Earlier this week, U.S. Congress reached a budget deal and managed to avoid a government shutdown. The deal, which is expected to pass promptly, provides almost $300 million in Medicaid funds to Puerto Rico. These funds will help offset the depletion of the nearly $6 billion one time, eight-year allotment provided through the Affordable Care Act, also known as “Obamacare.” This allocation comes short of the Puerto Rican Government’s request for a short-term allocation of between $650-$900 million. The island still needs an additional $300 million to fund its entire Medicaid budget for fiscal year 2018, with hopes that it might come from the Children’s Health Insurance Program (CHIP) in September.
Without these new funds, Puerto Rico would have reverted to depending solely on a Medicaid cap allotment, reducing the allocation to just $350 million, instead of the nearly $1.55 billion received in total in 2016.
Since Puerto Rico is not a state, U.S. citizens who live on the island don’t pay federal taxes. However, they pay the same level of Social Security, Medicare, and other payroll taxes that stateside residents do. Regardless, all U.S. territories receive proportionally less federal Medicaid reimbursement than states do. The federal matching rate for states ranges from 50%–83%, depending on the yearly per capita income; Puerto Rico’s federal matching rate is fixed at 55%. Additionally, Puerto Rico’s annual federal Medicaid allotment is capped at a level far below what states receive1. Prior to Obamacare, Puerto Rico partially funded its Medicaid budget through bonds, undoubtedly contributing to the island’s debt crisis.
Currently, more than half of the island’s population relies on Medicaid and Medicare programs for health coverage. The debt crisis has triggered one of the largest migrations to the U.S. mainland since the 1950s. A large portion of the emigrating population consists of young adults and physicians. This has led to rapid aging of the population coupled with a declining number of physicians and a struggling health care system. If these issues are not further addressed they could lead to mass emigration to the mainland and create a public-health emergency.
1Annie Mach, Puerto Rico and Health Care Finance: FAQ (Washington: D.C.: Congressional Research Service, February 2016), https://www.fas.org/sgp/crs/row/R44275.pdf