Puerto Rico’s economy would receive a boost of billions of dollars annually if residents become fully eligible for three federal safety net programs under President Biden’s proposed budget.
In addition, the budget supports “moving toward parity for other critical federal programs including Supplemental Security Income and the Supplemental Nutrition Assistance Program.”
Congress isn’t expected to act on all three requests anytime soon.
Eligibility for the Social Security SSI program for the disabled is tied up in a U.S. Supreme Court case that is sceduled to be heard in the fall term that begins in October.
And eligibility for full SNAP benefits, formerly know as food stamps, isn't likely to be considered until Congress enacts the next five-year farm bill in 2023.
But there is urgency to the Medicaid situation because the territory faces a fiscal cliff at the Sept. 30 end of the current fiscal year.
Federal funding for Medicaid health services for the poor also represents the largest source of formula aid to the states.
Puerto Rico temporarily is receiving a Federal Medical Assistance Percentage of 76% because of the COVID-19 pandemic.
The federal aid is about $2.8 billion to $3 billion compared to the statutory block grant of about $360 million the island is otherwise eligible to receive.
If the island is recognized as eligible for full formula aid, the FMAP percentage would rise to 83% because of Puerto Rico’s high level of poverty.
Puerto Rico Gov. Pedro R. Pierluisi on Tuesday released an estimate that the island could eventually receive between $5 billion and $5.2 billion in federal Medicaid funding depending on how the island sets its eligibility threshold.
Puerto Rico's Medicaid program currently serves more than 1.4 million low-income residents. Officials say 43.5% of the population has an income below the federal poverty level.
If Congress does not act on the island’s Medicaid funding by the end of September, the funding shortfall would force island officials to drop an estimated 800,000 people from the Medicaid rolls.
Between 2011 and 2019, the Puerto Rico Medicaid program received between $300 million and $380 million in federal funding with its FMAP percentage at 55%.
"If Puerto Rico were treated as a state for Medicaid purposes, the island would be receiving more than $3 billion in fiscal year 2022 with an FMAP as high as 83%, which means that the burden on Puerto Rico's budget would be only 13%,” said Pierluisi.
The governor also said Puerto Rico would be eligible for a separate annual allocation under the Disproportionate Share of Medicaid formula. Residents also would be eligible for the Low Income Subsidy (LIS) for Medicare Part D for copays and deductibles.
Residents of Puerto Rico have become jaded by the periodic federal funding cliffs its Medicaid program goes through, said Rosanna Torres, director of the Washington office of the nonpartisan Center for a New Economy.
“I think the pandemic has exposed just how delicate the situation can be if the government is not equipped with a strong health care system,” said Torres.
Puerto Rico residents recently benefited from the expansion of the Earned Income Tax Credit in the American Rescue Plan and eligibility for the state formula under Medicaid would be the logical next step, she said.
If Puerto Rico is fully integrated into the Medicaid program, its rules would provide mandatory eligibility, long-term services and support, and prescription drug coverage.
“The way that I see this budget, it’s an important signal for all of Puerto Rico’s advocates to work together, flex our muscles and advocate in Congress to turn that into reality,” she said. “We have the support of the administration.”
Javier Balmaceda, senior policy analyst focusing on Puerto Rico at the Center on Budget and Policy Priorities, said Biden’s position goes beyond that of even President Obama.
“I think there was support for the notion of including Puerto Rico under Medicaid, but I never saw it specifically stated in their budget,” said Balmaceda. “This is a lot bigger.”
The territories have among the highest poverty rates in the United States.
“I think it’s very positive that he’s endorsing parity for Puerto Rico and all the U.S. territories for key safety net programs,” said Balmaceda.
