fccThe USF rural healthcare fund appears set to get an increase in its budget cap of $171 million annually, which would bring its annual budget to $571 million from its current $400 million. FCC Chairman Ajit Pai issued a press release today stating that a draft order that would increase the FCC rural healthcare fund budget has the support of the majority of FCC commissioners.

The rural healthcare fund covers some of the costs of broadband connectivity in rural areas where broadband is costlier than in urban areas because of the higher costs of delivering rural service.

FCC Rural Healthcare Budget
When Pai circulated the draft order last week, the FCC issued a press release noting that the current $400 million budget cap for the rural healthcare program was established in 1997 and was never indexed for inflation. The order “would apply the increased cap to the current funding year to immediately address a funding crisis and enable rural health care providers to continue offering telemedicine services,” the release stated.

In today’s press release, Pai noted that the plan to increase the USF rural healthcare budget had bipartisan backing in Congress and among the healthcare community. To support that assertion, the press release included 11 quotes from senators and congressional representatives and from the American Hospital Association and the Schools, Health & Libraries Broadband (SHLB) Coalition. x

One of the commissioners who supports Pai’s plan is Brendan Carr, who issued a statement yesterday praising the draft order and citing Carr’s recent visit to a skilled nursing facility in Lennox, South Dakota, where he saw how a connected workstation allows patients to visit virtually with a doctor located in Sioux Falls or elsewhere.

“This broadband connection has eliminated the need for the long and sometimes arduous ambulance ride into bigger cities and gives patients access to specialists that they might otherwise be unable to see,” Carr observed.

An FCC spokesperson was unable to detail where the $171 million annual funding increase would come from. But I would be surprised if Pai is proposing an overall increase in the Universal Service Fund, which is comprised of three other programs in additional to rural healthcare. Instead, it is more likely that he envisions cuts to other portions of the overall USF. Commissioner Michael O’Rielly already has stated that he would not like to see the rural healthcare budget increase without cuts to other parts of the USF.

The other three portions of the USF program are the high-cost fund, which covers some of carriers’ costs of delivering service in rural areas; the E-rate schools and libraries fund, which helps schools and libraries pay for broadband connectivity; and the Lifeline program, which covers some of the costs of voice and internet service for low-income Americans.

It’s unlikely that Pai is eying the high-cost fund for cuts, as the FCC recently allocated additional funding for that program  and I would be surprised if the commission were to consider E-rate funding cuts. More likely Pai and other supporters of the proposed order anticipate obtaining the funding by further squeezing the Lifeline program. Under Pai, the FCC has adopted several reforms aimed at limiting that program.

And that could explain why the draft order may not have full commission support, as today’s press release seems to suggest.

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