The National Rural Health Association (NRHA) has issued a strong warning following the passage of the One Big Beautiful Bill Act (OBBBA)—a legislative package with sweeping implications for Medicaid, the ACA Marketplace, and rural healthcare as a whole.

Since being signed into law on July 4, 2025, the bill implements significant funding shifts and eligibility changes that could put vulnerable patient populations at risk and leave rural hospitals scrambling for financial stability.

A Call to Protect Rural Communities

In a statement released this month, NRHA expressed alarm at the bill’s consequences, stating that “This legislation will limit access to care for all rural patients by ending health care coverage for rural residents nationwide and putting financial strain on rural facilities who care for them.”

Primary Concerns

• Cuts to provider taxes and state-directed payments, which fund critical rural healthcare services.
• A Rural Health Transformation Program that, while promising, may fall short of addressing broader rural impacts.
• New Medicaid work requirements that may exclude some of the most vulnerable rural populations from coverage.

Key Provisions

Medicaid Changes

The bill introduces a range of cost-saving measures targeting Medicaid funding:

Provider Taxes

Expansion states will see a gradual phase-down to 3.5% of provider tax rates between 2028–2032, while non-expansion states are locked into their current rates. Long-term care facility taxes are exempt.

State-Directed Payments (SDPs)

Expansion states are capped at Medicare rates; non-expansion states at 110%. These limits will tighten over time.

Work Requirements

By 2027, Medicaid enrollees must work 80 hours per month or be enrolled in school half-time. Exemptions are limited, and parents of children 14+ are no longer automatically exempt.

Rural Health Transformation Program

The bill’s potential bright spot is a proposed $50 billion fund over five years to aid rural healthcare transformation. However, the program’s efficacy will depend heavily on how funds are distributed and whether states can quickly create and submit comprehensive rural health transformation plans by December 31, 2025.

Funds may be used for:

• Expanding access to behavioral health services
• Recruiting and retaining rural healthcare providers
• Supporting cybersecurity and IT adoption
• Advancing chronic disease management
• Implementing value-based care programs

Preparing for the Future

At MEDHOST, we stand with rural hospitals, providers, and communities as they navigate this complex and fast-moving policy landscape. Our commitment remains steadfast: to support the people and systems delivering essential care to rural America.