Congress just authorized $50 billion for the Rural Health Transformation Program under P.L. 119-21 — and states are already receiving their first-year awards averaging $200 million each. The framing is sweeping: a generational fix for rural healthcare access. That framing has been used before. The last time Congress took this approach, it produced an office that still exists today — and a set of structural problems that the current legislation is still trying to solve.

In December 1987, Congress passed the Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203), signed into law by President Reagan on December 22 of that year. Embedded in that sprawling reconciliation bill — the same vehicle carrying nursing home reform, Medicaid expansions, and farm program adjustments — was a subtitle specifically dedicated to rural health. That subtitle formally created the Federal Office of Rural Health Policy (FORHP) within the Health Resources and Services Administration (HRSA), codifying it in statute under Section 711 of the Social Security Act. The context: rural hospitals were closing, rural populations were Medicare and Medicaid-insured at high rates, and access to care in rural areas was degrading. The 100th Congress used a budget reconciliation package to address it.

The FORHP was charged with advising the HHS Secretary on the effects of policies and proposed changes on Medicare and Medicaid in rural areas, coordinating rural health activities within HHS, and maintaining a rural health information clearinghouse. The office has operated continuously since. What it did not do was stop the underlying structural problem. Rural hospital closures continued across subsequent decades. By the time the Cecil G. Sheps Center at UNC began tracking closures, the cumulative count exceeded 195 rural hospital closures and conversions since 2005. The 1987 legislation created a policy infrastructure — an advisory and coordination apparatus — but did not resolve the reimbursement and workforce dynamics driving rural hospital financial distress. Congress returned to the issue repeatedly: the Rural Health Clinic Services Act, Critical Access Hospital designations, the Medicare Rural Hospital Flexibility Program, and multiple HRSA grant reauthorizations followed across the 1990s and 2000s, each addressing a piece of the same structural gap.

The Rural Health Transformation Program established by P.L. 119-21 represents a structurally different approach than 1987: it is grant-based rather than regulatory, state-administered rather than federally directed, and funded at a scale ($10 billion per fiscal year, 2026–2030) that dwarfs anything in the FORHP era. However, the underlying conditions are comparable. A December 2025 analysis by the Center for Healthcare Quality and Payment Reform identified 756 rural hospitals nationally at risk of closure due to financial problems — with 7 in Ohio, 17 in Kentucky, 15 in West Virginia, and 9 in Indiana among those at risk. A June 2025 analysis from the Sheps Center identified 35 Kentucky hospitals and 12 Indiana hospitals specifically at elevated risk tied to Medicaid dependency and negative operating margins. The 1987 legislation created the office that monitors this problem. The 2025 legislation is attempting to fund its way out of it. Whether the current investment holds after fiscal year 2030 is the open structural question — the same question that followed 1987.

— YOUR 5-STATE SNAPSHOT (current risk data, Center for Healthcare Quality and Payment Reform, Dec. 2025) —

Source: Center for Healthcare Quality and Payment Reform, Rural Hospitals at Risk of Closing (December 2025)

Congress has now created the infrastructure for rural healthcare reform twice in 38 years — once by building a federal office to track the problem, and once by allocating $50 billion to states to solve it. Whether the second approach achieves what the first did not depends largely on how state transformation plans hold up past their 2030 funding horizon.