Stanley Sears was 50 years old when he had a heart attack in Martin County, North Carolina. Emergency crews from a neighboring town worked on him for half an hour, but couldn’t revive him for the long drive to the closest hospital. Martin County’s only hospital had closed a year before his death.
His sister, Debra Pierce, still wonders. “The sad thing is we’ll never know if he could have been saved that night or not, because we don’t have a higher level of care in this county,” she told KFF Health News reporter Sarah Jane Tribble.
In the political moment following the passage of the One Big Beautiful Bill Act, the story of Martin County is being told differently by different people. Republicans point to the $50 billion Rural Health Transformation Program included in the bill as evidence that rural communities will be helped. Martin County Manager Drew Batts, who has walked through the shuttered corridors of Martin General Hospital with federal and state lawmakers, has a simpler assessment: “The $50 billion is not something that is specifically going to help our situation. It’s not going to help us get this place reopened.”
He is correct. And the reasons why are an object lesson in the gap between what a federal health fund promises and what it can actually deliver.
What the $50 Billion Rural Health Fund Is — and What It Isn’t
According to KFF’s comprehensive analysis of the fund, the Rural Health Transformation Program was added to the One Big Beautiful Bill Act in response to concerns from lawmakers representing rural states about the bill’s massive Medicaid cuts. The fund provides $10 billion per year over five years (fiscal years 2026–2030), for a total of $50 billion. CMS has broad discretion over distribution and — critically — those distribution decisions are not subject to administrative or judicial review.
The fund’s structural design creates several limitations that directly affect communities like Martin County:
Limitation 1: The fund goes to existing organizations, not to closed facilities. North Carolina distributes its $213 million first-year allocation among existing health and social service organizations. As KFF Health News reported, federal regulations set limits on how much can be spent on construction and building renovations. Martin General Hospital isn’t open — so it isn’t an existing organization that can receive funds.
Limitation 2: The hub-and-spoke distribution model concentrates money in larger systems. North Carolina’s plan creates a hub-and-spoke model that allots money to six large regional leads, including nonprofits such as ECU Health’s affiliate Access East. Those hubs then distribute to local entities. ECU Health’s affiliate did win a portion of North Carolina’s first-year payout — but the federal money cannot be used to reopen Martin General, according to ECU Health’s Chief Operating Officer Brian Floyd.
Limitation 3: The fund is temporary; the Medicaid cuts are not. KFF analysis shows the $50 billion could offset approximately 37% of the estimated cuts to federal Medicaid spending in rural areas ($137 billion over ten years). But while the rural health fund is limited to five years, nearly two-thirds of the ten-year reductions in federal Medicaid spending occur after fiscal year 2030 — meaning the fund’s support runs out before most of the damage it’s supposed to offset materializes.
Limitation 4: The math doesn’t work for the most rural communities. KFF analysis shows that Connecticut (with 3 rural hospitals by one definition) could receive the same amount as Kansas (with 90 rural hospitals) if both states are approved for funding. The allocation formula gives equal weight to states regardless of rural hospital density, diluting the fund’s impact in states most desperately in need.
$50 Billion Rural Health Fund — Key Facts
Detail
Total fund size
$50 billion ($10B/year for FY 2026–2030)
Authorizing legislation
One Big Beautiful Bill Act
CMS discretion over distribution
Broad; not subject to administrative or judicial review
NC first-year allocation
$213 million
Distribution model in NC
Hub-and-spoke; six large regional lead organizations
Can NC funds reopen Martin General?
No — federal rules limit construction; hospital must be operational
Fund’s offset of rural Medicaid cuts
~37% of estimated $137B in rural Medicaid cuts over 10 years
Timing mismatch
Fund runs FY 2026–2030; 64% of Medicaid cuts come after FY 2030
Martin County’s situation
22,000 residents; no hospital since 2023; no paramedics on ambulances
Distance to nearest ER
20+ miles
ECU Health projected Medicaid cut impact
$1 billion over 10 years (CEO testimony)
What Martin County Actually Needs — and What It Would Take
ECU Health signed a letter of intent to reopen Martin General as a rural emergency hospital (REH) — a federal designation that allows smaller facilities to operate with 24-hour emergency services and outpatient care but without inpatient beds. Under that plan, Martin County would pay to refurbish the hospital, and the North Carolina General Assembly would need to provide ECU Health with $210 million — of which $150 million would fund construction of a new inpatient tower at ECU’s Beaufort Hospital.
That legislative appropriation has not materialized. And even if it did, Representative Don Davis, whose district encompasses Martin County, told KFF Health News the rural health fund money “is essentially putting a band-aid on a much, much broader situation that needs dire help.” Davis has introduced legislation to increase Medicaid reimbursements for rural hospitals — the structural fix that would prevent hospital closures — but it has not moved forward.
The closure of Martin General in August 2023 was abrupt. Employees were not notified. Patients being treated were wheeled out on stretchers and transported to other facilities. The company operating the county-owned hospital, Quorum Health, did not notify local elected leaders before filing for bankruptcy.
Martin County also does not have paramedics on its ambulances — only emergency medical technicians (EMTs), who have a more limited scope of practice. The closest emergency rooms are 20 miles or more away, often overcrowded. One woman told KFF Health News she drove 2.5 hours from a small town near the Outer Banks so her 79-year-old aunt could get care at an ECU Health ER in Greenville — and was told to wait outside because of capacity issues.
“It’s a real healthcare crisis that has already proven itself to have lost lives that perhaps didn’t have to be lost,” said ECU Health COO Brian Floyd. “They just want to not die because there’s nowhere to go when you have an emergency.”
Frequently Asked Questions
What is the $50 billion rural health fund?
The Rural Health Transformation Program, included in the One Big Beautiful Bill Act, provides $10 billion per year for five years (FY 2026–2030) for rural health. CMS has broad discretion over distribution, and distribution decisions are not subject to administrative or judicial review.
Why won’t the fund reopen Martin County’s hospital?
Because the fund is distributed to existing health and social service organizations, and federal regulations limit how much can be spent on construction and renovation. Martin General Hospital closed in 2023 — it is not an existing operational facility that can receive funding. Martin County’s situation requires capital investment in a closed hospital that the fund’s design specifically does not accommodate.
Does the $50 billion offset the Medicaid cuts in the same bill?
Only partially. KFF estimates the fund could offset approximately 37% of the $137 billion in estimated cuts to federal Medicaid spending in rural areas over ten years. Critically, the fund runs through FY 2030, but nearly two-thirds of the Medicaid cuts occur after that — meaning the fund’s support ends before most of the cuts’ impact materializes.
What happened to Martin County’s hospital?
Martin General Hospital, the county’s only hospital, closed abruptly in August 2023 when the company operating it (Quorum Health) filed for bankruptcy without notifying local elected leaders or staff. Patients were wheeled out on stretchers. The county has approximately 22,000 residents with no hospital, no paramedics on ambulances, and emergency rooms 20+ miles away.
What would it take to reopen Martin General?
ECU Health has a letter of intent to reopen it as a rural emergency hospital (REH), but the plan requires the North Carolina General Assembly to appropriate $210 million to ECU Health and Martin County to fund building refurbishment. Those appropriations have not materialized. ECU Health’s CEO has separately warned the system expects to lose $1 billion over the next 10 years from Medicaid cuts under the One Big Beautiful Bill Act.
