By Kiera Peoples
Rural hospitals are struggling to navigate rapid policy changes affecting their financial stability, and maternity units – departments that often operate at a loss – are usually the first to close when there are budget constraints. Since 2020, over 130 labor and delivery units have closed in rural areas, where rural residents now have to drive over 40 minutes on average to give birth. Moms and babies need a long-term, comprehensive federal strategy prioritizing infrastructural support over temporary innovation.
The Rural Health Transformation Program (RHTP), a $50 billion initiative authorized by H.R.1, or the so-called One Big Beautiful Bill Act, has been positioned by the Trump Administration as a major federal investment in rural health. However, the RHTP is insufficient to stabilize rural health systems following H.R.1’s nearly $1 trillion cut from Medicaid over the next decade. The program provides an inadequate, short-term offset to sweeping, long-term disinvestment, particularly for women and families who rely on Medicaid for care.
Administered by the Center for Medicare and Medicaid Services, the RHTP distributes $10 billion annually over five years (2026-2030), covering only about five percent of total Medicaid cuts due to H.R.1. and roughly 37 percent of the projected $137 billion loss in Medicaid funding for rural areas. Rural hospitals are estimated to experience substantial financial losses largely due to state budget shortfalls and increased uncompensated care as a result of restrictive provider taxes and unnecessary barriers for Medicaid enrollees, such as work reporting requirements. Additionally, the RHTP has a 15 percent cap on provider payments, further limiting hospitals’ ability to offset financial losses and maintain essential services.
The looming cuts are deeply concerning. Rural hospitals already operate on thin financial margins, with Medicaid reimbursement accounting for about 10-20 percent of their revenue. Moreover, most H.R.1 cuts (76 percent) will occur after 2030, leaving health systems to absorb the steepest funding losses after the RHTP expires.
While the RHTP funding may support targeted pilot initiatives, including some state maternal health investments, its scale and design do not align with the realities and challenges rural communities face. Long-term and robust financing solutions are needed to prevent service reductions and protect access to care. To understand how the RHTP represents a missed opportunity for rural maternal health, it is important to examine its funding limitations and the populations it is designed to serve.
The Rural Maternal Health Crisis
Rural communities are disproportionately impacted by H.R.1 cuts, as one in four rural residents relies on Medicaid. Medicaid finances nearly half of all rural births, serving as a primary payer for prenatal, delivery, and postpartum care. H.R.1 cuts will exacerbate rural provider shortages and maternity care deserts by threatening hospital solvency and forcing service reductions. Before H.R.1 became law, nearly two-thirds of maternity care deserts across the country were in rural areas. Analysis by the National Partnership for Women & Families found that in 2025 there were 131 rural L&D units at risk of closure due to HR.1. cuts and four of those listed have closed since.
Women living in maternity deserts, no matter their insurance type, have higher rates of preterm births, worse overall health than women with access to maternity care, and are less likely to receive prenatal care. Rural residents travel longer distances for care, increasing both cost and risk during pregnancy and child birth. Women living in rural areas have significantly higher maternal mortality rates compared to women in urban areas. The crisis is even more dire for Black women in rural areas, who are more than three times as likely to die and more likely to have severe health complications than white women in rural areas.
The additional financial challenges imposed on rural hospital systems by H.R.1 will significantly impact the quality of care to pregnant patients, especially those with complex health conditions, by limiting the resources available for appropriate level staffing, equipment, and services. Rural residents who are Black, Hispanic, American Indian, Alaskan Native, or on Medicaid have higher rates of receiving low-quality maternity care.
Given the rural maternal health landscape, the RHTP cannot be seen as a credible replacement for these deep structural deficits further exacerbated by H.R.1.
RHTP Limitations
While the RHTP provides states with flexibility to design and implement rural health initiatives, its funding structure limits states’ ability to address core health system needs, especially for moms and babies.
Maternal Health is Sidelined
Despite the severity of the rural maternal health crisis, CMS did not make maternal health a central component of the RHTP’s design. In fact, only 13 states have dedicated initiatives focused on maternal health and just four of those states plan to allocate more than 10 percent of their RHTP funds to maternal health (see table below). Where there is funding allocated to maternal health-related initiatives, the investments generally focus on:
- Telehealth expansion & remote monitoring.
- Emergency obstetric readiness.
- Workforce training programs.
While these interventions may improve aspects of care delivery, many do not address the need for significant rural maternal health infrastructural development. Moreover, the level of funding that states have received will not be enough to sustain these programs given the losses from Medicaid and longstanding underlying drivers of maternal health inequities in rural areas.
Funding Fails to Reach the Most Impacted States
RHTP funding does not replace lost Medicaid revenue either dollar-for-dollar or per-rural-resident. Only 5 percent of the funding is allocated based on rural population size. As a result, states experiencing the greatest losses from Medicaid cuts may not receive proportionate percentages of RHTP funds. For example, while Texas received the most funding from RHTP, it has the largest rural population in the country and only received about $66 per rural resident compared to Rhode Island – one of the most densely populated statesThe RHTP funding can only be used to support rural health, however, urban hospitals also face significant challenges. Rhode Island is among a handful of states that saw more than 25 percent of urban hospitals lose their obstetric service. Other states include Iowa, Oklahoma, Pennsylvania, South Carolina, Washington, D.C., and West Virginia. – which received over $6000 per rural resident. This means that some states have less resources available to them to support their rural population, which may skew their program’s effectiveness compared to other states.
Unregulated Flexibility
CMS has framed the RHTP as a fund that broadly supports the health of rural communities, however it has few guardrails to ensure fidelity to that objective. There are no standardized accountability measures to ensure that funding is prioritized to support rural Medicaid enrollees or participants, or communities with worse health outcomes. Though these investments can support broad health goals, impact will be hard to measure without greater oversight and guidance on how to use the funds. There should be strong oversight from CMS and states should thoroughly evaluate their current condition to ensure that RHTP investments will meaningfully address gaps in maternal health access and outcomes.
Conclusion
The Rural Health Transformation Program acknowledges the challenges of rural health care, but it falls short of what is required to meaningfully address them. RHTP’s limited funding and temporary nature is inadequate in the face of sweeping Medicaid cuts that threaten provider stability and access to care, especially in maternal health. A short term program designed around innovation cannot address the long term financing and workforce challenges facing rural health systems. Federal policy must commit to establishing and investing in infrastructure development to adequately support rural maternal health. Part two of this issue brief provides a more targeted set of policy recommendations to address these gaps.