Iowa to receive $209M in 1st year from federal rural health care funding program

DES MOINES — Iowa will receive $209 million in the next fiscal year from a federal program designed to bolster rural hospitals and clinics, the federal government announced Monday.

The funding — $50 billion spread across the country — comes from federal Republicans’ tax policy and federal budget legislation which also slashed hundreds of billions from Medicaid and other federal health programs.

States were required to apply for shares of the funding. Iowa’s portion of the funding in the first fiscal year of the five-year Rural Health Transformation program matches the amount the state requested: roughly $200 million.

The goals of Iowa’s Healthy Hometowns proposal, according to the state’s application to the federal administration, are to:

The state’s proposal included plans to:

In the state’s application, Gov. Kim Reynolds described the proposal as, “thoughtfully crafted and years in the making, that will enable us to implement sustainable, community-supported solutions to improve health outcomes for our residents.”

“This program is an incredible opportunity to advance health care in rural Iowa,” Reynolds said Monday in a statement. “We’re grateful to the Trump Administration for this investment in our state, and we’re ready to innovate care delivery in ways that improve health, well-being, and quality of life for Iowans statewide.”

What is the Rural Health Transformation Program?

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The Rural Health Transformation Program was included in the One Big Beautiful Bill Act — the Republican-backed tax-cut-and-spending law enacted in July.

The legislation reduces future federal Medicaid spending by nearly $1 trillion over 10 years and will increase the number of uninsured people by 10 million, according to projections from the Congressional Budget Office, or CBO.

Of that total, Medicaid spending in rural areas will decrease by $137 billion over 10 years, according to the nonprofit health care advocacy organization KFF.

The projected 10-year impact on Iowans, according to the American Hospital Association: 37,700 rural Iowans will lose Medicaid coverage and rural hospitals will see $2.7 billion less in Medicaid funding.

Congressional Republicans’ legislation established a five-year, $50 billion fund meant to help states offset the impact of those cuts on rural hospitals. Half the funding was divided equally among approved states, with the remainder distributed based on rural population, hospital infrastructure and other factors.

Iowa hospital leaders, health policy experts and rural advocates have criticized the plan as insufficient to make up for the deep Medicaid reductions expected to hit rural providers.

“None of this funding can be used to replace the cuts that were put into effect,” Chris Mitchell, president and CEO of the Iowa Hospital Association, said during an Oct. 3 Iowa Ideas conference panel discussion hosted by The Gazette.

Under federal rules, states must use Rural Health Transformation funds for at least three of a dozen approved purposes.

Those include promoting evidence-based prevention and chronic disease management; providing payments to health care providers; and supporting consumer-facing, technology-driven solutions such as telehealth and remote monitoring.

States may also invest in workforce recruitment and retention programs requiring a minimum five-year service commitment in rural areas; expand the use of artificial intelligence, robotics and cybersecurity technology in hospitals; and strengthen opioid, substance use disorder and mental health treatment services.

Other approved uses include modernizing health information systems, offering training and technical assistance, and testing innovative care models such as value-based and alternative payment arrangements — all aimed at ensuring sustainable access to high-quality health care in rural communities.

More about Iowa’s proposal

Reynolds’ proposal outlines a comprehensive strategy to strengthen rural health systems through a “hub-and-spoke” model of care developed in collaboration with hospitals, community partners and the Iowa Department of Health and Human Services.

Iowa has launched several initiatives in recent years to strengthen rural health care, including a network of Centers of Excellence (COEs) to expand access to specialized care in underserved regions. Hospitals such as Cass Health, Mahaska Health and Van Buren County Hospital have received state grants to build regional partnerships. They serve as coordinated systems that provide primary care locally with regional hubs that offer specialty services to surrounding counties, such as maternal health and behavioral health, by bringing specialists to rural areas or creating regional partnerships.

State, national leaders react to funding announcement

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Iowa Health and Human Services Dir. Larry Johnson: “Our mission is simple: healthier communities and better outcomes. Healthy Hometowns brings that vision to life by transforming how care is delivered across Iowa.”

U.S. Sen. Chuck Grassley: “Senate Republicans fought hard to ensure our (the legislation) included significant funding for rural communities. I was proud to help craft this legislation that provides the largest federal investment in rural health care in history. It’s fantastic news that Iowa will receive $209 million in the next year to support its Healthy Hometowns program and revitalize rural care across the state. I thank Gov. Reynolds and her team for working with my office and our congressional delegation to make this substantial investment in Iowa health care.”

U.S. Rep. Mariannette Miller-Meeks: “This is a transformational moment for rural Iowa. Access to high-quality health care should never depend on your ZIP code, and today, we’re delivering on that promise. This $209 million investment will bring top-tier care closer to home for families, seniors, and veterans in every corner of our state. I fought hard to ensure Iowa received its fair share, and I’m proud to see that fight pay off for the people I serve.”

U.S. Rep. Zach Nunn: “When we passed the (legislation), I fought to secure $50 billion for rural health care across the country. Now, more than $209 million is coming home to Iowa to strengthen care close to home, expand access through telehealth, and help rural clinics recruit and retain the providers Iowa communities rely on.”

U.S. HHS Sec. Robert F. Kennedy, Jr.: “More than 60 million Americans living in rural areas have the right to equal access to quality care. This historic investment puts local hospitals, clinics, and health workers in control of their communities’ health care. Thanks to President Trump’s leadership, rural Americans will now have affordable health care close to home, free from bureaucratic obstacles.”

Gazette Deputy Bureau Chief Tom Barton contributed to this report.

Comments: (515) 355-1300, erin.murphy@thegazette.com

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