WA gets $181M for rural health care. Hospitals say they’re still struggling
AI-generated summary reviewed by our newsroom.
- Washington won $181 million in FY2026 rural-health funding, $19M below its $200M ask.
- Advocates warn the grant won’t offset H.R.1 Medicaid cuts, nor recent state reductions.
- Hospital systems face funding cuts, service reductions and multiple layoffs.
Washington state recently learned that it’s getting $181 million in rural health-care funding from the federal government.
Health-care advocates are pleased with the award, saying that it’s higher than was expected. But they’ve also warned that the money won’t offset a barrage of funding cuts from both the federal and state levels.
The federal funding for fiscal year 2026 is from the Rural Health Transformation Program, which is part of H.R. 1, the controversial tax and spending legislation signed by President Donald Trump on July 4.
The approved $181 million is less than the $200 million proposal that Washington state submitted in November.
Rachelle Alongi with Washington’s Health Care Authority said via email that HCA is working alongside its partner agencies on a revised budget for the state’s program. Funds are going to support providers, clinics and hospitals upon which rural Washingtonians depend.
“Although our state did not receive the full amount requested, we remain committed to improving the health and wellbeing of people living in rural Washington,” Alongi said. “As we revise the budget, we will carefully consider priorities and trim, not eliminate, funding allotments.”
A revised budget must be submitted to the Centers for Medicare & Medicaid Services (CMS), which manages the program, by Jan. 30.
The state wrote in its funding application that it has restricted the use of food-assistance benefits for alcohol, tobacco products and drinks or food with controlled substances, according to The Spokesman-Review. However, the Trump administration has urged states to limit such benefits from covering junk food, a step that Washington hasn’t taken, per the article.
Other states benefited from greater award amounts, including Alaska ($272 million), Idaho ($186 million) and Montana ($233 million). States led by Republicans tended to benefit more than those helmed by Democrats, the Washington State Standard reported.
CMS said in an email that the funding was allocated based on a framework applied evenly across all states. States’ rurality played a big role in divvying up the dollars. The scoring methodology included factors such as analysis of “state policy actions and commitments to those policies” and merit-based review of state proposals.
The CMS spokesperson added that funding wasn’t contingent on whether states adopted any certain policy, and that “politics played no role in funding decisions.”
Critics say that the new Rural Health Transformation Program hardly offsets the projected $137 billion of federal cuts in rural Medicaid spending over a decade. KFF, a nonpartisan health-policy research organization, said the rural health fund’s $50 billion for state grants covers just over a third (about 36.5%) of that projected loss.
Jacqueline Barton True, vice president of advocacy and rural health at the Washington State Hospital Association (WSHA), said that Washington’s award doesn’t come close to being a replacement for losses under H.R. 1.
That new law significantly decreased federal funding for Medicaid, which provides health coverage to low-income people. Rural hospitals generally have a disproportionately high share of Medicaid patients.
Barton True also highlighted the “tremendous amount of cuts” that hospitals saw at the state level last session, noting that Gov. Bob Ferguson’s proposed supplemental budget includes even more health-care reductions.
“We’re really concerned about how our hospitals are going to weather those cuts,” she said. “So the addition of this money is certainly welcome, but there’s still a lot to be seen with how helpful it will actually be.”
WSHA wrote in a newsletter that Ferguson’s suggested budget, which was rolled out last month, includes further reductions to Medicaid hospital reimbursement.
As Washington hospital systems brace for more financial challenges ahead, some are beginning to slash services and announce layoffs. Providence Swedish, for instance, revealed in November that financial difficulties prompted it to make workforce reductions affecting some 296 positions, or 3.8% of workforce roles, across the central Puget Sound area.
Last summer, 116 positions with Virginia Mason Franciscan Health, including some in the Tacoma area, were eliminated systemwide, per The News Tribune. PeaceHealth announced in October it was planning to nix 241 positions in Washington, 55 of which were in Bellingham, affecting 2.5% of its workforce, according to The Bellingham Herald.
Barton True said good work will be done thanks to the $181 million funding influx, such as investments in mobile services or the purchase of cyber-security software. Yet she said that even though it sounds like a lot of money, it isn’t that much relative to the cuts that hospitals are enduring.
WSHA spokesperson Kelly Akers also noted the recent expiration of enhanced tax credits under the Affordable Care Act, which officials have warned will lead to skyrocketing premiums for many.
Barton True said hospitals can’t continue to lose ever-more funding.
“So it’s really helping the Legislature understand … that though there may be budget challenges at the state, we’ve done all we can,” she said. “We can’t — there isn’t more to give in health care.”
This year’s 60-day legislative session starts Monday.
This story was originally published January 8, 2026 at 5:00 AM.
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