The North Carolina Department of Health and Human Services (NCDHHS) announced recently that the state will begin preparing an application for federal funds meant to help struggling rural health providers like some of those across North Carolina.

The money would come from the new Rural Health Transformation Program that was created under HR1 – a sweeping federal initiative signed into law by President Donald Trump last month.

 The Rural Health Transformation Program is being billed as a way to “soften the blow” of major Medicaid reductions that are included in the federal legislation in the One Big Beautiful Bill – reductions that state health officials say will weigh most heavily on rural communities.

It’s a particular focus for this state.

North Carolina has one of the largest rural populations in the nation, with more than 3 million residents living outside of major metro areas. The state ranks second only to Texas in total rural population.

Rural residents have to deal with higher rates of chronic disease, fewer doctors and nurses per capita and longer drives to reach basic medical care.

Guilford County leaders – like the leaders of other counties across North Carolina – have been very concerned about what the recent changes in federal law will mean for local health care and for Medicaid recipients in the county.

 Guilford County Social Services Director Sharon Barlow told the Rhino Times recently that the One Big Beautiful Bill passed by Congress and signed by Trump is expected to cut federal Medicaid funding in Guilford County and in the state, which, she said, could force North Carolina to reduce or eliminate optional Medicaid benefits.

That includes home- and community-based care for people with disabilities.

Barlow said this “could negatively impact access to care for vulnerable populations, including those with disabilities and those relying on home-based care.”

Barlow added that the work requirements in the new legislation will knock a lot of people off Medicaid. While many conservatives say that’s just fine – if you don’t work, they argue, you shouldn’t be entitled to medical care – others argue that the health care system will see increased cost because it’s not a though those people without coverage will go untreated. Instead, they’ll go to emergency rooms or other urgent care facilities, get treated – and the health care provided to the uninsured will ultimately be paid for by taxpayers and those who are legitimately participating in the system.

There is some time to address the issues. Some of the changes to Medicaid won’t take place until after the mid-term elections next year. That buys health officials in North Carolina and other states with large rural populations a little time to adjust.

According to NCDHHS, Medicaid cuts under HR 1 will total an estimated $1 trillion nationwide over the next decade. North Carolina alone is projected to lose $49.9 billion in Medicaid funding during that period.

NC Governor Josh Stein said the new funding for rural programs is badly needed, but he added that it won’t be enough to address the negative impacts of the bill.

“Rural communities need access to health care to thrive,” Stein said. “People in these communities won’t stop getting sick if their health care is gone – and towns will struggle to grow or attract businesses without a hospital. This program will help us mitigate those impacts, and we will do everything we can to put it to good use. Even so, it will not fully solve the problem we’re facing. We’ve got to come together as North Carolinians to support our Medicaid program.”

The scale of the changes in the state will be major.

The Medicaid reductions in HR 1 are predicted to lead to North Carolina’s rural hospitals losing $3.7 billion over the next 10 years. The new federal program, by contrast, would replace only a portion of that amount, according to NCDHHS officials.

Also, the funding won’t be permanent: The federal bill is designed as a “temporary relief measure” to be distributed over the coming five years.

 While it may help hospitals and providers in North Carolina keep their doors open in the short term, it’s not a long-term solution to the state’s Medicaid funding shortfall.

Adding to those challenges, North Carolina is one of the states with the highest number of recent rural hospital closures – behind only Texas and Tennessee.

The closures have left some communities with no emergency rooms or obstetric services nearby, problems that state officials say will be exacerbated by the new Medicaid cuts.

The new law allocates $50 billion nationwide over five years, with funds distributed in 10 payments. Half of that money – $25 billion – will be split evenly among all 50 states. That share will amount to about $100 million each year for North Carolina over five years.

The other $25 billion will be divided among states at the discretion of the federal Centers for Medicare and Medicaid Services.

State officials say they intend to pursue every dollar possible.

NCDHHS Secretary Dev Sangvai said that the department is determined to keep rural health care a priority despite the changes coming from Washington.

“We are rooted in our commitment to improve the health and well-being of all North Carolinians, and that includes the more than 3 million people who live in our rural communities,” Sangvai said. “As we navigate changes at the federal level, we will not lose sight of the mission to create a healthier North Carolina for all, despite the steep cuts to Medicaid and rural health.”

NCDHHS Deputy Secretary for Health Debra Farrington added that the state will work with hospitals and providers to determine how to allocate the money in the most effective way.

“It is our mission to increase access to care to ensure our hospitals and providers can continue to provide a broad array of health services that we know are needed to keep North Carolinians healthy,” Farrington said.

The department has already launched a website with a link for providers to submit feedback as to what should be included in North Carolina’s application. State health officials also plan to host several opportunities for hospitals, health groups and other partner organizations to weigh in over the coming months.

North Carolina’s application will have to meet several requirements in order to qualify. According to NCDHHS, the state must show how its plan will improve access to rural hospitals and other providers, improve health outcomes for residents, foster partnerships among rural health providers and strengthen the rural health care workforce.

After more detailed application instructions come out in September, NCDHHS may need to put its plan together on a fast timeline since some applications are expected to be approved by the end of 2025.

If approved, North Carolina providers could begin applying for portions of the money in early 2026. The state’s health and human services department said funding would then start flowing to rural hospitals and clinics in fall 2026.

Even with the program in place, the cuts to Medicaid will leave hospitals and clinics across rural North Carolina facing serious financial pressure. The Rural Health Transformation Program is designed as a stopgap, not a full replacement for the lost federal funding.

Still, NCDHHS officials say they plan to pursue every option for federal dollars in hopes of keeping the state’s rural health infrastructure from further erosion.

Leaders at the agency emphasized that rural health care is not only a matter of individual well-being but also a foundation for economic stability in small towns and counties

Department officials said the state will continue to provide updates as it moves forward with the application process, and a public notice will be issued once providers are eligible to apply for a share of the funding.

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