Puerto Rico’s Imminent Medicaid Fiscal Cliff: The Trials and Tribulations of the Oldest U.S. Colony

Puerto Rico has been an unincorporated territory of the United States since July 25, 1898, subject to Article IV,  Section 3, Clause 2 of the United States Constitution, more commonly referred to as the “Territorial Clause.” Honest actors who want to avoid euphemisms and not shy away from the truth, however painful and disgraceful as it might sound, unceremoniously call Puerto Rico a colony of the United States. In the notorious Insular Cases, a series of Supreme Court rulings dating from 1901 which ultimately sanctioned American colonialism, specifically in Downes v. Bidwell, clearly stated that Puerto Rico, and the other U.S. territories, are “a possession of, but not a part of the United States.” Puerto Rico’s political status as a “territory” gives Congress full Constitutional power to discriminate against American citizens living in the Isla del Encanto, or “Island of Enchantment.”

While in many respects Puerto Rico is treated like one of the 50 states of the Union and has access to many federal programs, it often receives less funding. It is worthy to note that this disparate and unequal funding treatment is partly to blame for the island’s fiscal and debt crisis. The Medicaid program and the Children’s Health Insurance Program (CHIP), federal programs which provide vital healthcare services to financially and medically needy populations, are two of the programs for which Puerto Rico receives less funding. While I will focus on Medicaid and CHIP in this instance, there are many other federal programs that treat Puerto Rico unequally. According to the U.S. Government Accountability Office (2014), if Puerto Rico were to be treated equally as the states, it would receive more funds for other critical programs including Medicare, the Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), Pell Grants, the Temporary Assistance for Needy Families (TANF), among other federal programs.  

The inadequate federal funding of Medicaid and CHIP in Puerto Rico has led to lower eligibility levels, lower federal funding, fewer mandatory benefits, lower provider payments, and lower spending per enrollee vis-à-vis programs on the mainland, ultimately negatively impacting access to and quality of care. According to FY 2020 projections by the Medicaid and CHIP Payment and Access Commission (“MACPAC”), average benefit spending per full year enrollee in Puerto Rico will be $2,144, representing 64% of the lowest per capita spending state ($3,342), 32% of the median ($6,763), and 16% of the highest per capita spending state ($13,429).

While Medicaid programs in the states enjoy an open-ended funding commitment by the federal government, receiving federal funds based on actual costs and need, Puerto Rico’s Medicaid program is subject to an annual ceiling or cap, known as the Section 1108 cap, effectively turning the program into a blockgrant. Puerto Rico’s federal funding was capped at $367 million in FY2019, while Medicaid expenditures in the island totaled $2.7 billion. Given this inadequate level of funding, Congress has had to enact temporary supplemental funds in addition to the capped funds in order to avert a collapse of the island’s healthcare system and stave-off a public health humanitarian crisis in Puerto Rico. However, these funds will be largely depleted during the first half of FY2020, thus creating an imminent fiscal cliff. This funding shortfall is putting at risk the healthcare services of the most vulnerable populations on the island including low-income families and children, pregnant women, the elderly, and people with disabilities.  In FY 2020, as per current law, Puerto Rico will receive $375.1 million through the Section 1108 cap, $446 million through Section 1323 of the the Patient Protection and Affordable Care Act (ACA), and $59 million through Section 1935(e) of the Social Security Act (SSA), for a total of $880 million in federal spending. FY 2020 total spending is projected to be $2.8 billion. If Congress does not act quickly and provide the necessary funding, hundreds of thousands of Medicaid beneficiaries could lose access to critical healthcare services. Policy deliberations and prescriptions must consider the fact that Puerto Rico is traversing a deep and prolonged economic depression and one of the largest municipal bankruptcies in history. While going into why Puerto Rico is in this predicament goes far beyond the scope of this blogpost, pointing the finger of responsibility solely to Puerto Rico and its people would be wildly fallacious and unjust. Congress and Puerto Rico’s current undemocratic arrangement with the U.S. play a large role in this tragic reality.

Furthermore, while Puerto Ricans have a relatively high prevalence of chronic health problems, its Medicaid program does not cover all mandatory services. Additionally, the income eligibility criteria for Medicaid in Puerto Rico uses the Puerto Rico Poverty Level (PRPL) and not the federal poverty level (FPL). The PRPL is less than half of the FPL.

For the unequal treatment of Puerto Rico to come to a long-overdue end, the undemocratic political arrangement between Puerto Rico and the United States must cease. The Dalai Lama once told President Obama that the United States is a “champion of democracy, freedom, human values.” The U.S., its political leaders, and its people must live up to these core values of democracy and equality. While urgently addressing Puerto Rico’s plight is probably not a priority for the American people, it undoubtedly should be. I invite them to empathize and try to imagine how it’s like to reside in Puerto Rico or any of the other U.S. territories and not benefit from all the advantages (and burdens) those domiciled in the states enjoy. While it is important that Puerto Rican leaders continue to testify before the United Nation’s Special Committee on Decolonization to demand the eradication of colonialism in Puerto Rico, for there to be real change, Congress must rise to the occasion and resolutely start and finish a process of decolonization. I call on all our brothers and sisters on the mainland to join us in this noble fight. 

For a full policy paper on Puerto Rico’s Looming Medicaid Fiscal Cliff commissioned by the Center for a New Economy (CNE), Puerto Rico’s preeminent think tank, to Olivier Perrinjaquet, go to the following link: https://grupocne.org/2019/09/18/puerto-ricos-looming-2019-medicaid-fiscal-cliff/

Olivier D. Perrinjaquet Cruz is a Ph.D. student at FSU’s Askew School of Public Administration and Policy, born and raised in Puerto Rico of a Puerto Rican mother and Swiss father. Being a first-hand witness to the “wicked problems” being faced by the Puerto Rican people, he hopes to dedicate his life to working on “wicked solutions” to the island’s problems and help elevate the public discourse.  

The featured image is from Caribe Flame.

5 Comments Add yours

  1. Hunter run says:

    Does no one consider the terrible governance of PR? The already corrupt and bankrupt PR government? The fact that they could have become a state a while ago? The billions that disappeared in Hurricane relief? Are you folks not paying attention? Ever hard of good money after bad?


    1. Olivier Perrinjaquet says:

      Thank you for your comment. Certainly corruption and a weak governance structure is a big problem in Puerto Rico. In other articles I’ve written I talk about that. However, your reaction to
      My blog seems like a classic example of whataboutism. This article is about how Congress discriminates with Puerto Rico because it is an unincorporated territory of the US (a colony) and how that violates core principles and values the US holds dear. We can talk about PRs corruption some other time. It is also a call to action to fellow Americans so that this injustice ends. I don’t expect everyone to join in this fight, but many will. Take care!


  2. Erskine Fincher says:

    Does Decolonisation mean statehood, independence, or some other status?


    1. odp14 says:

      Thank you for your question. Yes, certainly statehood and independence . The United Nation also recognizes a political arrangement “Free associated state” different from “Estado Libre Asociado” I remember I was in a political science class in University if Puerto Rico with Puerto Rican scholar Angel Israel Rivera where the entire class was on how Pr isn’t Estado, isn’t Libre, or isn’t Asociado.


      1. Erskine Fincher says:

        Which status do you think would be best for Puerto Rico?


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