Puerto Rico is facing a Medicaid cliff: that is, the territory’s government is about to run out of money to pay for healthcare for people eligible for Medicaid.

States don’t run out of Medicaid funds. That’s because there is a big difference between Medicaid funding in states and in territories.

First, Puerto Rico and other territories get lower amounts of funding. If Puerto Rico were a state, it would get 83% of the costs of Medicaid. As a territory, it gets just 55%.

Second, there is a cap on the funds Puerto Rico receives. A state gets a percentage of all the costs of administering Medicaid. Puerto Rico only gets a certain amount, and then no more federal funding, no matter what the costs are.

So people in Puerto Rico might be eligible for Medicaid, but unable to receive those benefits because the local government can’t afford it, and the federal government won’t pay.

In September, Puerto Rico will run out of federal funds for Medicaid, and the government can’t make up the difference. Their attempts to cover these healthcare costs in the past are a big part of why they have a financial crisis now.

When the federal funds run out, 900,000 U.S. citizens in Puerto Rico will lose their access to healthcare.

This month’s report from the Medicaid and CHIP Payment and Access Commission says, “The Commission finds that the statutory financing arrangement for Puerto Rico’s Medicaid program has resulted in chronic underfunding of its Medicaid program. Medicaid spending is constrained to a greater degree than in any state, reflected, for example, in more limited benefit packages, lower eligibility ceilings, and lower provider payment levels.”

Congress looks for a solution

Hearings on the subject have made the situation clear to Congress. Healthcare in Puerto Rico is in such a desperate situation that people are leaving the Island in order to get healthcare. Doctors also are leaving, making it even more difficult for people on the Island to access the healthcare they need.

When Puerto Rico is admitted as a state, this problem will be solved. As a state, Puerto Rico will receive Medicaid funding just as the other states do.

However, Puerto Rico will not become a state before reaching the Medicaid cliff. So Congress is looking for ways to solve the problem without either waiting for statehood or making frequent temporary changes.

“The ideal is to treat the U.S. citizens in those territories as U.S. citizens,” Michael Melendez, a retired Medicaid administrator, was quoted as saying by Bloomberg Law. “If everybody has to stop at the red light, then everybody has to stop at the red light, not just people that live in the mainland. If they’re going to be held to certain requirements, let them meet those requirements, but fund the program at the same level that states get the funding.”

The Territories Health Equity Act of 2019, S1773 and HR1354, gives state-like funding to U.S. territories. The House and the Senate have similar bills with the same title. Once both bills are passed, the two parts of Congress must agree on a single bill which they can then send to the president for a signature. Both bills are currently in committee. That means that the relevant committees are looking over the bills and will make recommendations to the larger groups: the Senate and the House.

Puerto Rico can’t wait for statehood to solve the Medicaid problem. As Resident Commissioner Jenniffer Gonzalez-Colon pointed out, making the funding decisions now will save taxpayers money in the long run.



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