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Up to $275 Million in U.S. Medicaid Funding Unclaimed

The Government of Puerto Rico lost $235 million in U.S. Government appropriations for the territory’s Medicaid program September 30th.

It could lose another $40 million by January 1st, the Interim Director of the territorial Health Insurance Administration (ASES), Yolanda Garcia, admitted today.

The acknowledgement comes after Resident Commissioner in the U.S. House of Representatives Jenniffer Gonzalez-Colon (New Progressive Party/R) advised that she no longer expects a congressional agreement on a major increase in funding for the territorial program by November 21st but expressed hope that there will be by December 20th.

The increase, if agreed to, would be from $375.1 million during the Federal fiscal year that began October 1st with annual increases for the cost of medical inflation during the next three years if the insular government matches the Federal grants on a 55% Federal/45% territorial basis to between $9.8 billion and $12 billion over the four years, with a Federal/territorial match ranging from 70% Federal to 83% Federal for two years and then 76%.

The $235 million that remained in the U.S. Treasury was from the $4.8 billion that the last Congress appropriated to help the territory fiscally as well as to meet emergency medical needs after Hurricanes Maria and Irma. The money required no territorial matching but had to be used during Federal Fiscal Years 2018 and ’19.

Congressional negotiators had a difficult time before the money was appropriated finding out from territorial officials how much money they could use. In what now is clear was an overabundance of caution, the amount was increased from $4.7 billion to $4.8 billion at the last minute.

When agreement on a major increase was not reached, as hoped, before the beginning of this fiscal year, congressional leaders on the issue agreed to continue the 100% Federal funding through November 21st as temporary FY20 spending legislation (a ‘continuing resolution’) was enacted to last through that date. It now appears likely that there will be another continuing resolution through December 20, although there has been talk of temporary spending through February or March.

The $40 million that Garcia of ASES expects to lose is the remainder of $6.35 billion appropriated in 2010 along with the ‘Obamacare’ health care reform package. $586 million of that money had not been spent as of October 1st. It is being spent now. The longer the 100% Federal share lasts through December 31st, the more of it ASES will be able to use. The money will no longer be available as of January 1st.

After the 100% Federal funding ends and after December 31st unless there is agreement on an increase in Federal funding, the territory will have the $375.1 million provided for by current Federal law as long as it matches that amount on a 45% territorial basis. With the program now spending about $217 million a month, the monies would not provide Federal funding for the fiscal year ending September 30th past some time in February.

Garcia said today that ASES will also, however, have $145.57 million in funding for two programs related to Medicaid that it can use to continue Federal contributions through mid-March. $86.2 million is from the Children’s Health Insurance Program (CHIP), which the territory has folded into its health insurance program for the poor, and $59.37 million is to subsidize prescription drugs for Medicaid recipients also eligible for Medicare. Unlike their fellow Americans in the States, low-income elderly and disabled Puerto Ricans who participate in Medicare cannot receive Medicare Part D prescription drug price subsidies, which would be much higher than are provided by the Medicaid “Enhanced Allotment Program” for territories.

Congressional agreement for a major increase in Medicaid for Puerto Rico and the four much less populated territories, however, appears likely and relatively imminent. House Republicans as well as House and Senate Democrats agree on an average of $3 billion a year for four years in slightly increasing amounts with the territory only needed to match at a 17% rate for the first two years and 24% during the second two.

Senate Finance Committee Chairman Chuck Grassley (R-IA) has said that he is more concerned with that program improvements Puerto Rico would need to make to access the funds than the amount of money at issue.

He has proposed more measures to ensure funds are spent properly and wants the territory to provide more of the services that Medicaid requires, which Puerto Rico has not provided because of a lack of funds. The territory’s Health Secretary, Rafael Rodriguez Mercado, has said that Grassley’s demands cannot be met with his proposed $9.814 billion over four years at a 70% Federal/30% territorial matching rate.

A compromise, however, seems likely.

The PROMESA Financial Board’s Fiscal Plan for the territory, though assumes now increase in Federal Medicaid grants. In addition to some cost-savings in Puerto Rico’s Medicaid program, it would devote more territorial revenue to the program than would be needed under the amounts and percentages of Federal contributions that are being discussed by congressional leaders on the issue.

A compromise would, therefore, result in substantial revenue not budgeted for by the PROMESA Board in its Fiscal Plan and Government of Puerto Rico budget on top of already budgeted surpluses.

In the past, this has led President Trump to oppose additional Medicaid funding for Puerto Rico because creditors would be able to claim it. PROMESA Board Executive Director Natalie Jaresko, however, has said that additional revenue should be saved for deficits that the Board projects will begin many years in the future and for contributions to the Government’s pension system.


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