Half of the $50 billion rural-health fund is allocated equally among states; policy commitments affect the other half. Tennessee has enacted a four-year phaseout of most remaining hospital approval rules.
President Donald Trump’s administration is using rural-health grants to encourage states to loosen laws governing new hospitals and healthcare facilities. The Centers for Medicare & Medicaid Services gives higher application scores to states with fewer such restrictions, KFF Health News reported on October 22. The preference affects part of the five-year, $50 billion Rural Health Transformation Program—not access to the entire fund.
These restrictions, called certificate-of-need laws, require providers to demonstrate a community need before building or expanding healthcare facilities or adding certain services. They were intended to curb monopolies and rising costs. The rural-health program became law in 2025 to modernize healthcare in remote areas; its grant criteria now give states a financial reason to reconsider those controls.
The program divides its money into two equal parts. Certificate-of-need changes are among the policy commitments relevant to the conditional portion, rather than a requirement for receiving any money.
| Portion | Amount | Allocation |
|---|---|---|
| Equal-share half | $25 billion | Divided equally among states |
| Conditional half | $25 billion |
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| Depends on factors including states’ policy commitments |
In its application notice, the federal agency called certificate-of-need laws “an additional expense and burden on rural facilities.” Its scoring preference favours fewer rules, but the conditional funding also depends on other factors.
KFF reported that six states indicated plans in their applications to revisit their laws. Alaska, Connecticut, Delaware, Iowa and Mississippi said they would consider ending or loosening them. Those commitments to consider changes are distinct from enacted repeals.
Tennessee, the sixth state, has taken a legislative step. In a bipartisan vote in April 2026, lawmakers passed a bill to phase out most remaining certificate-of-need rules over four years. KFF reported that lawmakers had sought changes for years but did not pass sweeping legislation until the state faced losing out on federal funding.
Critics of certificate-of-need laws argue that the restrictions raise healthcare prices, delay needed facilities and keep rural patients from accessing new technology. In Tennessee, Maury County Commissioner Kevin Markham supported a proposed hospital on competition grounds, telling KFF that patients should have options about where to receive care.
Some rural hospital leaders argue that removing the controls would draw investment toward already-profitable areas instead. In a 2024 letter opposing repeal, Martin Chaney, identified by KFF as Maury Regional Health’s CEO, argued that repeal would increase costs, thin existing hospital staffing and worsen rural access because hospitals would favour expansion in already-profitable areas where residents have a range of health-insurance providers.
Judy Herbert, a Williamson County commissioner and Williamson Health board member, predicted that larger systems would attract expensive procedures, leaving smaller hospitals with losses that could force them to close or sell. That is her forecast of repeal’s effects, not an established outcome.
The debate also concerns what states can learn about hospital owners. Maureen Hensley-Quinn, a researcher at the National Academy for State Health Policy, warned that repeal removes detailed application records that help officials track ownership, finances and management. She said officials in some states that repealed their laws later found that licensing alone did not give them that insight.
Tennessee’s enacted law sets a four-year path for removing most remaining rules. In the other five states, the reported commitments remain at the stage of considering whether to loosen or end their laws.
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