“The Rural Slush Fund” for healthcare that will be used to aid marginal Republicans during elections.

Merrill Goozner

GoozNews

How the $50 billion bailout for rural health care providers will be used to aid vulnerable Republicans in the mid-term elections.

Has it only been four days since the end of that brief moment when affordability, especially in health care, was the top issue in next November’s mid-term election?

Early Saturday morning, an earthquake rocked the political landscape. After months of a military buildup in the Caribbean, Donald Trump ignored the constitution, bombed and invaded Venezuela, kidnapped its illegally-elected president, and turned our involvement in that oil-rich-yet-destitute country into the #1 political story in America.

Thus began the dog days of American politics.

Why the dog days? The first thing that came to my mind upon hearing the news was the movie Wag the Dog, a 1997 political satire starring Dustin Hoffman and Robert DeNiro. Its plot revolved around a president facing a sex scandal during his re-election campaign. He asked Hollywood talent to create a “fake news” war in Albania to distract the public. It worked, at least in the movie.

Then, as I read media punditry over the weekend (The Don-roe doctrine? Really?) about the U.S. reasserting its homegrown version of 19th century imperialism in Latin America, it brought to mind a second canine-inspired thought. “The dog caught the car. Now what?”

An endless stream of commentaries, analyses, and editorials speculated about what might ensue. Why bother when the policy is thoroughly unpredictable. The only serious questions being entertained by the grifters, hatemongers and warmongers running this country is what they must do next to remain in power, feather their own nests and flatter the boss, not necessarily in that order.

When it comes to the first of those three goals, the commentariat might find clues in the actions the Republican Congress took last July to paper over the damage done to health care in the One Big (Ugly) Bill. That legislation stripped an estimated $900 billion from Medicaid over the next decade, the biggest cuts to any domestic program in U.S. history. The damage won’t begin until after the 2026 mid-terms.

But that fist in the eye was covered with a velvet glove. The Ugly Bill authorized the Centers for Medicare and Medicaid Services (CMS) to spend $50 billion to bail out rural hospitals and health care systems harmed by the cuts. That money — $10 billion a year for five years — begins flowing this year.

In other words, the GOP gave small grants to their rural constituents in hopes they will overlook the much larger losses to come. Meanwhile, they did nothing to help urban safety net hospitals, which are much more dependent on Medicaid patients for their funding and will suffer much larger losses than rural areas.

Life along Blue Highways

As anyone who traveled last year along William Least Heat-Moon’s Blue Highways would know from looking at the yard signs, rural America is almost entirely red politically.

Yet their local health care infrastructure is heavily dependent on federal programs. The nation’s 1,900 critical access hospitals (CAHs have 25 beds or less by government definition) get paid on a cost-plus basis by Medicare, not fee-for-service like the rest of the nation’s hospitals. Medicare is by far rural health care providers’ largest source of funds. This significant subsidy hasn’t prevented more than 150 from closing over the past decade, usually due to shrinking populations.

This new subsidy program won’t prevent this continuing erosion. The Medicaid and Obamacare cuts will accelerate it.

The nation’s 300-plus safety net hospitals, on the other hand, are 95% urban, located in large and mid-sized cities that are run for the most part by Democratic mayors. These safety nets are heavily dependent on Medicaid. They deliver a quarter of all uncompensated care to uninsured and destitute Americans. And, like their rural counterparts, they have few well-insured, private-paying patients to pick up the slack.

Who needs the most help to deal with the forthcoming Medicaid cuts? As the Harvard School of Public Health found in a study published in November (and was the basis for a New York Times’ Upshot column), about 20% of all safety net and critical access hospitals in both urban and rural areas are currently considered financially distressed, even before the cuts to Medicaid. About half of each group fell into the financially distressed category.

But only 15% of rural hospitals had more than 25% of their patients on Medicaid, while 85% of urban safety net hospitals were over that threshold. Almost all safety net hospitals have bed counts that are 10 times or more greater than rural CAHs.

The bailout fund

The Ugly Bill’s language governing the distribution of the new rural bailout fund will compound the inequities. Half the money was distributed equally among the states: $100 million per year per state. The other half was given in discretionary grants to states based on an evaluation of their applications, none of which — applications or evaluations — has been made public.

Last week, the Centers for Medicare and Medicaid Services (CMS) announced discretionary grants to all 50 states ranging from $181 million for Texas to $47 million for New Jersey. “More than 60 million Americans living in rural areas have the right to equal access to quality care,” HHS Secretary Robert F. Kennedy Jr. was quoted in a prepared statement.

Yet the grant distributions have no relationship to the number of rural residents in a state. It makes sense that Texas would get the most since it not only has the highest number of CAHs among states (92), it has the largest number of rural residents (4.7 million). But why is Alaska with just 8 CAHs the second highest grant recipient ($172 million), when its total population (mostly rural) doesn’t rank among the top ten in rural residents? Ditto for Montana, tied with California for third in discretionary grants at $134 million.

Indeed, if one ranks the states for total grants, the top half (25) have a decidedly red political coloration. Remember, the first $100,000 of each award is automatic:

Many of the states on that list are receiving larger total grants than they would receive if the government apportioned the money based on either total rural populations or total number of critical access hospitals. And many of the states receiving a disproportionately larger share of the total pie have Republican incumbents who face tough political races this fall.

On the Senate side, they include Dan Sullivan in Alaska, whoever replaces Joni Ernst in Iowa, and Jon Husted in Ohio, who faces a tough challenge from former Democratic Senator Sherrod Brown. Its notable that Maine, where Sen. Susan Collins faces a tough race after challenging Trump on several issues including the One Big Ugly Bill, received just $90 million in discretionary grants despite over 60% of its 1.4 million population living in rural areas, about the same number as Alaska. On the other hand, Georgia, where the GOP hopes to prevent Democratic Sen. Jon Ossoff from winning a second term, won $119 million in discretionary rural grants, which is commensurate with its ranking (#7) in total rural population. Any GOP candidate will need a large turnout from rural areas to dislodge Ossoff, who will win big among African-American voters in Atlanta and the rest of the state.

There are only a few swing districts on the House side that are mostly rural and where high-profile announcements about new health care programs could make a difference. Republican incumbents face close races in Alaska, Montana and Iowa, all rated “competitive” by the Cook Political Report. There are also a number of ex-urban districts that are in play across the country that have small but significant rural populations where Trump won narrowly in 2024. They may be willing to turn out in the mid-terms in response to high-profile announcements about aid for their local health care infrastructure.

Of course, how the first $10 billion from the slush fund gets distributed in an election year won’t affect the long-term the financial viability of hospitals and other providers in rural areas. That will require much more than simply restoring the Medicaid cuts and restoring the expanded subsidies for Obamacare plans, something that will never happen as long as Trump is in the White House.

It requires a fundamental rethinking of how the U.S. funds health care, which is something I tried to address with “A Bold Plan to Make Health Care Affordable for All.” If you haven’t read it yet, please do and then share it with your local Congressperson and Senators.