Caribbean Matters: Omnibus bill rescues Puerto Rico's Medicaid—for now

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The omnibus $1.7 trillion spending bill, which passed the House and Senate last week, will have a major impact on the state of Medicaid funding in Puerto Rico and other U.S. territories. The bill ensures Medicaid funds for Puerto Rico for the next five years, which is key, given that nearly half of the island’s 3 million residents get their health coverage via Medicaid.

That funding is not the same as what is provided to U.S. states, even though Puerto Rico is far poorer and more Medicaid dependent than Mississippi—the poorest U.S. state. Now that the fiscal cliff has been avoided, here’s hoping we can address the funding inequities in the years ahead—though with Republicans controlling the House, that’s pretty iffy.

RELATED STORY: Cutting off Puerto Rico's Medicaid is not a 'fiscal cliff.' It will push people off a cliff—to die


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In November, the Center for American Progress highlighted the funding inequities.

Medicaid has long been underfunded in Puerto Rico

While the federal government’s methodology for its provision of Medicaid dollars is intended to equitably distribute resources to states, its funding guidelines and statutes fail to provide sufficient funding to Puerto Rico, despite the territory’s high rate of poverty. The federal government sets the federal share of Medicaid funding, known as the federal Medicaid assistance percentage (FMAP), for each state, territory, or district based on per capita income. In general, poorer states receive higher levels of federal matching funds. Statutorily, the FMAP ranges from 50 percent to 83 percent. In fiscal year 2021, under the COVID-19 public health emergency, states and territories received an additional, temporary 6.2 percentage-point FMAP bump, raising the FMAP range for the year to 56.20 percent to 83.96 percent. (see Figure 1)

Puerto Rico’s per capita income in 2021 ($14,468) was just slightly more than half that of Mississippi ($26,941), the state with the lowest per capita income, which received the highest FMAP among states in fiscal year 2021. In fact, in 2021, more than 40 percent of Puerto Rico residents had incomes below the federal poverty level (FPL). If Puerto Rico’s Medicaid funding were calculated as a state, it would receive the maximum FMAP of 83 percent. However, Puerto Rico and other territories statutorily receive a 55 percent FMAP—just two-thirds of the matching rate it would receive as a state. Because of the temporary FMAP increase of 6.2 percentage points in fiscal year 2021, Puerto Rico received an FMAP rate of 61.2 percent, calculated as its statutory 55 percent plus the temporary FMAP bump.

Nicole Acevedo wrote about the impact of the allotment model for NBC News.

Members of Congress reached a deal Tuesday to fund Puerto Rico’s Medicaid program in a way that prevents it from running out of federal money by the end of the year and ensures stable funding for the next five years. Ensuring consistent funding is crucial for the U.S. territory because of the way the money is allocated.

Unlike the states — where Medicaid funding is open ended and can more easily adjust to the needs of the population in times if crisis — Puerto Rico and other U.S. territories receive a fixed amount of funding, or allotment, with a spending cap that can fall well short of expenditures.

Running out of federal Medicaid funds means that more than a million low-income Puerto Ricans are at risk of losing health care coverage or seeing drastic cuts to their benefits.

Health care analysts and people engaged in health care policy have been following Puerto Rico’s funding problems, along with those of the other territories. Edwin Park wrote about the bill for Georgetown’s Health Policy Institute.

Under the latest funding extensions, Puerto Rico’s FMAP was set at 76% and the FMAPs for American Samoa, Guam, the Northern Mariana Islands and the U.S. Virgin Islands were set at 83%. But after December 23, 2022, the FMAPs for all the territories will revert to the regular 55%. (This fiscal cliff was to have originally taken effect on December 16, 2023 but it was pushed back one week under last week’s continuing resolution.) This means that the federal government will pick up much less of the cost of the territories’ Medicaid programs. The territories will then either have to make up the difference with their own funds, or as is far more likely, they will have to institute deep, damaging cuts over time to compensate for these large reductions in federal financial support.

The omnibus bill would extend the 76% FMAP for Puerto Rico for another five years (through the end of federal fiscal year 2027) and extend the 83% FMAPs for the other territories on a permanent basis. It would also likely provide sufficient federal block grant funding for each of the next five years to not only sustain Puerto Rico’s Medicaid program at that higher level but also allow for further programmatic improvements. This would ensure greatly needed fiscal stability for Puerto Rico for the medium term and for the other territories over the long term and thereby increase access to needed care for low-income individuals and families in Puerto Rico and the other territories.

Inequitable funding for the island has also contributed to a shortage of doctors and medical personnel, a dire situation that David Begnaud covered for NBC News in September.

"The collapse is caused mainly by debt and the economic crisis in Puerto Rico and historic privatization of the health care system there. Our research shows patients are waiting for six to eight months to get an appointment with a specialist. If that's not a sign of collapse, I don't know what is," said Varas-Diaz.

Dr. Edgar Domenech Fagundo, an ear, nose and throat specialist in Ponce, Puerto Rico, would see 30 patients a day when he started practicing in 1999. More than two decades later, that number has about doubled.

"The average I see is anywhere from 50 to 60 patients a day every time I'm in the office," Fagundo said.

His schedule is so busy he can't see any new patients until March of 2023. He said the delay can potentially have life-threatening effects on people.

"The longer people wait, their diagnosis gets delayed. And so things like cancer and other illnesses, you want to treat them early so that patients will have a better chance of cure," said Fagundo.

Dr. Carlos Mellado, who became Puerto Rico's health secretary a year ago, said there are only 17 neurosurgeons in Puerto Rico — for a population of 3.2 million people.

What can you—yes, you—do about all this? It is important to push our elected officials to pay attention to and redress the medical situation and funding for the territories, given that, as colonies of the United States, they have no voting representation. Find out where your congressional representatives stand on funding for Puerto Rico and the other territories, and encourage them to do what’s right.

Please join me in the comments for more on the situation in the territories, and for the weekly Caribbean News Roundup.