July | August 2017







Puerto Rican Leaders Warn of Looming ‘Medicaid Cliff’ and Potential Migration Crisis

By Andy Karellas, director of federal affairs, CSG Washington, D.C., Office
As Congress continues to work on policy reforms to the Affordable Care Act, policy leaders in Puerto Rico are preparing for a possible health care crisis from the rapid reduction in federal funding for their health care programs, called the “Medicaid cliff.”  Puerto Rican officials warn the potential crisis could create a substantial economic burden for other states, and for the federal government. 
In a letter to Florida Gov. Rick Scott, the governor of Puerto Rico, the Honorable Ricardo A. Rosselló Nevares, wrote “the rapidly approaching drop in federal health care funding for Puerto Rico, known as the ‘Medicaid cliff’ will come into effect before the end of 2017, threatening to derail our fiscal and economic efforts. This could lead to a full-blown collapse of our health care system.” He goes on to state, “between 2010 and 2015, Florida received over 128,000 new residents from Puerto Rico. Our projections on the Medicaid expenses in Florida needed to serve the [eligible] population could exceed $6 billion, with $3.7 billion coming from the federal government, and the remaining $2.5 billion from [Florida’s] funds.”
Medicaid is a federal entitlement program, established in 1965. Under current law the entitlement works two ways: individuals who meet state eligibility requirements are entitled to services and states are entitled to receive federal matching funds to the extent that they provide their state matching funds. Medicaid, the largest source of health coverage in the U.S., provides health services and long-term care to low income families and individuals. Currently, 70 million individuals are insured through Medicaid in the U.S. Puerto Rico’s Medicaid program, called Mi Salud, has 1.4 million enrollees, totaling 48 percent of the island’s population.
Under Medicaid, Puerto Rico and other U.S. territories receive capped matching funds rather than a formula match as states do. No matter how much Puerto Rico spends on health care for Medicaid beneficiaries, the amount of federal funds remain at the capped level. When the ACA passed in 2010, Congress declined to provide matching formulas based on need for Puerto Rico like it does for states, and instead provided increased Medicaid funds, between $1.1 and $1.3 billion per year, through fiscal year 2018. Once Puerto Rico depletes its supplemental funding, Medicaid funding will revert to the capped match, expected to be approximately $360 million in fiscal year 2018. Puerto Rican officials have called this a policy time bomb set to go off at the end of 2017 or early 2018, leaving 500,000 Puerto Ricans without health care coverage.
Policymakers from Puerto Rico came to Washington to urge Congress to include bridge funding in the upcoming fiscal year 2017 omnibus spending bill and are warning against delays to avert a health crisis on the island. 
Carmelo Ríos, the Puerto Rico Senate majority leader and vice president of the National Hispanic Caucus of State Legislatures, wrote in an editorial, “If Congress does not act before the Island’s budget is approved on June 30, the Centers for Medicare and Medicaid Services will not have time to approve the new contracts with health providers.” He goes on to state, “By acting now to prevent this cliff, the federal government could save taxpayers close to $30 billion, which is the cost of providing healthcare for the tens of thousands of Puerto Ricans who would move to the states to receive better healthcare services by 2025.” 
On April 5, Rep. Nydia Velazquez of New York and 74 Democratic members of Congress sent a letter to Speaker Paul Ryan urging immediate action to prevent the Medicaid cliff that will leave nearly one million residents without health coverage. In the letter, Velázquez wrote that “Puerto Rico is already experiencing dire economic conditions and a failure to address the Medicaid cliff will be a devastating step towards further havoc. Failure to address the situation will also result in additional outmigration to the mainland, where there the cost of providing Medicaid is much greater than on the island.”
Naturally, many Puerto Rican officials are concerned about the island’s ability to withstand another crisis. Rep. Jenniffer González of Puerto Rico stated, “the loss of funds and further migration of Puerto Ricans to the States would also further hurt a territorial economy that has been in depression for eleven years.”