Most discussions of rural health policy overlook the key role that states play in crafting and delivering programs that directly affect the access, cost, or quality of health services to rural residents. However, policies such as regulations embodied in medical practice acts, education programs, and funding for local public health programs are the subject of debate in state capitals. Moreover, the current climate of devolution and block grants serves to increase the state government role in shaping the effectiveness of rural health programs. Despite the lack of discussion of the state role by rural health researchers, state governments play a vital role in rural health. This paper provides statelevel policy makers with an overview of the key issues in rural health and principles for developing policies and programs in this area. Furthermore, this paper argues that states should adopt a “rural lens” in health policy formulation. That is, states should explicitly account for the differences in medical geography of their rural areas when crafting and implementing health policy. Additionally, this paper suggests scrutiny of current rural health policies so that significant rural people (the intended beneficiaries) do not lose benefits from the policies through rent-seeking behaviors of powerful interests in the health care arena on the provider side (physicians, hospitals, medical schools).