The Trump administration has linked billions of dollars in federal rural health funding to state-level policy changes, specifically encouraging states to repeal or loosen "certificate of need" (CON) laws. These laws require healthcare providers to prove a community need before constructing new facilities or expanding services. The administration informed states that applications for the Rural Health Transformation Program would receive higher scores if they committed to rolling back these regulations.
Certificate of need laws were originally established to curb monopolies and control rising healthcare costs by regulating the supply of medical services. However, critics argue these rules have instead increased prices and prevented rural patients from accessing new medical technologies. Currently, more than 30 states and Washington, D.C., maintain some form of CON law, according to the National Conference of State Legislatures.
The funding is part of the $50 billion, five-year Rural Health Transformation Program, which was included in the One Big Beautiful Bill Act. The Centers for Medicare & Medicaid Services (CMS) described CON laws as an "additional expense and burden" on rural facilities. While half of the program's $50 billion is distributed equally among states, the remaining $25 billion is contingent on factors including these specific policy commitments.
In April, Tennessee lawmakers passed a bipartisan bill to phase out most of the state's CON rules over the next four years. South Carolina also voted in 2023 to end most of its rules, with requirements for new hospital construction set to expire in January. Alaska, Connecticut, Delaware, Iowa, and Mississippi have indicated in their federal applications that they would consider similar changes.
For rural residents, the concrete day-to-day change could involve the construction of new competing hospitals or the addition of specialized medical equipment in their local areas. Proponents, such as Maury County Commissioner Kevin Markham, state that increased competition provides patients with more options for care. Conversely, hospital leaders like Martin Chaney of Maury Regional Health argue that repealing these laws could lead to "cherry-picking," where large systems build facilities only in profitable areas, potentially causing smaller independent or nonprofit hospitals to lose revenue and close. This could result in "healthcare deserts" if local facilities can no longer afford to operate.
A significant effect involves state oversight and transparency. Maureen Hensley-Quinn of the National Academy for State Health Policy noted that without the applications required by CON laws, states may lose the ability to track hospital ownership and financial stability. This is particularly relevant as health systems increasingly contract with private equity firms. For example, Williamson Health in Tennessee recently cited policy pressures around certificates of need when announcing a $900 million sale to Ascension St. Thomas. What happens next depends on individual state legislative calendars, such as the January expiration of construction requirements in South Carolina and the four-year phase-out currently underway in Tennessee.