Congress is Holding Health, Wellbeing of U.S. Territory Residents in the Balance

By Lena O’Rourke

UPDATE: At the end of 2019, Congress passed a 2-year deal to support the territories' Medicaid programs. The package provides much-needed funding for Medicaid, as well as an enhanced match (83% FMAP for Pacific Island territories and 76% for Puerto Rico). While this falls short of the four-year (or longer) package advocates were pushing for, this is a much-needed investment in the health of the islands' populations. 

More than 3.5 million residents of the U.S. territories—American Samoa, the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands—face a dire health care crisis. Unless Congress acts before the end of the year, our territories will fall off a dramatic Medicaid funding cliff that could force residents to lose benefits or the territories to terminate Medicaid coverage for U.S. citizens and nationals altogether. 

The federal government has long relied on the territories’ land for military bases and crops for exports of sugar and more. The government’s use of the territories’ lands has severely impacted the island residents and disrupted and shaped their way of life for generations. Additionally, the majority of residents in the territories are communities of color, raising the question of why policies disrupting these lands occurred in the first place. The health care systems of the territories is similarly shaped by the federal government—and is, unfortunately, at the whim of the federal government’s spending cycles. Worse still, the underlying structure of how the federal government finances Medicaid in the territories is inequitable as compared with other states, and Congress dramatically underfunds the program as compared to need. 

Individuals born in Puerto Rico, Guam, the Northern Mariana Islands and the U.S. Virgin Islands are U.S. citizens and those born in American Samoa are U.S. nationals. Island residents are some of our most vulnerable populations, with deep rates of poverty. They also face high rates of chronic conditions and unique public health crises—and do so in conditions worsened by recent natural disasters. About 44 percent of Puerto Rico’s population have incomes below the poverty line, and almost half have health care coverage through Medicaid. In American Samoa, almost 80 percent of the population is enrolled in Medicaid or the Children’s Health Insurance Program (CHIP). 

U.S. territories receive a fixed block grant of Medicaid dollars to fund their health care programs. Unlike Medicaid in the 50 states and D.C., the territories’ funding is not an entitlement and is not tied to the income levels or health care needs of the population. What’s more, each territory’s matching rate is fixed at 55 percent, despite the high rates of poverty on each island. If the territories’ programs were funded like state Medicaid programs, the matching rate would all be at the highest rate of an 83 percent matching rate. As a result, each territory pays a much higher share of their populations’ Medicaid costs than comparable states, even though they have fewer resources. Moreover, the territories do not automatically receive increased Medicaid funding when need increases, such as after the hurricanes that hit Puerto Rico and the Virgin Islands in recent years.

Because need far outpaces the block grant in the territories, Congress has provided additional federal Medicaid funding in recent years. These funds help ensure that the territories are able to provide continuous Medicaid services to their residents. Most recently, Congress provided additional funding allotments through 2019; although these are set to expire at the end of the month. The Continuing Resolution under which the federal government is currently funded extended the enhanced 100 percent reimbursement rate for the territories’ Medicaid programs—but it did not include any additional funding. All territories will now face a Medicaid funding cliff, but this is particularly dire in the Pacific territories of American Samoa, Guam, and the Northern Mariana Islands, all of which will exhaust their FY20 Medicaid funding before the end of 2019. Puerto Rico estimates its funds will run out in February 2020. And FY21 funds will not be available until October 1, 2020. 

This has a real and human impact. When Medicaid can no longer fund services, residents are at risk of not having access to the care and treatments they need. It means delaying or forgoing needed care. For residents of the territories, this means delayed surgeries, chemotherapy treatments, and cuts to dental and prescription drug services.

Congress now appears poised to act on a four-year package of legislation to support the territories. The proposal would provide funding and an enhanced matching rate—a welcome and much-needed investment in the health of the islands’ populations--as well as other provisions designed to support program integrity. Congress should pass this funding fix as soon as possible. 

It is important to note that this funding package does not fix the territories’ Medicaid issues. It is a vital first step to protecting the health and wellbeing of the population—but it isn’t enough. As long as the territories operate their Medicaid programs under a fixed, capped allotment, they will always be at risk of running out of money. This forces them to make untenable tradeoffs that include limiting benefits or capping enrollment. This is one of many reasons why Medicaid block grants are a bad idea—whether for territories or states.

Faced with public health crises and natural disasters, the islands will undoubtedly experience great gaps in service provisionand the Medicaid program must be there with the funds to help. Residents of the U.S. territories would get the health care they need through uncapped federal Medicaid funding at a higher matching rate—comparable to what the states receive.

Lena O'Rourke is a consultant with the income and work supports team at CLASP who focuses on Medicaid and other health care issues.