Understanding the Impact of the “One Big Beautiful Bill” on Rural Healthcare

Following the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, the National Rural Health Association (NRHA) has raised serious concerns about its potential effects on rural communities. This comprehensive legislation brings substantial revisions to Medicaid, the ACA Marketplace, and rural healthcare policy—changes that could jeopardize coverage for millions and destabilize hospitals already operating on thin margins.

Major Issues Identified by NRHA

Reductions in provider taxes and state-directed payments, which currently serve as lifelines for rural health providers.
A Rural Health Transformation Program that may be insufficient to offset broader Medicaid cuts.
Work requirements for Medicaid eligibility, which could disproportionately affect underserved rural residents.

Provider Tax Adjustments

Starting in 2028, states that expanded Medicaid will see their provider tax rates decrease gradually to 3.5% by 2032. Non-expansion states will maintain their current tax rates. Long-term care facilities remain exempt from these changes.

State-Directed Payment Limits

Payments to providers in expansion states will now be capped at Medicare rates, while non-expansion states are limited to 110% of Medicare rates. These thresholds will decrease incrementally over time.

Medicaid Work Requirements

By 2027, states are required to enforce monthly work requirements—80 hours of employment or half-time school enrollment. Exemptions are narrower than past proposals, and parents of teens aged 14 and up are no longer exempt.

The Rural Health Transformation Fund: A Double-Edged Sword?

A central component of the legislation is a $50 billion allocation over five years intended to improve rural health systems. However, its impact will depend on how effectively states can develop and implement qualified transformation plans by December 31, 2025.

Eligible Use of Funds Includes:

Expanding behavioral health and substance use treatment access
Supporting recruitment and retention of rural clinicians
Funding cybersecurity and infrastructure modernization
Facilitating chronic disease prevention and management
Enabling value-based care strategies

Moving Forward

As the healthcare landscape shifts, MEDTEAM remains committed to empowering rural providers with the tools, insight, and support needed to adapt. We stand behind our hospital partners and the communities they serve—because access to quality care should not be defined by geography.