Commentary: Rural Health Transformation Program is woefully inadequate to save West Virginia hospitals

by Ellen Allen

Originally published on August 28, 2025 by West Virginia Watch. 

As I visit communities around my beloved West Virginia to talk about the impacts and consequences of Capito Care, or HR 1, perhaps the most sweeping and arguably the worst piece of health care legislation to ever come out of our nation’s capital, it is the impact upon rural hospitals that is getting the most attention — and concern.

If you have attended one of the meetings or town halls where I have discussed the dire consequences of the $1.1 trillion in cuts to Medicaid, then you have also heard me discuss the vulnerability of our hospitals. Quite frankly, there is not a single hospital in our state that will not be affected. However, there are 10 hospitals and three nursing homes in our state that are either at high risk for closure or vulnerable to closure. You can find those hospitals and the supporting analysis in Rural Hospital Closures — Sheps Center at UNC Chapel Hill and Federal Medicaid Cuts Would Force Rural Hospitals to the Brink of Closure by Families USA, a national, non-partisan advocate for health care consumers.

These hospitals are not in imminent danger of closure. They will, however, be in danger starting in 2027 as the provider tax, the funding mechanism that helps fund Medicaid, is rolled back and ultimately dismantled.

The $50 billion Rural Health Transformation Program is touted as the solution to saving rural hospitals from the dismantling of the funding mechanism for Medicaid. Perhaps it is better than not having one, but barely. It was a last minute addition to appease the outcry of hospital administrators around the country who foresaw the existential threat of Medicaid cuts to their hospitals.

Here is why the fund is inadequate to meet the moment:

• According to the Congressional Budget Office, the fund will roughly offset only 37% of estimated cuts to Medicaid spending. States will have to make up the difference.
• Half of the funds — $25 billion — will be equally distributed among the states with approved applications (states must apply for these funds) irrespective of the rural population or financial health of the rural hospitals. This approach may not adequately address unique challenges faced by hospitals in states with large rural populations, or greater need of older or sicker populations. This certainly stands out to me as a red flag for West Virginia.
• The $50 billion fund may not be enough to overcome systemic issues, of which West Virginia has many. These include rural hospitals who have been operating on razor thin margins for years, or even negative revenue, declining patient volumes, and workforce shortages.
• West Virginia hospitals serve an older, sicker and poorer population. It is just a fact. Many of our hospitals rely heavily on government payers such as Medicaid and Medicare which reimburse at below cost of providing services.

To add insult to this injury, these funds may not even go to rural hospitals. There is no guarantee. The law says that states should use the funds to pursue goals including improving access to hospitals and other providers, improving health outcomes, enhancing economic opportunity for health care workers, and prioritizing the use of emerging technologies. All good things worthy of funding.

Dr. Mehmet Oz, a President Donald Trump appointee leading Medicare and Medicaid, will determine how to distribute the other $25 billion. The law says the money is to be used for such things as increasing robotics, upgrading cybersecurity and helping rural communities “to right size their health care delivery systems.”

And here is the real kicker, especially given the carrot and stick approach of the Trump administration: The law not only grants the Center for Medicare and Medicaid Services broad discretion over the award and distribution of funds, but these funding decisions are not subject to administrative or judicial review.

What could possibly go wrong? Capito Care is bad policy and it is not ameliorated by a mere $50 billion fund. We urge hospitals and supporting  associations to fight for adequate funding to protect health care in their communities.

If these rural hospitals close — and some will —we may never get them back.

Sen. Shelley Moore Capito should revise Capito Care while there is still time, and turn it into legislation she would be proud of. Sen. Jim Justice and Reps. Carol Miller and Riley Moore should join her.