Healthcare Funding Gaps Deepen Humanitarian Crisis in Puerto Rico

By David Thomsen, Policy Analyst, Health Policy Project, NCLR

Members of Congress held a press conference last week to highlight the need for Congress to act.
Members of Congress held a press conference last week to highlight the need for Congress to act.

The decade-long economic recession engulfing Puerto Rico and its 3.5 million American citizens has become a humanitarian crisis. Governor Alejandro Garcia Padilla’s recent announcement that the island’s $73 billion debt was “not payable” is a call to action for leaders in Puerto Rico and Washington, D.C. to address this issue in a meaningful way. This crisis not only impacts the Puerto Rican economy—it severely impacts the ability of American citizens to access vital health services. Puerto Rico’s Medicaid, Medicare, and Medicare Advantage programs, which provide health coverage for 2.37 million people, face a catastrophic funding shortfall of up to $3 billion over the next two years. This shortfall could leave thousands of Puerto Ricans without health coverage by 2017.

The island can ill afford any more bad news. Nearly half of the population lives in poverty (45 percent), and as a result, 1.6 million Puerto Ricans count on the island’s Medicaid program Mi Salud for health care coverage. Although residents contribute the same amount in health care taxes as mainland residents, the federal government has long treated Puerto Rico’s health care system differently. While the federal government effectively covers between 50 percent and 83 percent of annual state Medicaid costs, it only funds between 15 percent and 20 percent of Mi Salud, leaving Puerto Rico to fund the balance of its $2.5 billion program. As a result, health care costs alone account for $25 billion of the island’s debt total.

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In 2010, prior to passage of the Affordable Care Act (ACA), the federal government’s contribution to Mi Salud was $364 million. Comparatively, Oklahoma, with a population of 3.9 million, receives $3.5 billion for its Medicaid program. The ACA temporarily addressed this monumental funding gap by providing a one-time boost of $5.5 billion for Mi Salud. However, due to the continuing financial crisis and structural funding disparities, this funding stream could be depleted as early as the end of 2016, once again leaving the island with a large Medicaid funding gap.

HEALTH CR School 3This is especially problematic as the island struggles to pay its debt and fund basic public services. Without Congressional action, the island’s federal contribution will fall back to its pre-ACA average of around $400 million, devastating a health care system already under tremendous strain. An estimated 900,000 Puerto Ricans could lose their health care coverage when this temporary funding runs out.

Puerto Rico’s seniors unfortunately are not immune to funding cuts either. In January, the federal government will cut funding for Puerto Rico’s Medicare Advantage program by 11 percent. Medicare Advantage, an alternative to the traditional Medicare program in that it’s offered by private companies, forms the backbone of the island’s Medicare program. These cuts will hit nearly 560,000 Puerto Rican seniors enrolled in Medicare Advantage, resulting in higher co-pays for medication and hospitalization for many poor and chronically ill patients. These cuts are due even as the states are slated for a three percent increase in federal funding.

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Like Medicaid, Medicare Advantage funding cuts could not come at a worse time. According to the Puerto Rico Healthcare Crisis Coalition, Medicare reimbursement rates are already 40 percent lower than the mainland U.S. and the Medicare Advantage reimbursement rate is just 60 percent of the mainland’s. These disparities exist despite the fact that Puerto Ricans contribute as much in Medicare payroll taxes as their fellow mainland U.S. residents. Medicare beneficiaries in Puerto Rico already report worse healthcare experiences than mainland beneficiaries for several outcomes including access to needed care, getting timely care, and immunization rates. These cuts will only exacerbate these disparities.

Vast disparities in Medicaid and Medicare reimbursement rates have already contributed to around 3,000 doctors leaving Puerto Rico in the past five years alone, resulting in a tremendous shortage of internists and specialists. To make matters worse, a growing number of medical graduates, along with thousands of other Puerto Ricans, are leaving to pursue jobs on the mainland due to the lack of economic opportunities on the island.

As Puerto Rico’s financial crisis deepens, so will its impact on the most vulnerable populations, including the poor, seniors, and the chronically ill. Our fellow Americans in Puerto Rico deserve the right to access healthcare. It is time for Congress to take action and address health care funding gaps—ensuring that our fellow Americans on the island of Puerto Rico have access to vital public health services.

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