The evening before a major Federal program to ensure healthcare for middle-income individuals began operations Tuesday, Governor Alejandro Garcia Padilla (“Commonwealth” party) announced that Puerto Rico would not participate.
The program will provide insurance policies and subsidize premiums for individuals making up to $45,960 a year and families of four earning up to $94,200 who earn too much for Medicaid healthcare for low-income people and who do not qualify for Medicare coverage of the elderly and the handicapped.
The new program is a key part of the 2010 reform of Federal healthcare programs known as ‘Obamacare.’ It provides for States, territories, and the nation’s capital to operate health insurance “exchanges’ (markets) offering Federally-subsidized private policies to the uninsured.
The law makes available whatever funds are needed in the States and the District of Columbia (DC) and provides for the Federal government to operate exchanges in States that choose not to do. But it only allotted the U.S.’ five populated territories $1 billion over six years and allows the territories to use the money for their Medicaid programs if they choose to not subsidize insurance for middle-income individuals and families.
Puerto Rico’s share of the $1 billion is $925 million. PUERTO RICO REPORT estimates that the territory would need at least $6.75 billion over the six years to provide the same subsidies that will begin to be paid in the States and DC January 1st.
The far less than equal funding is made possible because of the Commonwealth’s unincorporated territory status.
Garcia’s last-minute announcement contradicted the statement of his Insurance Commissioner, Angela Weyne, in July that his administration was inclined to establish an exchange.
But in a letter to U.S. Health and Human Services Secretary Kathleen Sebelius just before his announcement, Garcia acknowledged that the $925 million was inadequate for providing the subsidies, writing, “the limited application” of the law “to Puerto Rico significantly curtails the ability to expand health coverage of Puerto Rico’s uninsured.”
The Governor said that he would use the $925 million instead to shift 76,643 people from Puerto Rico’s purely local Mi Salud healthcare program for the poor to Medicaid, which is financed 55% by Federal grants and 45% by the territory, and to expand coverage and benefits for the poor. In his public announcement, Garcia said that shifting low-income people from Mi Salud to Medicaid would save the territory $61 million a year.
He also asserted that uninsured middle-income people could buy good health insurance themselves.
Garcia’s letter to Sebelius also recognized that the Commonwealth is challenged by “disparities” under Medicaid as well as under Obamacare. The $925 million over six years will only make a small dent in the unequal funding of the Commonwealth in Medicaid compared to what Puerto Rico would receive as a State.
Puerto Rico’s representative to the Federal government, Pedro Pierluisi, and Garcia’s predecessor, Luis Fortuno, both of the territory’s statehood party, won a tripling of the Federal grant for the territory’s Medicaid program, not including the $925 million. The just over $1 billion a year that Puerto Rico gets for Medicaid is still far less, however, than the at least $2.6 billion a year it could expect to get as a State.
The Obamacare reform includes money to enable States to expand eligibility for Medicaid to people with incomes as high as $15,282 for an individual and $31,322 for a family of four. All of the cost would be borne by the Federal government at first with States assuming 10% of the cost after a number of years.
Under the law, if Puerto Rico expands eligibility for Medicaid, however, it will have to pay 45% of the cost from the first.
Garcia announced that Commonwealth’s Medicaid program would cover people with incomes far less than would be possible in a State: up to $6,600 a year.
This severely unequal treatment of Puerto Ricans in Medicaid is also due to the Commonwealth’s territory status. According to the U.S. Supreme Court, the U.S. Constitution permits the Federal government to treat territories differently than the States. it also prohibits territories from having voting representation in the Federal government.