W.Va. Health Expert Assesses $500 Million Impact Of Rural Transformation Fund

Starting in 2026 the state of West Virginia is expected to get $100 million a year for five years from the Rural Transformation Fund. It’s part of the Trump administration’s One Big Beautiful Bill, designed to help states offset Medicaid cuts and transition to a state-funded system. 

Gov. Patrick Morrisey called it a “game changer” for West Virginia.

Maria Young talked with Rich Sutphin, executive director of the West Virginia Rural Health Association, to find out how the Rural Transformation Fund can help patients in West Virginia – and if it’s enough to prevent hospital closures. 

This interview has been edited for length and clarity.

Young: Can you, first of all, just sort of summarize what is the rural transformation fund? How does this impact the federal Medicaid cuts?

Sutphin: Yeah, so the Rural Transformation Fund sets aside $50 billion over the next five years to allow rural health providers to come up with solutions to hopefully prevent any catastrophic or significant cuts as the Medicaid rules will change,

Young: So for the state of West Virginia, by my calculations, that comes out to about $100 million a year over five years. To most of us, that sounds like a lot of money.

Sutphin: Right. But when we’re evaluating the Medicaid cuts that are expected to start with the enrollment changing at the beginning of 2027 and the state directed payment changes at the end of 2027, we’re expecting to see a significant – much more than $100 million – decrease in Medicaid spending in West Virginia.

Young: Isn’t the hope that those changes will prompt a certain number of people, or a certain percentage of people who are on Medicaid right now to go out and get jobs that then provide health insurance and that take them off the rolls, but that still benefit them. They’re still covered, just in a different way. So some of those funds don’t necessarily need to be made up. Is that a good way of looking at it?

Sutphin: Potentially. So the expectation is, if someone is in the expansion population and are impacted by the enrollment changes, potentially they could qualify for a Marketplace plan, or they may get employer-sponsored coverage. It’s really hard to tell. I don’t have the crystal ball to say, yes, these folks will get insured somewhere else, or no, they won’t. But that’s what we’re looking at, is the ages 19 to 64 who are in the expansion population, most of them are already working. So it may be that they would qualify for one of the subsidies through the ACA marketplace, or they may get employment that provides that coverage.

Young: So why hasn’t that happened up until now then?

Sutphin: That’s a very good question that I don’t have an answer for. I do think that the rural transformation fund will allow health systems to plan and create new models that will better serve rural West Virginians. But I don’t think it’s the silver bullet to prevent the cuts that are coming in 2027 and 2028. I’m not so optimistic to believe that that is going to be the fix that will prevent service line cuts or, God forbid, hospital closures.

Young: What is the bottom line in terms of what West Virginia is getting now and what – with the Rural Transformation Fund – it gets when this all goes into effect?

Sutphin: The rural transformation fund starting at the beginning of 2026 gives us a full year as a state to plan and create new programs or change programs to better prepare for these cuts

Young: West Virginia gets about $100 million a year, but stands to lose over a billion dollars a year in these cuts. Correct? 

Sutphin: That’s the estimate.

Young: So the rural transformation fund really addresses about 10% of the loss that’s coming. Is that right?

Sutphin: Correct, the expected loss after all of the provisions in the reconciliation bill are put into effect, we’re expected to lose a little over a billion dollars a year in Medicaid spending. But my hope is that our system will be able to adapt, and folks won’t go without coverage, and health systems will be able to stay afloat.

Young: When you talk about your system adapting realistically, what can you do? Does it mean cutting out services that are all but the most critical services? What does adapting in a situation like this mean?

Sutphin: Health system leaders have to sit down and say, you know, ‘What services are essential? What are we required to cover?’ Because a lot of the smaller facilities in West Virginia, critical access hospitals and FQHCs [federally qualified health centers] and rural health clinics have to provide specific services under their federal grants and their reimbursement models. So it’s one of those things that they may evaluate and say that specific services that they currently offer can’t be offered anymore. And we know that service lines will have to be cut with that large of a cut. We’re hoping that this rural transformation fund will prevent hospital closures.