According to the Legislative Budget Board (LBB), the fiscal implications of HB 18 are significant, with an estimated negative net impact of approximately $48.75 million to General Revenue through the 2026–27 biennium. The primary cost drivers are the establishment and implementation of multiple new initiatives: the Texas Rural Hospital Officers Academy, an add-on Medicaid reimbursement payment for rural hospitals offering obstetrics and gynecology services, and the Rural Pediatric Mental Health Care Access Program.

The Health and Human Services Commission (HHSC) is projected to need around $22.2 million from General Revenue and $45.6 million from all funds in fiscal year 2026, with similar levels continuing into 2027. These funds would cover staffing (10.5 full-time equivalents), infrastructure, and program launch costs. Approximately $15.6 million annually is allocated to support the new Medicaid payment add-on for qualifying rural hospitals, assuming a 2% increase across inpatient and outpatient services.

Notably, while the bill authorizes the creation of several rural hospital grant programs, the fiscal note excludes their full implementation costs due to insufficient data on grant demand and design. However, the note estimates $2.5 million annually will be needed by the Texas Child Mental Health Care Consortium to expand data systems and provider capacity in support of the new pediatric behavioral health access program.

On the revenue side, modest gains are expected from insurance premium tax revenue tied to increased Medicaid managed care payments, estimated at about $340,000 in 2026 and $861,000 in 2027. A portion of this revenue is projected to benefit the Foundation School Fund. Despite these offsets, the overall fiscal outlook is notably negative, though these investments aim to improve long-term health access and sustainability in rural areas.

HB 18, even in its revised Senate Committee Substitute form, remains fundamentally incompatible with principles of limited government and responsible fiscal stewardship. While the bill admirably attempts to address a genuine crisis in rural healthcare infrastructure, its approach is one of substantial government expansion, creating new permanent programs, administrative bodies, and taxpayer-funded subsidies without clear evidence of long-term efficacy, cost containment, or private-sector alignment.

The establishment of the State Office of Rural Hospital Finance within the Health and Human Services Commission represents a durable expansion of the state's administrative responsibilities. This new office, along with the Texas Rural Hospital Officers Academy, will be staffed and funded on a recurring basis, with no sunset provisions for core operations. While professional development for rural hospital administrators is an understandable goal, the responsibility for such training could be more appropriately borne by the institutions themselves, or through partnerships that leverage local and private resources, rather than being centralized under state authority.

Financially, the bill’s impact is substantial. It is expected to cost over $48 million from General Revenue in the first two years alone, with additional annual expenses for Medicaid rate adjustments and mental health services expansion. Notably, the Legislative Budget Board was unable to fully assess the cost of the four newly created grant programs due to insufficient data, meaning the actual long-term cost to the state is likely far higher. These include the Financial Stabilization, Emergency Hardship, Innovation, and Rural Hospital Support Grant programs, all of which place the burden of rural health system maintenance squarely on the state without demanding proportional contributions or reform from local entities.

Moreover, the Medicaid add-on for rural hospitals with obstetrics and gynecology departments introduces new recurring costs that must be absorbed by the state budget indefinitely. While it seeks to preserve critical maternal care access, it does so through ongoing taxpayer support rather than structural reform. This policy could disincentivize efficiency or consolidation where appropriate and may inadvertently entrench inefficient service models.

The bill also departs from market-oriented solutions. Rather than creating incentives for private investment or deregulating barriers to rural care, it increases dependency on government funds and prescriptive oversight. Although some administrative guardrails were added to ensure grant dollars benefit local hospitals rather than centralized systems, this does not address the broader concern that public dollars are being used to prop up systems with uncertain long-term sustainability and no clearly defined metrics for success.

From a liberty standpoint, while the bill ensures continuity of care in underserved communities, it does so at the cost of expanding state authority and taxpayer obligations. It effectively transfers the risk of rural hospital failure from local actors to the state, undermining both local responsibility and potential private innovation. The lack of clear exit strategies, cost-recovery mechanisms, or privatization pathways means this framework could become a permanent fixture of the state health bureaucracy.

In summary, while HB 18 seeks to solve a real problem, its execution relies too heavily on government intervention, creates ongoing financial liabilities, and lacks a path toward self-sufficiency. For those committed to a vision of restrained governance, personal responsibility, and sustainable public policy, the bill in its current form remains untenable. Texas Policy Research continues to recommend that lawmakers vote NO on HB 18, reflecting a commitment to these principles and an insistence on alternatives that support rural health without growing the size and cost of state government.

• Individual Liberty: The bill indirectly supports individual liberty by helping ensure rural Texans retain access to essential healthcare services—especially emergency, obstetric, and pediatric care. In communities where hospital closures have become increasingly common, this legislation attempts to prevent healthcare access from becoming a geographic privilege. In that respect, it empowers individuals to remain in their communities without sacrificing access to care that directly affects life and health outcomes. However, the bill does not expand individual choice in healthcare or introduce reforms that improve autonomy over care options. It maintains the status quo in terms of healthcare delivery mechanisms (state-managed Medicaid and institutional hospital care), offering no new freedom for patients to choose providers, insurance models, or care settings. As such, while the bill may preserve access, it does not significantly advance liberty in terms of individual choice or control over one’s healthcare decisions.
• Personal Responsibility: The bill undermines the principle of personal responsibility by shifting the financial and operational burden of rural healthcare from local hospitals and communities to the state. There is no requirement that rural hospitals contribute matching funds or demonstrate prior efforts at financial self-sufficiency. Nor does the legislation include performance incentives or benchmarks tied to continued funding. In essence, it creates a system of recurring grants, subsidies, and centralized training with no clear expectation that recipients reduce dependency on public support over time. By doing so, the bill encourages a dynamic where responsibility for sustaining rural healthcare lies primarily with taxpayers rather than with the communities and institutions that directly benefit from it.
• Free Enterprise: The bill expands state-managed healthcare support through direct subsidies and technical assistance, potentially crowding out market-driven solutions. Rather than removing barriers to rural healthcare entrepreneurship or encouraging private-sector innovation (e.g., mobile clinics, telehealth startups, direct primary care models), the bill institutionalizes public sector involvement as the primary strategy. While this may help preserve struggling hospitals in the short term, it risks further entrenching a model of healthcare that is insulated from competitive pressures, price discipline, or consumer choice. It may also disincentivize private providers from entering or investing in rural markets where public subsidies create uneven playing fields.
• Private Property Rights: The bill does not infringe on or alter any existing private property rights. It does not invoke eminent domain, impose zoning restrictions, or reallocate property for public use. Its provisions are focused on healthcare financing and service delivery rather than land use or ownership. As such, it neither supports nor undermines this principle directly.
• Limited Government: This is the principle most clearly violated by the bill. The bill creates a new state office, expands the Health and Human Services Commission’s authority, adds at least 10.5 full-time state employees, introduces four new grant programs, and authorizes recurring state-managed training academies. None of the programs is time-limited or tied to sunset provisions for automatic review or repeal. In fiscal terms, the bill represents a sizable and ongoing commitment of taxpayer dollars (over $48 million estimated for the 2026–27 biennium, excluding grant disbursements), and expands the state’s footprint in rural healthcare without a clear off-ramp. It places the state in the role of permanent funder and manager of services that could potentially be devolved to regional or private entities.