Rural hospitals and community clinics across California are bracing for a major loss of federal funding over the next few years and say new Rural Health Transformation Grants will do little to offset it.

The nonprofit Advocates for Community Health estimates that Medicaid changes in the Republican “One Big Beautiful Bill Act” will cost rural areas across the U.S. $137 billion. The new grants total about $50 billion.

Tory Starr, CEO of Open Door Community Health Centers in northwest California, said the grants will only cover infrastructure, not operating costs.

The grant money “will not make up for the losses in revenue from people losing coverage,” Starr pointed out. “That is going to have a devastating impact on the economies of rural areas.”

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The state estimated 1.4 million Californians could lose health coverage in the next two years because of new work requirements and increased eligibility checks mandated in the Republican bill. More details are expected June 1, when the state releases guidance on who will be affected by the work requirements.

Supporters of the “One Big Beautiful Bill Act” justify the cuts by saying the savings will be better spent on other administration priorities, such as immigration enforcement and corporate tax cuts.

Starr noted clinics will have only six months to apply for the Rural Health Transformation Grant money, a timeline she said favors large institutions, such as university health centers, over small rural clinics.

“It would be helpful if they had requirements to make sure that the populations being targeted actually can participate,” Starr asserted.

Amanda Pears Kelly, CEO of Advocates for Community Health, said Congress ultimately needs to identify new sources of funding for community health centers.

“They need to establish a primary care Value and Innovation Fund, a $3 billion stabilization vehicle that’s dedicated to preserving and strengthening what already works,” she contended.

The state estimated the Medicaid changes could cost California clinics and hospitals about $30 billion in federal funding per year.