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Puerto Rico’s Medicaid Cliff

As Congress debates controversial new caps on Federal spending on State Medicaid programs, it is sometimes overlooked that there is precedent for this increasingly unpopular arrangement: Puerto Rico.  Puerto Rico can receive Federal matching on its Medicaid’s expenses; after that limit is reached Federal funding stops.

The Congressional Task Force on Economic Growth in Puerto Rico recognized in its 2016 report that the Affordable Care Act (ACA) contained both positive and negative elements for the territories’ Medicaid programs, insofar as the law provided additional funding but made that funding temporary. Specifically, the final report noted, the ACA provided for a one-time increase in Medicaid funding for the territories of $7.3 billion, of which Puerto Rico received $6.4 billion.

Puerto Rico’s supplemental funding will be depleted by the end of March of 2018, a date that has come to be known as the “Medicaid cliff.” Once Puerto Rico depletes this supplemental funding, it will revert to receiving only its annual capped federal Medicaid allotment, which is expected to be $357.8 million in Fiscal Year 2018.  This amount is far lower than similarly situated states.

When the “cliff” happens, Puerto Rico will have to come up with resources to pay for Medicaid that states don’t have allocate because they receive federal assistance. Clearly, Puerto Rico can’t sufficiently fund its Medicaid program any more than the 50 states could. Indeed, Puerto Rico’s financial position is worse than any of the 50 states, so the territory is even less able to cover these costs than a state would be able to.

Congress has the power to fix this. Numerous advisors and members of Congress have emphasized the need for equitable Medicaid funding for Puerto Rico. This would come automatically with statehood, but Puerto Rico needs action now.

What if Congress takes no action?

We hear people saying that Puerto Rico shouldn’t get a “bailout” or that the United States shouldn’t “take on” Puerto Rico’s problems. However, Puerto Rico is not a foreign country. The Island is a territory belonging to the United States. The U.S. is responsible for Puerto Rico today.

One of the consequences of this fact is that people living in Puerto Rico who are unable to get Medicaid benefits in Puerto Rico can move to Florida and get those Medicaid benefits. They can in fact move to any of the 50 states and receive the healthcare benefits they need. Since they are not immigrants, it is no more difficult for someone to move from Puerto Rico to Florida than to move from Alabama to Florida. It just requires a plane ticket.

The federal government will pay more for Medicaid to the states than it does to Puerto Rico, but the states will still bear responsibility for these benefits. If Puerto Rico cannot pay for its residents’ healthcare, the states to which these people relocate will have to do so.

Healthcare need is already one of the primary reasons given by Puerto Ricans who leave the territory to live in a state. As healthcare becomes less accessible in Puerto Rico, more people will be forced to move in order to meet the healthcare needs of their families.

Will this benefit Puerto Rico?

Does this seem like a solution to Puerto Rico’s problems? Can Puerto Rico simply pass Medicaid costs on to North Carolina or New York?

In short, no.

The people who are unable to move to a state will be those in the poorest health and the greatest poverty. As the population decreases, Puerto Rico’s tax base shrinks. The population is aging, since younger people are leaving the territory, and the economy continues to shrink, too.

Puerto Rico will have less and less funding to cover the healthcare of the most needy, fewer healthcare professionals to provide the needed care, and a continuing drain on its already challenged economy.

Will inaction benefit the United States?

Carmelo Rios estimates that health care provision costs three to four times as much on the mainland as it does in Puerto Rico. Rios, the Puerto Rico Senate Majority Leader, shares projections that Florida will face $6.3 billion in additional healthcare costs, Texas will face $1.6 billion, and many other states will have comparable costs — some of which will be paid by the federal government and some by the states.

He concludes that “By acting now to prevent this cliff, the federal government could save taxpayers close to $30 billion, which is the cost of providing health care for the tens of thousands of Puerto Ricans who would move to the states to receive better health care services by 2025.”

Learn more.

An event presented by Cenadores PR and the National Convention of Puerto Rican Women – DC Chapter will take place on July 17th in Washington D.C. The following panelists will share their views on the upcoming Medicaid cliff:

  • Mario Marazzi– Executive Director, Puerto Rico Statistics Institute
  • Marta Rivera – Chair of the Board of Directors, Puerto Rico Hospitals Association
  • María Fernanda Levis – CEO, Impactivo Consulting
  • Pedro Montenegro – Government Affairs Director, National Hispanic Medical Association

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