State Legislatures Moving to Increase Rural Healthcare Access
February 21, 2025 | Lana McKinney
People living in rural areas face greater health risks than those living in urban areas. Rural populations not only experience increased poverty and higher rates of chronic disease; they are also older and have less access to both healthcare providers and health insurance. States are exploring several strategies to improve healthcare access for rural residents, including recognizing a new hospital type, exploring alternative methods or sources of health services, and offering financial support for healthcare facilities and the rural health workforce.
Access to Care
Among many factors contributing rural areas accessing healthcare, hospital closures are a major one. Almost 200 rural hospitals have closed since 2005. When rural hospitals close, people living in those communities must travel farther for care. Rural areas may also experience shortages of and less access to healthcare professionals, including specialty care, as compared to urban areas.
To reduce the number of hospital closures and provide support for existing hospitals in rural areas, the Consolidated Appropriations Act of 2021 created a new Medicare provider type known as the Rural Emergency Hospital (REH). These facilities offer a more limited scope of services than acute care or critical access hospitals and have their own conditions of participation and Medicare reimbursement structure. There have been 36 REH conversions in 16 states since 2023.
Jurisdictions continue to explore legislation to formally recognize REHs under state law, State recognition of REHs is crucial for establishing licensure, defining service scope, and enabling participation in state healthcare programs like Medicaid, ensuring these facilities can legally operate and provide necessary care. with Florida (SB 644) enacting legislation in 2024, and Hawaii (HB 1179) considering legislation so far in 2025. A number of other jurisdictions have recently received approval to amend their Medicaid State Plans and define the payment methodology for REHs serving Medicaid recipients, including Iowa, Kentucky, Nebraska, Nevada, New Mexico.
States are also exploring other policies to financially support rural hospitals during the 2025 legislative session. Alabama (HB 86) is considering a rural hospital investment program that would create tax credits to incentivize donations to those hospitals that could support service delivery. And bills to establish grant programs to support rural hospitals are before the legislatures in both Oklahoma (HB 2754) and Indiana (HB 1274).
States are also exploring the role of technology, and community needs and resources, to support rural access to care. In 2024, Colorado enacted at least two bills with a rural population focus, including SB 24-168 to invest in remote patient monitoring to support rural health facilities and requires reimbursement. SB 24-055 creates an agricultural and rural community behavioral health program to understand the relevant issues and improve access to care.
So far in 2025, at least two states are exploring ways to better serve people in rural communities. Hawaii (SB 1004) is considering legislation that would establish a pilot program to utilize community health workers in rural areas, while North Dakota (HB 1567) is proposing a legislative management study focused on improving access to oral healthcare, and would require review of telehealth options for reaching rural areas and workforce incentives for dental providers.
Rural Health Care Workforce
Jurisdictions are also using financial supports—including scholarships, tax incentives, and loan cancelation programs—to increase the number of health care providers in rural areas. At least three states modified financial support programs for practitioners working in rural and underserved areas in 2024. Mississippi’s S 2729 expanded the scope and responsibilities of its rural physician and dentist scholarship programs and their respective governing commissions. And Georgia (HB 872) amended its cancelable loan program to include dental students. California (SB 909) amended the requirements for its physician corps program, which provides financial assistance to those who practice in underserved areas, removes the limit on the amount of loan repayment available, and reduces the duration of service obligation from three to two years.
Jurisdictions have also pursued tax policy changes aimed at supporting rural healthcare providers, including state tax credits for individual practitioners working in rural areas. In 2024, Georgia (HB 82) amended its rural physician tax credit to include dentists living and working in rural areas. In 2025, at least two states are considering expansion of tax credits for providers serving rural communities. In New Mexico, HB 52 would expand the state’s rural healthcare practitioner tax credit to include additional provider types, including speech language pathologists and occupational therapists. And Oregon is considering several bills to expand existing rural provider income tax credits, including HB 2549 to add pharmacists and HB 2204 to add podiatrists.
Finally, legislatures are continuing to consider other policy initiatives to bolster the rural health care workforce in 2025. Acknowledging a shortage of nurses in rural communities and barriers for rural nursing students, Washington SB 5335 would establish a rural nursing education program in the state health department with a goal of improving nursing care in rural areas of the state. And in Nebraska, LB 119 would formally enact the state’s rural health opportunity program, which provides tuition waivers for students from rural areas pursuing health care careers, into law.
ASTHO will continue to monitor this issue and provide any necessary updates.