Pallone announces bipartisan deal to provide long-term Medicaid funding to Puerto Rico

Energy Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) and ranking Republican Cathy McMorris Rodgers (R-WA) announced a bipartisan agreement to provide long-term Medicaid funding to Puerto Rico and the U.S. Territories.

The U.S. territory has had such unequal access to Medicaid funding, that Puerto Rico’s Health Secretary Carlos Mellado says that contributes to the deterioration of the island’s health system.

“We are pleased to announce a bipartisan agreement that will avert the looming fiscal cliff by providing Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa with stable Medicaid funding for years to come,” Pallone said. 

Even though the poverty rate in Puerto Rico is over two times higher than in Mississippi, the nation’s poorest state, the federal government covers only 55 cents of every dollar spent by Puerto Rico on Medicaid compared to 76 cents in Mississippi.

This is because unlike the 50 states — where Medicaid funding is open ended — Puerto Rico gets a limited spending cap, essentially a block grant, and the island has to pick up the rest of the costs.

In the 2020 fiscal year, the island’s Medicaid funding was capped at $375 million, while Medicaid expenditures were projected to reach $2.8 billion, according to the Center on Budget and Policy Priorities, a progressive think tank.

This discrepancy between the funding and the expenses has been a consistent issue for the island’s government, across different administrations.

Under Section 1108 of the Social Security Act, territorial Medicaid programs, unlike state programs, are subject to an annual statutory cap.

Most recently, in 2019, Congress acted to increase the limit of the Section 1108 cap for a period of two years. Should that expire without a legislative fix, Puerto Rico’s Medicaid program will lose approximately 90 percent of its federal funding.

On March 17, 2021, Anne L. Schwartz, Ph.D. , executive director of the Medicaid and CHIP Payment and Access Commission (MACPAC), testified before Pallone’s committee that she did not expect Puerto Rico to be able to “fill the funding gap with local funds.”

“Medicaid is an important safety net for those in the territories as we continue to confront the COVID-19 pandemic. We look forward to working together to find a way to pay for this legislation and ensure it passes and is signed into law,” Pallone said. 

The bipartisan agreement will extend increased funding and Federal Medical Assistance Percentages (FMAP) levels for five years for Puerto Rico and eight years for the U.S. territories at current FMAP levels (76 percent FMAP for Puerto Rico and 83 percent FMAP for Guam, U.S. Virgin Islands, Northern Marianna Islands, and American Samoa). 

Puerto Rico has been relying on a smaller number of physicians during the pandemic, according to a report from the Urban Institute, a policy think tank in Washington, following a decade long exodus of doctors to the mainland.

According to the federal Health Resources and Services Administration, 72 of the island’s 78 municipalities are considered to be medically underserved and face “unmet health care needs.”

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