A Congressional subcommittee will hold a hearing tomorrow at 10:30 am to examine health care funding in the U.S. territories. The hearing, which is entitled “Strengthening Health Care in the U.S. Territories for Today and Into the Future,” will cover Puerto Rico’s upcoming extreme loss of Medicaid funding, often referred to as the “Medicaid Cliff.”
The Medicaid Cap
Puerto Rico and the other territories have a set limit on the amount of Medicaid funding they receive, regardless of their needs. Territories have to come up with additional funding locally or they simply can’t provide the medical care doctors recommend.
The result is that U.S. citizens living in the territories do not receive the same level of medical care as those living in the States, and providers, who are reimbursed at a lower rate than their colleagues in the states, are moving out of Puerto Rico to establish practices where they get paid more for the same services.
Unequal Federal Matching Rates
Medicaid is a joint Federal-State program that finances medical services. The federal government’s share of most Medicaid expenditures is called the federal medical assistance percentage (FMAP). The remainder is referred to as the state share.
The FMAP formula is designed so that the federal government pays a larger portion of Medicaid costs in poorer states . FMAP rates are set in law to range from 50% and 83%, so that the Federal government pays at least half of all Medicaid funding but often considerably more in states that have the greatest need.
As of July 1, 2011, FMAP rates for the U.S. territories (Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and the Virgin Islands) were increased
from 50% to 55%. Yet because territories are subject to federal spending caps, they actually get substantially less than 55% of their funding needs matched by the Federal government – historically they have paid 80% of their expenses and the U.S. government contributes less than twenty percent.
The Medicaid Cliff
Congress has granted Puerto Rico and the other U.S. territories temporary increases in their Medicaid Caps several times over the years:
- March 23, 2010 – The Affordable Care Act (ACA) omitted U.S. territories from its key provisions and, as recognition of this omission, provided them with $6.3 billion in federal funds for their Medicaid programs – $5.4 billion of that for Puerto Rico – available to be drawn down between July 2011 and September 2019. (An additional $925 million is available through December 2019).
- May 5, 2017 – When it came clear that the ACA funds were expected to run out in 2017, Congress made additional funding available: The Consolidated Appropriations Act of 2017 (P.L. 115-31) provided Puerto Rico with an additional $295.9 million. This funding can be claimed through September 30, 2019.
- February 8, 2018 – Responding to the devastation of Hurricane Maria (September, 2017), the Bipartisan Budget Act (BBA) of 2018 (P.L. 115-123) provided Puerto Rico with up to $4.8 billion in additional federal funds and allowed it to access these funds at a 100 percent matching for the period from January 1, 2018 through September 30, 2019.
After these funds expire or are exhausted, Puerto Rico’s cap will return to its federal ceiling, which is $366 million in FY 2019 – when Puerto Rico’s projected spending will be $2.8 billion – for a health program that provides a benefits package significantly less comprehensive and provider reimbursement levels significantly lower – than those found in States.
Because much of the above funding expires in or soon after September of 2019, this deadline has become known as the Medicaid Cliff.
Proposals that Address the Medicaid Cliff
Puerto Rico Governor Ricardo Rossello is requesting $15.1 billion in Medicaid spending over five years, with an 83% percent matching rate (up from the current 55% match rate). This funding would also increase provider payments, raise hospital reimbursements, expand eligibility and enhance benefits. The Governor’s proposal would also add coverage for drugs to treat Hepatitis-C and cover Medicare Part B premiums for close to 300,000 Puerto Rico residents who are dually eligible for Medicaid and Medicare and who now pay the premiums themselves.
Resident Commissioner Jenniffer Gonzalez-Colon’s has a plan that contains similar core elements as the Governor’s proposal, calling for $2.65 billion each year in FY20 and FY21. The Resident Commissioner’s plan also eliminates the current 55% match rate and, instead, uses the same formula applied in the States, which would result in a 83% match rate.
According to a Fact Sheet prepared by the Gonzalez-Colon office, the Island is still in a severe economic crisis following Hurricane Maria. Puerto Rico’s poverty rate is currently 45%, compared with 13% on average for the 50 states and Washington, D.C. The average annual income is $19,343, less than one third of the average for the States. Food insecurity affects up to 60% of the population, and 40% are eligible for Medicaid coverage — even though the standards are higher than in the States.
Earlier this year, US Virgin Islands Delegate Stacey Plaskett (D) introduced the Territories Health Equity Act of 2019 (HR 1354) to remove the Medicaid cap and provide the same funding to the territories as is currently given to the States. Rep. Plaskett was joined by fellow representatives of the U.S. territories, Resident Commissioner Jenniffer González-Colón (R-PR) and Delegates Amata Coleman Radewagen (R-AS) and Michael San Nicolas (D-GU), as well as Puerto Rican born Rep. José Serrano (D-NY), and Rep. Nydia Velázquez (D-NY).
Healthcare funding is just one of the areas in which territories are treated differently from States.