A fiscal crisis looms on the island of Puerto Rico, and the controversy – about health care spending – has far-reaching implications that extend well beyond the Atlantic coastlines of the United States’ largest territory. At stake are the long-term health of the Puerto Rican population, the pragmatic use of the U.S. taxpayer’s money and the flow of Puerto Rican citizens from their island to mainland states.
As soon as December 2017, the territory faces a terrifying deadline. That month brings Puerto Rico face to face with the Medicaid Funding Cliff, when money allotted under the Affordable Care Act (ACA) to finance the Medicaid is projected to run out. That will reduce the annual Puerto Rico Medicaid Budget by $1.2 billion, risking the coverage of more than 817,000 Medicaid and nearly 300,000 dually eligible patients (PR Medicaid, 2017).
Inequitable funding to Puerto Rico has an outsized, and perhaps largely unrealized, impact on American taxpayers. Consider the facts: Puerto Rico has the lowest annual per capita health expenditures in the nation and maintains the lowest Medicaid ($1,571 per enrollee vs. $5,790 in the U.S.) and Medicare ($5,208 per enrollee vs. $8,700 in the U.S.) annual spending while cost of living remains comparable (Perreira, 2016). That tamp-down on spending translates to significant savings – of about $5,790 in Medicaid and $3,492 in Medicare funding for every U.S. citizen who is enrolled in these programs in Puerto Rico.
The underlying challenge is that unequal treatment of Puerto Rico in federal health and economic policy has created unintended, pernicious incentives that have set the local health system on a downward spiral. That spiral is leading to significant population changes. Nearly two-thirds (65%) of people living in Puerto Rico have considered moving to the United States to receive better health services, according to an August 2017 Impactivo poll. Already, many Puerto Ricans are enrolled in Medicaid within a U.S. state. In 2015, for instance, 1.9 million Puerto Ricans were receiving health care under the jurisdiction of a state, rather than the territory, according to data from the U.S. Census. Due to the differences in per capita spending, that locality change translates to an additional $9.7 billion in annual Medicaid expenses to federal and state governments.
Enrolling beneficiaries stated to loose covergage because of the Medicaid Funding Cliff in in Medicaid and/or Medicare programs in the states would cost federal and state governments $4.2 billion in Medicaid and $1.7 billion in Medicare annually. This far surpasses the approximately $2.6 billion that Congress would need to authorize annually to provide Puerto Rico with equal treatment (parity) in the Medicaid program.
The reauthorization of the Children’s Health Insurance Program, a bill that also encompasses provisions to ensure care for the underserved, may be the last opportunity to avert the Medicaid Funding Cliff facing Puerto Rico. This Issue Brief presents data and policy recommendations to address severe health disparities already affecting millions of U.S. citizens living in its territories.
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