Congress Grapples with Upcoming Medicaid Cliff

The chairman of the U.S. House of Representatives committee with jurisdiction over Medicaid legislation was quoted in Puerto Rico news source El Nuevo Dia as saying he wanted a temporary increase in funding for the program in Puerto Rico in excess of $1.2 billion a year passed this September to deal with the upcoming Medicaid funding “cliff” in Puerto Rico and longer-term Medicaid reforms enacted later.

An increase in Medicaid funding for the territory is reportedly on the agenda of Democratic leaders in the Senate as well as in the House.

Several provisions of Federal health care law will expire at the end of September, the end of Federal Fiscal Year 2019, if not renewed. So, a bill to extend these provisions could be a ‘vehicle’ for a funding increase for Puerto Rico.

The PROMESA Financial Oversight and Management Board’s Fiscal Plan for the territory, however, presumes no increases in the future. The Board Plan would require the insular government to pay most of the cost of its Medicaid program, now about $2.8 billion a year.

The head of Puerto Rico’s Health Insurance Administration, Angela Avila, says that the territory has funding for Medicaid that will last through the end of next March or sometime in early April, about half of Federal FY2020.

House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) was quoted as explaining that, “initially, we want to be sure that they do not run out of money.”

He also said that he hopes to convene a hearing “over the next month” on the drastic drop in Federal Medicaid funding for the territories that Puerto Rico faces early next spring.

This would be the second House hearing on the issue during this Congress. The Natural Resources Committee, which has responsibility for territorial governance, held a related hearing a few weeks ago.

The Federal government generally shares the cost of Medicaid with State and territorial governments. In the States, the share nominally ranges from 50/50 to 83% Federal, with the Federal government contributing more in States with lower-income populations. The Federal/territorial cost-share for the territories under ongoing law is a fixed 55% Federal and 45% territorial but the Federal grants are also subject to dollar caps. The cap in Puerto Rico makes the effective Federal share in the territory under ongoing law about 13%.

Puerto Rico would qualify for 83% Federal funding as a State.

One of the laws that addressed the District of Columbia’s fiscal collapse in the 1990s increased the Federal share of Medicaid in the nation’s capital to 70%.

Last year, the then Republican-controlled House Appropriations Committee asked Congress’ Medicaid and Children’s Health Insurance Program Payment and Access Commission to study the need to increase funding for Puerto Rico.

PROMESA’s bipartisan, bicameral task force of members of Congress on Economic Growth in Puerto Rico recommended at the end of 2016 that the Medicaid ‘cliff’ faced by Puerto Rico and the other U.S. territories be averted with increased Federal funding and that a viable funding scheme be enacted for the long-run.

Puerto Rico’s Resident Commissioner in the House, Jenniffer Gonzalez-Colon (R) has proposed that Federal Medicaid funding for Puerto Rico be increased to $2.65 billion a year for the next two years and annually for inflation after that.

The territory’s Governor, Ricardo Rossello Nevares, more recently asked congressional leaders to appropriate $15.1 billion for the territory’s Medicaid program over five years.

Pallone is quoted as expressing concern about Puerto Rico’s ability to match a multi-billion dollar a year increase in Medicaid funding.

Puerto Rico’s Medicaid program does not cover hundreds of thousands of citizens who would be covered under a State Medicaid program. It also does not provide many of the services that Federal Medicaid law says that all States and territories must provide and many of the services that are options for States and territories that most States do provide. So, a much more generous Medicaid program in Puerto Rico is an option already in law outside of the territory.

Proposals to increase Medicaid funding for Puerto Rico and the other territories would increase the cap on funding or both the cap and the Federal cost share.

Pallone reported that, “There are several possibilities on the table but, for now, we have to make sure we do something in the short-term.”