By Robin Opsahl, Iowa Capital Dispatch
Gov. Kim Reynolds announced Wednesday the state submitted an application for a new “Healthy Hometowns” initiative that could bring in more than $1 billion for rural health care over five years.
The state applied to the federal Rural Health Transformation Program, an initiative managed by the Centers for Medicare and Medicaid Services, that was created by the “One Big Beautiful Bill Act” to provide funding for projects addressing health care shortages in rural communities.
This $50 billion fund, intended to dispense $10 billion annually for rural hospitals between 2026 and 2030, was created in part due to concerns that rural hospitals already facing financial struggles could close because of the cuts to Medicaid included in the budget reconciliation law.
The “Healthy Hometowns” initiative proposed by Iowa for the program requests $200 million per project year from the fund, totaling $1 billion over the five-year period. The state’s proposal for these funds was created in collaboration with rural hospitals, health systems and community partners, according to a news release from Reynolds, by developing a “hub and spoke” model of care to address health care shortages in rural Iowa communities.
In the application, the state lays out six areas of focus for improving rural health care outcomes and accessibility, including developing “Health Hubs” and expanding existing Centers of Excellence with access to specialized care and equipment, providing more incentives for health care professionals to practice in rural communities, increasing cancer screenings and treatment. The proposal also aims to streamline some aspects of health care, like the process of exchanging health records, coordinating community health workers’ care, and creating more mobile health services options.
Reynolds said in a statement the initiative would further her administration’s work on supporting rural health care access.
“Since taking office, my administration has emphasized the importance of supporting and revitalizing rural Iowa through targeted investments and policy initiatives,” Reynolds said. “Rural communities are the backbone of our state — home to nearly half of all Iowans and the foundation of our economy, culture, and identity. Healthy Hometowns is a pivotal opportunity to build a high quality, sustainable system of care that vastly improves health, well-being, and quality of life for rural Iowans.”
Some of the “Healthy Hometowns” proposals were included in Reynolds’ 2025 law focused on rural health care. In addition to directing the Iowa Department of Health and Human Services to create a “hub and spoke” model across the state, the measure also called for the department to draw down $150 million in federal funding to create 115 new residency slots at Iowa teaching hospitals, and to change to Iowa Medicaid rates for health care providers serving mothers and infants.
Iowa HHS Director Larry Johnson said the application to the federal government for this project “reflects years of thoughtful planning and collaboration” on how to address rural communities’ health care needs throughout the state.
“It’s a plan rooted in the values of hard work, innovation, and community,” Johnson said in a statement. “Iowans deserve a health care system designed for them — and with Healthy Hometowns, we’re delivering just that.”
State awards for the federal program are expected to be released Dec. 31, 2025 according to the news release.
Democratic gubernatorial candidate Rob Sand also held an event Wednesday where he discussed rural health care needs. Medical professionals at the Newton roundtable called for the state to expand medical residency slots and change loan repayment programs, as well as saying the state’s six-week abortion ban has made it more difficult to recruit or retain maternal health care providers in the state.
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