New Arizona rural health plan cuts $33 million, focuses on workforce

Arizona Gov. Katie Hobbs has slashed $33 million in a revised plan for the state’s “shortchanged” federal rural health grant money but is keeping workforce development it as the biggest priority.

Arizona is receiving $167 million in federal Rural Health Transformation dollars for the 2026 fiscal year, the sixth-lowest amount of any state, and an amount that Hobbs’ office has said will fail to meet rural Arizonans’ health care needs.

Hobbs’ revised budget for the federal Rural Health Transformation dollars, obtained by The Arizona Republic, had to reprioritize spending from the original $200 million plan for the money, which will go to help struggling rural areas with health care needs.

“They preserved the right stuff and made reductions in areas that I think made sense,” said Will Humble, executive director of the Arizona Public Health Association, after The Republic shared the revised plan with him. “They protected the right stuff and didn’t cut the longer-term pipeline investments. ... They kept the longer-term sustainable workforce investments.”

The revised budget for Arizona’s first-year share cuts nearly $10 million from what the state had previously planned to dedicate to rural workforce development, but the workforce component of the plan is still, at 28%, the largest share of the grant money for the current fiscal year. 

The revised budget for Arizona's first-year share cuts nearly $10 million from what the state had previously planned to dedicate to rural workforce development, but the workforce component of the plan is still, at 28%, the largest share of the grant money for the current fiscal year.

Rural areas of the state have severe shortages of health providers, including nurses, primary care doctors and specialists, including mental health professionals. 

The 50-state pool of money for rural America was designed to partially offset the deep cuts to Medicaid included in the Republican-led budget passed earlier in 2025. Medicaid is a government health insurance program primarily for low-income people and people with disabilities. Rural residents have a higher rate of Medicaid enrollment than people who live in urban areas.

Hobbs’ office asked the U.S. Department of Health and Human Services for an explanation of Arizona’s score after learning of its grant amount Dec. 29, but has not yet had a response, Hobbs spokesperson Liliana Soto wrote in a Feb. 6 email.

Hobbs’ office submitted Arizona’s plan Jan. 30. The Centers for Medicare & Medicaid Services, which is part of HHS, led by Secretary Robert F. Kennedy Jr., has 30 days to approve it.

Physician wants more investment in rural maternity care

About one in nine Arizona residents, or 785,000 people, live in a rural area. Rural Arizonans have higher rates of mortality from cancer, suicide, cardiovascular disease and diabetes than their urban counterparts, according to research from the governor’s office and the University of Arizona Center for Rural Health.

Though he’d like to see more investment in maternal health in rural Arizona, Hobbs’ office did a good job on reconfiguring how to spend the critical federal dollars, said Dr. Dan Derksen, who directs the University of Arizona Center for Rural Health, after viewing the revised plan.

The narrative accompanying the revised budget says rural Arizona has higher infant mortality rate, higher rate of severe maternal complications during labor and delivery, and higher rates of babies being born whose mothers had no prenatal care. Arizona also has four counties with low to no access to maternal care − Greenlee, La Paz, Cochise and Graham counties.

Arizona’s proportion of rural residents is lower than the U.S. average

Arizona has a smaller proportion of rural residents at 11% of state residents, versus other states such as Alabama and Georgia where 20% or more of the population is rural. Alabama received $203 million and Georgia received $218 million for the current fiscal year.

“I don’t have insight into all the criteria that CMS used, but I expected us to get less,” Derksen said.

U.S. states have about a 20% rural population on average, Derksen said. Arizona ranked 22nd of the 50 states in terms of its per rural resident award, he said.

However, he added, it’s difficult to believe politics didn’t play some role in the allocations.

Seventy percent of the states that voted for Kamala Harris for president in 2024 and have Democratic governors received less than $200 million and 74% of the states that voted for Donald Trump in 2024 and have a Republican governor received more than $200 million, Derksen said.

The six states, including Arizona, that received the lowest allocations, all have Democratic governors.

The money has become a hot-button political issue. Swing-district Republican Rep. Juan Ciscomani, who has pointed to the rural health money to defend the Medicaid cuts, told The Republic in a Dec. 31 statement that Arizona’s allocation “falls short” of his expectations.

The rural health fund has been widely criticized by Democrats because it pales in comparison to the size of the politically sensitive GOP-led Medicaid cuts. The fund allocates a total of $50 billion across all 50 states. The Medicaid reforms, meanwhile, are generally expected to cost upwards of $1 trillion nationwide.

This article originally published on AZCentral.com