Obama Administration officials push for Medicaid funding, EITC for Puerto Rico

The Obama Administration this morning reiterated its requests that the Congress treat Puerto Rico much more equally with the States in contributing to Medicaid in the territory and that it fund an earned income tax credit (EITC) in the islands. The call came in a letter to the Congressional Task Force on Economic Growth in Puerto Rico, established by the June 30 law on territorial finances known as PROMESA from Treasury Secretary Jacob Lew and Health and Human Services Secretary Sylvia Burwell.

The Administration’s budget for Fiscal Year 2017 beginning October 1st proposes monies for more equal funding of Medicaid in Puerto Rico and the four much less populated territories on a phased in basis of $9.315 billion over five years and $29.644 billion over 10 years. Under past legislation, Puerto Rico has received 87.1%-92.5% of such funding increases for health care programs for low-income individuals in the five territories.

The Obama budget plan would also appropriate $601 million for an EITC in Puerto Rico in FY 2017 and $6.642 billion for it over 10 years. One aspect of the proposal that will be somewhat controversial in Puerto Rico is that the proposal would fund a local EITC instead of extending the refundable portion of the EITC that applies in the States, the District of Columbia, and, to en extent, three other territories. Leaders of Puerto Rico’s autonomy-oriented Popular Democratic Party, which controls the Government of Puerto Rico now, wants a different program than the national program. Leaders of the New Progressive Party, which has equality within the nation as its primary goal — and is likely to sweep November’s elections, wants Puerto Rico to be part of the national program. An earned income tax credit reduces income taxes for low-income workers. The refundable portion of the Federal EITC provides cash payments to low-income workers to the extent that they cannot use a tax credit.

In their letter, Lew and Burwell emphasized the benefits of the two proposals to Puerto Rico’s failing economy. Economists consider that the proposals would have major positive impacts on the insular economy because the funds would be spent locally.

Democratic presidential candidate Hillary Clinton has pledged Medicaid equality for Puerto Rico and the national Democratic Platform reflects this. Clinton has been generally supportive of refundable earned income tax benefits for low-income Puerto Rican workers and the Democratic Platform has relatively vague language on this.

The Task Force is comprised of two Republicans and two Democrats from each house of the Congress and is chaired by Senate Finance Committee Chairman Orrin Hatch (R-UT). It is to identify measures requiring urgent attention by September 15th and make final recommendations for changes in Federal law that will help Puerto Rico’s economy, specifically addressing equitable access to healthcare programs and reducing child poverty, by December 31st. It has asked for recommendations by next Friday.