The Facilities for Medicare & Medicaid Providers (CMS) is taking a victory lap, saying Rural Well being Transformation grant awards to states one after the other. Don’t be fooled. This system totals $50 billion and expires in 5 years — the regulation that created it, the 2025 Republican reconciliation invoice, H.R. 1, cuts greater than $1 trillion in federal assist for well being care. No quantity of spin could make $50 billion fill a $1 trillion gap.

Though the Rural Well being Transformation Program could present some states with an preliminary injection of actual {dollars} that may fund well being initiatives to handle the very actual challenges dealing with folks in search of well being care in rural communities, this program was not born out of a very good religion effort to resolve these perennial issues. Reasonably, it was created in a cynical try to supply political cowl for Members of Congress so they might vote for H.R. 1’s deep cuts to Medicaid — the exact same cuts that are actually resulting in rural clinic closures and threatening the communities who depend upon them for care. Now CMS is handing out checks as in the event that they solved the issue they created.

That is the fact:

• H.R.1 lower $911 billion in federal Medicaid spending over 10 years, plus extra in federal assist for the Reasonably priced Care Act marketplaces. The Rural Well being Transformation Program totals $50 billion — simply 5.5% of what these Medicaid {dollars} to states would have been.
• The adjustments in how states can fund their Medicaid packages (e.g. supplier tax charges) are everlasting, thus the cuts will continue to grow after 10 years. Once more, the Rural Well being Transformation Fund solely lasts 5 years.
• Not more than 15% of Rural Well being Transformation grants to states can be utilized to pay suppliers for affected person care. Over 95% of federal Medicaid funding for states is spent on affected person care. This implies solely $7.5 billion in RHT funds can be found to make up for the $865 billion in federal Medicaid funding that seemingly would have gone to affected person care.

As an alternative of touting these one-time grants, the true focus needs to be the cascading fiscal disaster that HR 1 triggered in states throughout the nation. A number of states are actually chopping thousands and thousands — and in some situations — billions of {dollars} from completely different state packages to assist hold their Medicaid packages afloat:

• Idaho made throughout the board cuts between 3% and 4% for all state companies, to avoid wasting $131.3 million in state normal funds to assist steadiness its state funds.
• Michigan lower its College Assist Fund by $1.7 billion to assist offset federal funding losses and allotted $185 million to stabilize Medicaid funding and defend protection for Michiganders.
• Missouri’s Governor froze $441 million in FY2027 funds allocations, which implies the allocations will stay unfunded till income turns into accessible. Freezing these funds permits Missouri to switch $469 million in new normal fund {dollars} to its Medicaid managed care program.

In different situations, states are already making direct cuts to Medicaid to steadiness their state budgets:

• Colorado is chopping $135 million in supplier charges and Medicaid providers, along with extending its waitlist for twenty-four/7 take care of adults with developmental disabilities by solely enrolling one new member for each two spots vacated. This modification is predicted to double the ready interval for providers from 7 to 14 years.
• Nebraska’s funds mid-biennium adjustment cuts $231 million from Medicaid in FY2027, which implies much less Medicaid funding can be accessible for affected person care.

Even in states the place lawmakers have been in a position to keep away from probably the most extreme cuts, these states are shifting {dollars} away from state normal funds to plug holes of their Medicaid budgets as a substitute of utilizing the funds for different very important providers like schooling, housing, and meals help:

• Alaska moved $34 million from state normal funds to cowl Medicaid gaps in its supplemental FY2026 funds and FY2027 funds.
• Iowa legislators already wanted to handle pre-existing Medicaid funds shortfalls of $90 million in FY26 and $167 million in FY27, along with new shortfalls created by H.R. 1. To steadiness its funds, Iowa shifted $89 million normally fund {dollars} and $350 million from Iowa’s Taxpayer Reduction Fund to its Medicaid funds.
• Maine is growing taxes on incomes over $1 million to assist the state allocate $141 million in new state funding for Medicaid. Maine’s supplemental funds additionally transferred $53 million to the MaineCare Stabilization Fund to handle future funds shortfalls, adjusting Maine’s hospital tax to generate a further $24 million yearly, and offered the Governor with authority to spend as much as $30 million from its Funds Stabilization Fund to take emergency funds measures associated to future federal actions.

And H.R.1’s moratorium on new Medicaid supplier taxes is even boxing in non-Medicaid enlargement states. The moratorium is forcing states like Kansas and Florida to make dramatic budgetary adjustments with sweeping long-term impacts.

• To maintain KanCare complete, the Kansas state funds features a 1.5% funds lower for a lot of different state companies and packages, on high of a $91.7 million lower in state normal fund spending on schooling, and an $11 million lower for greater schooling.
• Florida is shifting $1.2 billion in new normal fund {dollars} into Medicaid. These funds may have been used for different state priorities like public security or baby care.

These drastic cuts and shifts in budgets spotlight what advocates all the time knew to be true — the Rural Well being Transformation Program is solely not an affordable alternative for the safety and predictability of Medicaid funding. Program {dollars} additionally include restrictions and limitations that forestall them from offsetting the influence of cuts from H.R. 1 on the state degree.

So don’t be fooled as you hear about new bulletins associated to Rural Well being Transformation grants to the states. The states are hurting. State funds cuts and main shifts to maintain Medicaid budgets balanced have been enacted. The Rural Well being Transformation grants won’t forestall or totally offset the hurt to states from H.R.1.