Policy Analyst at the Georgetown Center on Poverty and Inequality
It has become a bit of an end of year tradition: Congress is scrambling again to enact legislation to keep the federal government open. Unfortunately for the U.S. citizens of Puerto Rico, Congress is also scrambling to provide additional funding for the island’s Medicaid program and avoid a so-called “Medicaid cliff.”
Medicaid is a core pillar of the U.S. healthcare infrastructure that helps ensure that everyone — regardless of income — can have access to quality care. This support helps build a stronger, healthier future for all of us. It is financed partly by each state and partly by the federal government. Importantly, the total amount of federal support for Medicaid in the states and D.C. is based on need: it expands and contracts as the total number of eligible people changes.
But in Puerto Rico, Medicaid is financed differently than it is in the states. For decades the federal government treated Puerto Rico unequally, covering only half the share of the cost (in comparison to a maximum of 83 percent for states). And the amount of federal funding is subject to an extremely low, arbitrary and unstable cap set by Congress. As a result, Puerto Rico was forced to spend all its federal Medicaid funding well before the end of the fiscal year. The territorial government then made the difficult decision to use a disproportionate amount of local funding that would otherwise be available to address other critical needs, just to keep Medicaid working.
The perverse result is that one of the poorest jurisdictions in the United States is treated as one of the wealthiest states for Medicaid funding — a program specifically designed to help low-income individuals and families access quality medical care.
Congress has made some progress in recent years toward improving Medicaid funding for Puerto Rico. In 2011 the Patient Protection and Affordable Care Act increased the federal share to 55 percent and approved additional supplemental funding for several fiscal years. After Hurricane María in 2017, Congress temporarily increased the federal share to 100 percent and allocated additional funding to fully finance the program for two fiscal years. Since 2019, however, both the federal share percentage and the amount of federal funding have fluctuated significantly, and that is the essence of the current problem.
In the absence of a permanent solution to address Puerto Rico’s Medicaid needs, the island’s government faces recurring funding “cliffs,” every 18 months or so, which make long-term healthcare planning almost impossible. This uncertainty regarding Medicaid funding for Puerto Rico is also emblematic of a larger problem: the U.S. territorial classification system. This system is a legally sanctioned discriminatory scheme under which the American citizens of the U.S. territories have been treated as separate and unequal subjects — in data collection, health care, voting, and more — for far too long. The foreseeable outcomes in Puerto Rico have been a rise in preventable premature deaths, increased use of expensive emergency room care, and more migration to the mainland.
Ideally, Congress would eliminate all Medicaid funding caps for Puerto Rico and the other territories and align their matching rates with those applicable to the states. Currently, the House leadership is considering a proposal to be included in a year-end omnibus bill that is a step in the right direction. It would set the federal share of the costs for Puerto Rico at 76 percent and allocate the corresponding amounts to fund the program at that level during the next five fiscal years. After 2027, the federal share would increase with inflation–but it still wouldn’t expand and contract with need.
This proposal is an encouraging development. If enacted, it would provide some stability to Puerto Rico by setting forth clear funding levels for the next five years, allowing Puerto Rico to sidestep the painful and potentially tragic need to cut back coverage or reduce the number of participants. Perhaps most important of all, it would deliver a measure of long-delayed justice to the 1.3 million Puerto Ricans who rely on Medicaid to pay for quality, affordable healthcare.
But the proposed five-year deal does not address the real problem with Medicaid for Puerto Rico. It falls short of parity with the states and it perpetuates the separate and unequal treatment of Medicaid participants in the territories, who are being told once again to accept a “good enough” deal. We hope Congress realizes soon that the U.S. citizens in Puerto Rico deserve better treatment than that.
This column was originally published in The Hill on December 21, 2022.