Vermont is set to receive a little over $195 million each year for five years from the federal government’s new Rural Health Transformation Fund — an unexpectedly massive sum, and one of the highest per-capita grants in the nation.
“I don't think I've ever seen anything quite like this, frankly,” said Mike Del Trecco, the president and CEO of Vermont’s hospital association.
The windfall comes at a critical juncture for Vermont’s teetering health care system. The state’s insurance premiums are among the highest in the nation, and its rural hospitals are increasingly financially precarious. The state was already at work on a plan to better coordinate and regionalize care across Vermont, and officials across state government and the health care sector said Tuesday the grant could not have arrived at a better time.
“This is good news for Vermont, and I’m appreciative to the Trump Administration for their partnership on this, as we work to advance our shared priorities of rural health transformation,” Gov. Phil Scott said in a statement. “While there are still implementation details to work out, this significant investment will help us build on the good work we’ve started to make rural healthcare more affordable and accessible.”
Still, they also sought to emphasize that Vermont was not out of the woods — and that one-time money could be both a blessing and a curse.
Owen Foster, who chairs the Green Mountain Care Board, said Vermont would have to be strategic about how it spent the cash. Pandemic-era money came and went, he noted, and left shortfalls across systems in its wake.
“This opportunity is really not about bailing out our system,” he said. “It's about redesigning our system. I think that's one of the most important caveats to this, because there's going to be a lot of people lining up, asking for a lot of money.”
Vermont Health Care Advocate Mike Fisher agreed.
“We have really hard work in front of us to move to a health care system that we can sustain,” he said.
The $50 billion rural health fund was created during end-stage negotiations for President Trump’s sweeping “One Big Beautiful Bill,” and was seen, politically at least, as a way to soften the blow from upcoming Medicaid cuts. In the end, Vermont could lose more than it gains under the law: KFF, a nonpartisan health care researcher, has estimated that Vermont could lose between $1 billion and $2 billion over 10 years from changes to Medicaid.
States were given a very short window to put together their applications, and Vermont must now flesh out in more detail its somewhat vague plan for how to use the money. But broadly, state officials say they want to plow investments into workforce development, technology that will better enable care coordination and cost-tracking, and scale up mobile and virtual health options. The state’s nascent reform plan will also require expensive data-crunching and consulting work, and the grant could pay for that.
The federal cash will come with important limitations. The state’s Medicaid director, Jill Mazza Olson, for example, said she recently learned that states would not be able to spend the money on major renovations or building projects. That nixed Vermont’s idea to put some of the money toward workforce housing.
Some of the money may also come with strings attached.
Of the $50 billion available to states, $3.75 billion has been set aside to incentivize certain changes to state-level policies. Some involve Trump administration priorities, like bringing back the Presidential Fitness Test in schools — which Vermont has not said it will do.
But the state, in its application, said it would explore at least one idea likely to trigger pushback. Conservatives have long sought to ban candy and soda from the Supplemental Nutrition Assistance Program, and Vermont said in its funding application that it would seek to prohibit beneficiaries from purchasing certain “non-nutritious” foods. Both grocers and anti-poverty advocates have historically resisted such reforms, arguing they are stigmatizing and difficult to administer. But state officials emphasized Tuesday that it wasn’t clear how much Vermont would actually lose out on if these changes didn’t come to fruition.
But some policy changes sought by the federal government aren’t partisan at all. In its application, for example, Vermont pledged to expand its “scope of practice” laws to allow pharmacists and EMT workers to take on more work, which many reformers have said could expand access and lower the cost of care.
