Congress let enhanced marketplace subsidies expire, CMS named first-year rural transformation awards for every state, and HHS set out its approach to artificial intelligence.
The year closed with a coverage setback for hospitals, a significant infusion of federal money for rural care, and early signals on how HHS intends to approach artificial intelligence.
On December 11, the Senate voted on two competing measures: a Democratic bill to extend the enhanced premium tax credits for three years, and a Republican alternative that would have redirected support into health savings accounts for bronze and catastrophic plans. Each fell short of the 60 votes needed. A week later the House passed a Republican health package, 216 to 211, that expanded association health plans and individual coverage HRAs, funded cost-sharing reductions and added PBM transparency requirements, but left out the enhanced credits. A discharge petition to force a House vote on an extension gained some Republican signatures, though its prospects were uncertain.
With the credits expiring December 31, subsidized enrollees face sharply higher premium payments in 2026. Hospitals should expect some patients to drop coverage or move to high-deductible plans, increasing bad debt and charity care, with the heaviest effect in markets with large marketplace enrollment.
On December 29, CMS announced first-year awards under the $50 billion Rural Health Transformation Program, with every state receiving funds. Awards range from $147 million for New Jersey to $281 million for Texas, averaging about $200 million per state. Half of the funding was split evenly; the remainder was allocated based on rurality, state policy actions and the projected impact of each state’s plan. CMS will assign project officers to each state and require regular progress reports.
For rural hospital leaders, the next phase is execution. States will now decide how to distribute funds through grants, contracts and partnerships, and providers that align proposals with their state’s stated priorities will be better positioned.
HHS released an AI strategy on December 4 built on five pillars: governance and risk management, infrastructure, workforce and burden reduction, research reproducibility, and care modernization. The first phase focuses on the department’s own operations. On December 19, HHS followed with a request for information on accelerating AI adoption in clinical care, covering regulation, reimbursement and research, with comments due 60 days after Federal Register publication.
Executive takeaway: Track coverage losses as 2026 begins and tighten financial assistance and eligibility workflows; rural systems should engage their state now on how transformation funds will be distributed.
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