Vice President for Health Policy
As we’ve explained (here and here), increased federal assistance for the Medicaid programs of Puerto Rico and the U.S. Virgin Islands is essential for their hard and protracted recovery from Hurricanes Maria and Irma. But despite acknowledging the need for such assistance, President Trump’s latest request for disaster relief, submitted to Congress on November 17, includes no additional federal Medicaid support. Moreover, the request falls well short in other ways; for example, it doesn’t meet the basic needs, such as food, of low-income people for the post-hurricane recovery.
Unlike state Medicaid programs, federal funds for Medicaid in the U.S. territories come through a highly inadequate block grant — a fixed amount of federal funding that falls well below the territories’ actual Medicaid costs. Moreover, while states’ federal matching rates are based on their per capita income relative to the nation, territories like Puerto Rico and the Virgin Islands receive a fixed matching rate of 55 percent. (If Puerto Rico’s matching rate were set under the formula for states, it would be 83 percent.) Once a territory’s Medicaid spending exceeds its federal block grant amount, it must cover all Medicaid costs going forward. Before the Affordable Care Act (ACA) provided some additional Medicaid funding, as explained below, the federal government effectively covered only 15 to 20 percent of Puerto Rico’s Medicaid costs.
These steep long-term federal Medicaid funding shortfalls contributed significantly to Puerto Rico’s troubled fiscal situation. They also added substantial stress to the island’s struggling health care system because Puerto Rico’s health care providers rely heavily on Medicaid for reimbursement; the program covered nearly half of Puerto Rico’ residents before Maria and Irma.
The ACA provided an additional $7.3 billion in federal Medicaid funding to the territories, available from July 2011 through September 2019. Puerto Rico has nearly exhausted its share of those funds, so the President and Congress provided another $295 million this past May. Even before the hurricanes, Puerto Rico was projected to spend those funds by April 2018. Without any additional funding — which the President and Congress haven’t provided — Puerto Rico will likely have to remove up to 900,000 people from Medicaid (more than half of its total enrollment).
Now, many more residents of Puerto Rico and the Virgin Islands will likely need Medicaid, and their medical needs also may be much greater. Moreover, the hurricanes have drastically reduced Puerto Rico’s and the Virgin Islands’ fiscal capacity to maintain their current Medicaid contributions. (A 55 percent regular matching rate means that for every $1 of total Medicaid spending, the federal government contributes 55 cents and Puerto Rico and the Virgin Islands must contribute the other 45 cents.)
As a result, it’s critical that the federal government immediately increase Medicaid block grant funding for Puerto Rico and the Virgin Islands to ensure that they have the funds to provide their residents needed health care. In addition, policymakers should temporarily raise the federal matching rate to 100 percent — since neither Puerto Rico nor the Virgin Islands will be able to pay their current share of Medicaid costs anytime soon.
The block grant increase must be large enough to sustain their underlying Medicaid programs over an extended period, address the higher hurricane-driven demands, and cover the temporary matching rate increase. Finally, as with Hurricane Katrina evacuees in 2005 and 2006, the federal government should ensure full federal funding for states providing Medicaid coverage to hurricane evacuees.
The Administration acknowledges the need for such support in its supplemental request letter — yet it didn’t include any Medicaid assistance in the request itself. It “recognizes” that Puerto Rico still needs to contribute its share of costs of its Medicaid program to draw down its remaining federal block grant funding. It also notes the looming exhaustion of block grant funding by early 2018, leaving Puerto Rico responsible for all Medicaid costs from that point. Administration, however, states only that it “expects” to address these Medicaid “liquidity” issues “through a future request.” The Administration also states that it’s “aware” of congressional legislation providing Medicaid assistance that may address this issue sooner, but it offers no support for such proposals.
As it crafts a disaster relief package in response to the President’s request, Congress should ensure that it includes the additional federal support for Medicaid that Puerto Rico and the Virgin Islands need, as well as other critical support like meeting their residents’ basic needs.