The new budget bill in Congress doesn’t mention Medicaid. However, it does call for at least $880 billion in mandatory spending cuts on programs overseen by the House Energy and Commerce Committee. That would have to mean deep cuts for Medicaid, simply because that is the only program in the category that costs enough to accommodate cuts that deep. The goal could not be met without severely cutting Medicaid funding.
While the cuts have not yet been made, it is certain that Medicaid is under threat. If Medicaid is cut as deeply as expected, what will happen in Puerto Rico?
What is Medicaid?
Medicaid is the government-funded healthcare program that covers the costs of healthcare for people who cannot afford or access private health insurance. Medicaid serves millions of Americans across the nation. It pays for 40% of the births in the U.S., covers long-term care for the elderly and disabled, and provides healthcare services for 7 million American adults without other resources.
In Puerto Rico, 1.5 million people — nearly half the population — relies on Medicaid for healthcare. It is funded by federal block grants on the Island, rather than the open-ended matching program used in states, so it is limited. It is also funded less generously in Puerto Rico than in the states, leaving the territory government to figure out ways to stretch the funds to meet needs as well as possible. Nonetheless, it is extremely important. For about half the population, Medicaid is the only form of healthcare available.
How might cuts look?
The bills in Congress right now don’t give details about how Medicaid cuts might be taken or what they might look like. But there have been a few suggestions made.
One possibility is that states will receive capped block grants, as Puerto Rico currently does. At this time, states spend what they need to meet their needs of their people and are reimbursed according to a formula based on the economic reality of the given state.
Puerto Rico receives a pre-defined amount of federal funding for Medicaid. When it runs out, the funds are gone. States could find themselves in the same position. For Puerto Rico, decades of this situation have led to chronic underfunding of healthcare. We might think that this change would not affect Puerto Rico, for the very simple reason that the territory already has block grants. However, the grants could be for smaller total amounts of money, which would be very damaging for Puerto Rico’s already fragile healthcare system.
States may also add work requirements, dropping adults who are not employed from their Medicaid coverage. This plan has not worked well in the past, but it is very popular among Republican lawmakers. Puerto Rico continues to have lower labor force participation and may not have the infrastructure needed to ensure that everyone needing Medicaid would have the opportunity to work or train for work. When Arkansas tried the work requirements, 18,000 people lost their Medicaid coverage. Work requirements could be equally damaging in Puerto Rico.
Would statehood help?
States must have equality with other states. Territories can be treated differently. That’s why Medicaid in Puerto Rico is so severely underfunded: because Congress has the power to make different rules for Puerto Rico than for states.
If Medicaid is cut, cuts can be distributed more heavily toward Puerto Rico than toward the states. If Puerto Rico were a state, this would not be the case.
As is always the case, statehood is the path to justice and equality. Territory status is marked by inequality. Reach out to your congressional representatives and let them know that it’s time for statehood now.
No responses yet