MINNEAPOLIS — Minnesota risked irking President Donald Trump’s administration this month by prioritizing diversity in the use of nearly $200 million in new federal rural health grants

Hospitals applying for the funding were urged in the state’s application to “intentionally identify how the grant serves diverse populations, especially populations experiencing inequities and/or disparities.”

Critics called it a gamble to use the “D word” in any context now even though research shows health outcomes are measurably worse across rural Minnesota for populations that are racially diverse, economically poor and remotely located.

The Trump administration has consistently opposed diversity initiatives and could decide to cut Minnesota’s share of the badly needed rural health funding in the future, said Kevin Bennett, a South Carolina-based fellow at the Commonwealth Fund, a health care policy organization.

“You might be very successful on what you wanted to do,” he said. “But they can say, ‘Well, that’s outside the bounds of this, and you shouldn’t have done that. And so you’re not going to get as much money next year.’”

Minnesota’s nearly $200 million slice of federal funding came from the rural health transformation program, a five-year, $50 billion political compromise in Congress. The program was leverage to gain lawmaker votes for a trillion-dollar package of cuts to the Medicaid insurance program over the next decade for the poor and disabled, and to subsidies that reduce the cost of health insurance for low-income workers.

Every state that applies receives $100 million each year for the next five years to support technologies and innovations that improve health care in rural areas. Another $100 million or so is dispensed at the Trump administration’s discretion; New Jersey received $147 million in 2026, while Texas gained $281 million.

Minnesota gained $193 million to quickly dispense this year to hospitals and other providers seeking to improve rural health care. Like every state, Minnesota will start distributing the funding this spring to hospitals and public health systems. Then it will have to show by summer that the money is helping in order to renew its award for 2027.

Minnesota law requires state agencies to emphasize diversity when awarding grants, though it uses the term broadly and permits awards based on “geographic diversity.” That means the money can address disparities that exist based on where people live.

Health disparities include an increase in preterm births in parts of rural Minnesota where hospitals have been forced to stop scheduling childbirths. Rural residents also must travel farther for in-person care, making them less likely to seek tests that could identify cancers and prevent diseases.

That’s likely the spirit by which many hospitals and others will likely apply for the funding and seek to reduce disparities, Garry Bowman, a spokesperson for the Minnesota Department of Health, said in a statement.

“Applicants are asked to describe how their projects will advance the goals of improving health outcomes and access to care for rural Minnesotans,” he said.

Beyond improving health care, the funding could serve as a short-term economic boost.

Minnesota is expected to gain 1,500 jobs in 2026, largely because of the rural health grants, according to soon-to-be-released estimates from the Milken Institute School of Public Health in Washington, D.C.

But the organization estimates the state will then experience a net loss of 21,400 jobs in 2029 when cuts to Medicaid and other federal programs take effect.

Minnesota this month asked hospitals and county and tribal public health agencies to apply for the funding.

The money can’t be used to sustain existing services. Instead, it must go toward improving or expanding access to care, such as new video and diagnostic technologies that allow doctors to monitor patients in their homes.

The state has set measurable five-year goals for the federal money. They include a 10% increase in Medicaid recipients accessing medical care via telehealth and a 10% reduction in avoidable hospital readmissions in rural areas. The goals also include a 4% increase in rural patients using disease-management programs to keep conditions such as heart disease and diabetes in check.

The state will “assess grant performance and report to the Centers for Medicare & Medicaid Services based on progress toward advancing these goals and serving rural communities,” the Health Department statement said.

Even if the goals aren’t focused on diversity by race or sex, health officials said Minnesota might be courting trouble by mentioning it prominently in its application and risking another battle with the Trump administration.

This month, Minnesota and 20 other states sued the administration for withholding funding for low-income food programs and food shelves unless they complied with Trump’s priorities on diversity, immigration and gender identity. The state last month reached a settlement after suing the Trump administration for trying to rescind funding to Minnesota’s schools unless they eliminated diversity initiatives.

The Trump administration has generally argued that federal funding should be granted by current need alone, irrespective of historical biases and disparities in the U.S. that resulted in worse health and well-being for its minority populations.

Illinois, Iowa and Wisconsin made little or no references to diversity in the applications they provided to hospitals for the new federal rural grants. Wisconsin’s only reference was to an advisory panel that will review the state’s use of the funding and must match the diversity of the state’s population.

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