Medicaid funding for US territories is broken — Build Back Better could put us on a path to fixing it
As all Americans have been wrestling with the anxiety and uncertainty of the ongoing pandemic, residents of the U.S. territories—American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands—have been grappling with the looming threat of another crisis: The potential loss of billions of dollars in federal health care funding.
This isn’t a crisis the territories brought on themselves. The problem started in 1968, when Congress decided that Medicaid, the nation’s primary safety net health care payment program, would be funded differently in the U.S. territories than in the states. While states have no limit to the amount of Medicaid funding they can qualify for, territories are subject to a capped amount each year. Territories also have a federal matching rate (Federal Medical Assistance Percentage, or FMAP) for Medicaid funding that is set in statute. States’ rates are adjusted annually based on financial need.
This discrepancy puts the territories at a major deficit compared to states. In recent years, Puerto Rico’s capped amount of federal Medicaid funding has remained below $400 million—far short of the actual billions needed to support the territory’s health care system. In comparison, Mississippi has fewer than half as many Medicaid enrollees as Puerto Rico, yet received nearly $4.6 billion in fiscal year 2020.
To make up the difference, Puerto Rico and the other territories have been forced to rely on temporary bumps to their bare bones Medicaid budgets through supplemental funding and emergency response dollars approved by Congress. The result is a chaotic patchwork of funds that is always under threat of running out.
As chair of the Natural Resources Committee, the committee that oversees issues affecting U.S. territories, I know this piecemeal approach is neither sustainable nor fair. Like all Americans, residents of U.S. territories deserve a dependable health care system that is there for them when they need it.
Unquestionably, the best path forward is to give territories Medicaid funding parity with the states. It is the only truly just solution for Americans living in territories and I will continue to advocate for solutions that accomplish that. But unfortunately, we don’t have time to wait for that right now.
Congress’ inability to reach a long-term solution for the territories has already created undue strain and instability. This is especially true in Puerto Rico, where the FMAP for Medicaid dropped from 76 percent to 55 percent this past December. The other territories were spared this fate, but only until the current spending deal expires.
Puerto Rico’s Health Insurance Administration has already estimated that the FMAP decrease will cause the island’s health care expenditures to double in the first half of this year. For a government that has been navigating the rough waters of bankruptcy for nearly five years, doubling a major portion of its budget is not a safe route to shore.
Those most affected will be the people who rely on these funds for care. Without a source of reliable, long-term funding, the territories will have to cut services and eligibility, leaving many residents uninsured or only minimally covered. Doctors, nurses, and other medical providers will also see their payments reduced, likely exacerbating the mass exodus of health care personnel from the island to the mainland that has already stretched health care services thin. Deteriorating health care facilities and infrastructure that have not yet recovered from the devastation of Hurricane Maria in 2017 and earthquakes in 2020 will continue to suffer from neglect.
Fortunately, the House-passed version of the Build Back Better Act includes provisions that will keep Puerto Rico’s and the other territories’ Medicaid programs above water. The bill would make significant progress toward funding parity by permanently increasing federal funding caps for the territories’ Medicaid programs at adjustable rates. It would also bump the FMAP for territories to 83 percent, which is in line with what they’d receive as states.
But, as we know all too well, the Build Back Better Act is stuck in limbo right now. And the fate of health care for the millions of Americans living in U.S. territories is stuck with it.
As negotiations on the bill continue and hopefully move forward, we must make sure these provisions become law and we must do so quickly. The short-term solutions are already failing Puerto Rico; it would be unconscionable to sit by and let the present damages fester and spread to other territories as well.
Residents of the territories have been suffering with the instability of an unjust health care system for far too long. Although the only true solution is giving territories full Medicaid funding parity, the provisions in Build Back Better can be a safe and sturdy bridge for getting us there.
Raúl M. Grijalva chairs the House Committee on Natural Resources. He has represented Southern Arizona in Congress since 2003.
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