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Puerto Rico Gov’t Spends Scarce Funds on Helping Middle-Income Citizens of States

Although the Government of Puerto Rico is raising taxes and slashing services to avoid financial collapse, it recently spent funds to help middle-income citizens of Florida and New York obtain Federal assistance not available to middle-income and even low-income Puerto Ricans.

Juan Hernandez Mayoral, the head of Governor Alejandro Garcia Padilla’s offices in the States, yesterday boasted on Twitter that the central Florida and New York City offices had helped area residents get Federal subsidies for healthcare insurance.  According to a news report, the Florida office hired more staff to do the work.

Middle-income taxpayers in States are now getting the subsidies, which are new and pay all or part of the cost of insurance for individuals and families earning from 100% to 400% of the Federal poverty level.  In 2014, this is from $11,670 to $46,680 in the case of an individual, with $4,060 to $16,240 more for each additional family member.  So, for example, families of four with incomes between $23,850 and $95,400 receive subsidies.

The subsidies were established by the 2010 healthcare reform law known as Obamacare and took effect this year.

The law does not limit the amount of subsidies in States but included just $925 million for middle-income insurance premiums in the Commonwealth for the entire period from this year through 2019. Equal subsidies in the territory would cost an estimated $1.5 billion a year.

In enacting the law, Federal policymakers recognized that the $925 million would not be sufficient to pay for substantial subsidies in Puerto Rico.  So, the law permits the insular government to use the money for its Medicaid program, which pays for healthcare for low-income individuals and families.

Since the Commonwealth government does not even provide healthcare for all individuals and families earning less than the amount needed to qualify for the subsidies in the States because of a lack of Federal funding, it is using the $925 million for its Medicaid program.  The Federal government contributes $1 billion a year to the program — but equal funding with the States would provide an additional $1.9 billion a year.

Puerto Rico can constitutionally be treated unequally in Federal programs because it is a territory.  Unequal treatment is politically possible because territories cannot have voting representation in the Federal government.

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