Expiration of Temporary Medicaid Funds for Puerto Rico and USVI at the End of September 2019 Would Result in Budget Shortfalls That Could Cause Reductions in Enrollment and Undermine Access to Care

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Expiration of Temporary Medicaid Funds for Puerto Rico and USVI at the End of September 2019 Would Result in Budget Shortfalls That Could Cause Reductions in Enrollment and Undermine Access to Care   Most of the temporary federal Medicaid funds that have supported health care in Puerto Rico and the U.S. Virgin Islands (USVI) in recent years and in the aftermath of the 2017 hurricanes are set to expire at the end of September, raising the prospect of steep enrollment cuts, budget shortfalls, and increases in the uninsured population. A new KFF issue brief examines how the two U.S. territories have used the temporary funding provided under the Affordable Care Act (ACA) and the Bipartisan Budget Act of 2018 (BBA), as well as the health care challenges that remain as rebuilding continues after Hurricanes Irma and Maria.  The brief also highlights the likely consequences for health coverage and territorial finances if, after September, the territories revert to the prior system of Medicaid financing, which included a lower cap on Medicaid funding and a 55 percent federal match rate. It also explores the legislative options under consideration. The analysis finds that: The ACA has provided a combined $7.3 billion in special funding to all U.S. territories since 2011, of which Puerto Rico received $6.3 billion. The BBA’s hurricane relief funds included $4.8 billion for Puerto Rico and $142.5 million for the USVI. If Puerto Rico reverted to pre-ACA Medicaid financing, available funds would fall short of projected program costs by $1 billion in FY 2020 and $1.5 billion in FY 2021, or half of projected program costs. In the USVI, a return to traditional financing would leave the USVI with a projected $31.3 million shortfall in FY 2020, about 40 percent of projected program costs. Addressing the estimated shortfall in program funds to maintain current programs and increasing the federal match rate to 83 percent  -- which, under existing formulas, the territories would qualify for if they were states -- could provide an additional $1.4 billion to Puerto Rico and $46 million to USVI in FY 2020.  In addition, further increasing the cap on federal Medicaid spending could permit the territories to address reimbursement and benefits. In Puerto Rico, further increasing the cap to permit an increase per enrollee spending by 50 percent could provide an additional $2.8 billion in FY 2021.  The Puerto Rico and USVI health care systems are still fragile and in transition, as residents struggle with substantial mental health and other health needs. Nearly half of Puerto Rico’s population (47%) is enrolled in Medicaid, and more than half of the USVI population is uninsured (30%) or enrolled in Medicaid (22%).  Provider capacity and outmigration, especially of health professionals, remains a challenge in both territories. Territory elected officials and members of Congress are considering policy proposals to avert the Medicaid fiscal cliff and stabilize territory Medicaid programs in the short term while addressing longer-term permanent solutions to Medicaid financing issues. Uncertainty over available federal funding contributes to instability in the territories’ health care systems, confusion for providers and enrollees, and limited capacity for the territories to move forward with complex delivery system reforms.  Longer-term, the territories seek permanent changes to treat them like states in terms of Medicaid financing, which would include no cap on federal funding and an FMAP based on per capita income. Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.
Contact: Chris Lee | (202) 347-5270 | clee@kff.org
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