Revitalize P.R.: Island’s disproportionate Medicaid funding is unfair

Federal Medicaid funding has a critical role in providing affordable health care to the people of Puerto Rico, especially as the island works towards a sustainable recovery.

But the vast difference in how
Medicaid funding is calculated for Puerto Rico versus the 50 states is unfair,
hurts more than a million American citizens, and prevents the island from
effectively recovering from hurricane damage and its financial struggles, according
to a study released by Revitalize Puerto Rico, an initiative funded by Assured
Guaranty.

Federal Medical Assistance
Percentages (FMAP), which determine how much federal Medicaid funding each
state receives, are based on actual costs and needs as economic circumstances
change.

A number of lower-income
states, as well as the District of Columbia, have an FMAP rate of 70 percent or
above. In Puerto Rico, however, the FMAP rate is statutorily capped at 55
percent, Revitalize Puerto Rico revealed.

“This is despite the Government
Accountability Office concluding that the federal share would be 83 percent if
it were calculated in the same way that it is for the 50 states. If the FMAP
rates for the U.S. territories were calculated based on per capita income in
the same way, each of the territories would have an FMAP rate in the 70-80
percent range,” the organization stated.

The annual FMAP calculation
uses a formula based on a state’s average personal income relative to the
national average; states with lower average personal incomes have higher FMAPs.

While the average personal
income in Puerto Rico stands at approximately $19,000 while the U.S. mainland average
is $31,000, Puerto Rico is subject to an overall dollar cap under Section 1108
of the Social Security Act, where the FMAP rate is applied only up to a
predetermined dollar ceiling.

No cap applies to any of the 50
states or the District of Columbia. The Section 1108 federal dollar cap is
reset every year, with a $359.2 million cap in FY 2018, which covers only about
13 percent of Puerto Rico’s Medicaid costs.

“Eliminating the statutory cap
on the FMAP rate would go a long way toward mitigating the severity of the
impending Medicaid cliff. Its removal would also help bring long-term stability
to both the Medicaid program and the island economy as a whole, by ensuring
that the Medicaid funding Puerto Rico receives is consistent and reliable,” Revitalize
Puerto Rico stated.

Research shows that the influx
of federal dollars from Medicaid spending has positive effects for state
economies, it added.

Why Congress must act now to fix the problem

For Puerto Rico to establish a stable healthcare system in the years to come, Congress must act now to alleviate unfair burdens that have hampered Puerto Rico’s recovery.

In a report by the Congressional Task Force on Economic Growth in Puerto Rico, it wrote: “If Congress does not enact legislation to avoid the impending Medicaid cliff, the consequences for the health care system in Puerto Rico are likely to be severe” and recommended “federal financing of the Medicaid programs in Puerto Rico and the other territories should be more closely tied to the size and needs of the territory’s low-income population.”

At times, Congress has
apportioned block grants to Puerto Rico as additional limited-time funding for
Medicaid. The Affordable Care Act made an additional $6.3 billion available to
Puerto Rico from July 2011 to September 2019, but the funds were running out by
early 2018. The Bipartisan Budget Act of 2018 granted $4.8 billion with an
expiration date of September 30, 2019.

“If Congress doesn’t act by
September of this year, funding for Medicaid in Puerto Rico will be drastically
reduced, and the program would suffer an annual deficit starting in FY 2021,”
the group concluded. “Medicaid costs are projected to rise to more than $3.5
billion annually in FY 2023 from $2.8 billion for FY 2018.”

“Congress must act now to
implement a meaningful restructuring of Medicaid that would infuse short-term
resources, establish longer term certainty and set the stage for sustainable
growth on the island,” RevitalizePuertoRico.com concluded.