leadership in Congress created the $50 billion fund that is the source of Oregon’s $197 million award when they passed President Donald Trump’s signature domestic policy bill, H.R. 1, also known as the “One Big Beautiful Bill Act.”
That bill reduces federal spending on Medicaid by an estimated $911 billion, according to the Congressional Budget Office. Funding the rural health transformation program was a concession to members of their caucus who worried that cuts to federal Medicaid spending could force rural hospitals to close.
The Oregon Health Authority has projected a reduction of $11.7 billion in federal funding for Medicaid over the next ten years.
Critics have said rural hospitals will be particularly hard hit by new caps on how much federal funding states can draw down by taxing health care providers and insurers who participate in the Medicaid program.
“Many rural hospitals across Oregon are fighting just to keep services available in their communities,” said Becky Hultberg, president and CEO of the Hospital Association of Oregon. “This funding should be targeted to projects that help stabilize rural hospitals.”
Clare Pierce-Wrobel, director of the office of health policy and analytics at the Oregon Health Authority, said that the rural health fund award will not offset the state’s losses from H.R.1 over the next decade.
But it does give the OHA time and money to work with rural communities to try to design different, cost-effective ways of delivering health care that can help Oregon weather those cuts.
“We do see this as a silver lining to be able to support as many promising and sustainable rural health care solutions as possible,” she said.
In a press release, Health and Human Services Secretary Robert F. Kennedy, Jr. called the awards announced Monday a historic investment.
“Thanks to President Trump’s leadership, rural Americans will now have affordable healthcare close to home, free from bureaucratic obstacles,” he said in a provided statement.
The $50 billion in one-time federal funding will be distributed to all 50 states over the next 5 years. By statute, half is being split equally between every state, regardless of size, population, or how rural it is. The other half is awarded to states based on their demographics and how the administration ranks their applications.
Oregon received $100 million in base funding and an additional $97 million on top of that — just shy of the full amount Oregon requested. The state’s spending proposal had bipartisan support.
Pierce-Wrobel said the state plans to spend its money in two phases. This year’s awards will focus on short-term projects that are ready to go and can improve the quality of care in rural parts of the state. Later, Oregon will focus on longer-term projects addressing issues like technology and workforce development.
OHA will release a formal request for grant applications early next year.
