Obamacare was not created with the U.S. Territories in mind. As the Trump Administration and Congress act to repeal and replace Obamacare, they have the opportunity and obligation to address the unintended personal, fiscal and economic costs that have resulted from flawed federal health policies relating to Puerto Rico. The U.S. Congress, U.S. Executive Branch and ALL Puerto Rico stakeholders agree that financing for the Medicaid program in Puerto Rico is pivotal to the Island’s current crisis and is a “serious and urgent issue facing federal policymakers attempting to address the territory’s economic and social challenges.” Current Congressional discussions on the topic open the door to permanently fixing the underlying problems with the Puerto Rico Medicaid formula.
As is true for all U.S. territories, Puerto Rico’s Medicaid funding is subject to different provisions than those that apply to the States. The principal differences are that:
1. The federal medical assistance percentage (FMAP) which establishes the percent of Federal Medicaid funding Territories receive is set by law at 55 percent rather than based on per capita income as it is in the States.
2. Territories only receive Federal Medicaid funding up to a statutory cap which in Puerto Rico covers approximately 16 percent of the program’s costs.
These policies have been identified as the principal culprits to the Island’s fiscal, economic and humanitarian crisis which has forced hundreds of thousands of Puerto Ricans to leave the Island in search of jobs and their family’s sustenance. While Medicaid funding caps and disparate FMAP treatment for the Territories were probably intended to control federal spending, they instead provide the Federal Government with additional fiscal responsibilities at a high cost to all involved. Specifically, the Federal Government continues to pay more in Medicaid spending for Puerto Ricans that move to the States than it would with an effective Obamacare replacement option capable addressing the needs of residents on the Island. In the 18 months ending in May 2016 alone, Congress is estimated to have paid out $648 million in additional spending resulting from more than 111 thousand U.S. citizens who dropped their Puerto Rico Medicaid Program coverage to enroll in a State Medicaid Program. At the same time, Puerto Rico residents face the highest national prevalence of diabetes, hypertension and fair or poor self-rated health status among adults and children are affected with the highest pediatric asthma rates in the nation and what until recently was the highest premature birth rate in the world. The situation is unfair and unjust for all involved.
By the same token, Medicare spending on the Island was also significantly affected by changes in Obamacare which threaten the stability of the entire PR health system through unwarranted and unfair reduction of 20% in Medicare Advantage rates. These changes alone have placed at risk coverage for more than 290,000 low income elderly which are currently covered by dual special need plans.
Congress can address the PR Health Crisis by immediately implementing reforms like those presented by Congressman Ryan in “A Better Way.” A combination of his proposed reforms to the “Medicaid per capita allotment” and “State Medicaid Flexibility Design” present a viable option to curtail and provide a permanent fix to the looming “PR Medicaid Funding Cliff” which could leave approximately 900,000 U.S. citizens without coverage at the end of this year by adjusting the “allotment for each beneficiary category by the average medical assistance and non-benefit expenditures per full-year-equivalent enrollee during the base year (2016), adjusted for inflation.” This and other options which provide an appropriate formula for calculating Puerto Rico’s FMAP, address inequities created by Obamacare to PR Medicare Advantage and increase tools for the Island to direct funding towards prevention and system integration activities are vital to end the crisis.
Any Obamacare Repeal and Replace proposal must include the Territories if it is to achieve President-elect Trump’s promise to “broaden healthcare access, make healthcare more affordable and improve the quality of the care available to all Americans.” We urge Congress to use this opportunity to address the severe health disparities that already affect the millions of U.S. citizens living in its Territories.