A Circus in Cleveland and a Crisis in Puerto Rico

David R. Jones, La Nueva Mayoria / The New Majority

First, let me say that this column is about the dire state of Puerto Rico’s health system, where nearly one million residents could lose Medicaid benefits next year if our government doesn’t do something.

But before I get into that, I have to comment on the spectacle of this week’s Republican National Convention.

Like its star attraction, Donald Trump, who has in equal measures offended women, blacks, Latinos, Asians, the disabled, POW’s and Muslims on his way to locking up the Republican Party presidential nomination, the convention has been embarrassing to watch. Far from achieving unity as a party, or projecting a unifying vision for the nation, the convention has been a travesty of what made this nation great. A nation that was built on the labor of immigrants, people of color and hard-working folks of all races who understand that while we may not be a perfect union, we respect our differences and condemn bigotry and intolerance.

Now onto something really important: the looming health crisis in Puerto Rico.

For decades, the U.S. government has shortchanged Puerto Rico under Medicaid. About 68 percent of the island’s 3.5 million residents receive health care through Medicaid or Medicare, which is not surprising given that 46 percent of residents live in poverty.

But the problem is not just high rates of Medicaid usage. It’s also that – unlike any state in the Union – Puerto Rico’s federal Medicaid reimbursement tops out once its reimbursement limit is hit. This means that the federal reimbursement rate is set in stone, and cannot be increased when health costs increase due to inflation or population growth. And this means that Puerto Rico must foot the bill for whatever’s left – that or deny care. Neither alternative is right or fair.

No state has to live with such a limit. Here in New York if we spend more Medicaid money because the cost of an appendectomy goes up, we get more matching funds. Puerto Rico deserves the same consideration. Things must change to right this sinking ship, particularly given that the ship is still being steered by the United States.

Much of the current health crisis in Puerto Rico can be traced back to a 1968 law that capped Federal Medicaid reimbursement for U.S. territories regardless of the need or Medicaid costs. In practical terms, the law sets the federal contribution for the island’s Medicaid program at between 15 and 20 percent, or about $400 million for the past fiscal year. By comparison Oregon, which has a population similar in size to Puerto Rico received $5 billion in Medicaid reimbursement in FY2014, a rate of 63 percent.

To cover its Medicaid funding needs Puerto Rico has been drawing funds from the Affordable Care Act (ACA) which provided U.S. territories with an additional $7.3 billion in Medicaid funding. However, it is projected that the ACA funding for Puerto Rico will be depleted by the end of next year. Absent an administrative or legislative fix, Puerto Rico will go back to receiving $400 million in Medicaid funding to cover more than $2 billion in Medicaid funding needs.  

Last fall, Governor Cuomo led a New York delegation to Puerto Rico to offer strategies for addressing the island’s health and fiscal crisis. Many who made the trip were health officials from New York’s executive branch who worked with Puerto Rico officials on a Medicaid waiver. The difficulty they faced was dealing with the language in the federal statute granting waivers to states. It makes no mention of U.S. territories. Such waivers must also be revenue neutral, which would be hard to structure given the funding formula disparity. 

For now, a Medicaid waiver for Puerto Rico has hit a brick wall. That could change, especially if the island’s health crisis deepens resulting in more residents migrating north. Last year its population declined by 1.7 percent.

Assembly Health Chairman Richard Gottfried, who was part of the delegation to Puerto Rico, believes real change in Puerto Rico’s health crisis will require congressional action and legislation that treats the island as a quasi-state on Medicaid funding issues. He’s not optimistic that will happen. Still, he thinks the efforts of the New York delegation in Puerto Rico were important, and may yet produce results.

“Part of what I came away with after visiting Puerto Rico, more than I understood at the time, was how outrageously we have dealt with Puerto Rico for 100 years as a colonial power,” said Gottfried. “It is one of the great shameful chapters in the history of this country.”

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