The $50 billion Congress set aside for rural healthcare in HR 1 will be outpaced by Medicaid, ACA marketplace and SNAP cuts by 2029, according to a June 9 report from The Commonwealth Fund.
The report’s authors used an economic modeling system to examine the combined effects of HR 1 and the expiration of the ACA tax credits on every state’s economy and employment in 2026 — the first year of implementation — and 2029, when the law’s changes are fully implemented. Read about the methodology here.
Seven things to know:
1. The Rural Health Transformation Program is distributing $10 billion annually over five years for rural healthcare access and quality improvements. In 2026, the report projects it will generate 110,100 new jobs and $13.8 billion in GDP gains. Smaller rural states — Alaska, Vermont and Wyoming among them — stand to see net positive economic returns. But those gains are absorbed by simultaneous losses elsewhere in the same law.
2. HR 1 reduces federal Medicaid spending by $90.9 billion in 2029 alone, according to the report. ACA marketplace funding falls by more than $57 billion that year, and SNAP funding will be cut by $21.8 billion. Against the rural health transformation fund’s $10 billion annual contribution, the net federal funding loss reaches $160 billion in 2029.
3. The Commonwealth Fund projects that the $160 billion in federal cuts will reduce state GDPs by $197 billion in 2029, about 23% more than the federal savings themselves. The report attributes the gap to a multiplier effect: federal healthcare dollars cycle through hospitals, pharmacies, grocery stores and local businesses, so cuts generate economic losses larger than the funding reductions that triggered them.
4. The report projects 1.65 million fewer jobs nationally in 2029, equivalent to a 1 percentage point increase in the unemployment rate. Nearly half of those losses — about 800,000 positions — would come from the healthcare sector. An additional 135,500 jobs are projected lost due to SNAP cuts, many in food-related industries.
5. In 2026, the losses are projected to be concentrated in states that did not expand Medicaid under the ACA and are therefore more reliant on ACA marketplace coverage. The January expiration of the enhanced premium tax credits is driving those losses. Georgia, Texas and Florida are projected to lose between 30,700 and 79,500 jobs in 2026, equivalent to a 0.5% to 0.6% decline in their employment rates. By contrast, 22 smaller, more rural states will see net job gains that year.
6. When Medicaid cuts are fully phased in by 2029, however, every state is projected to lose federal funding and “suffer substantial economic and employment losses,” according to the report. States that expanded Medicaid face deeper losses because HR 1 specifically targeted expansion states with work requirements, stricter enrollment procedures and higher cost sharing.
7. As employment declines and incomes fall, state and local tax revenues are projected to drop by $14 billion in 2029. That limits the ability of states to offset lost federal funds through their own budgets.
Read the full report here.
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