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If Puerto Rico Were A State, Its Health Care System Would Recover Faster From Maria

Nearly three weeks after Hurricane Maria landed in Puerto Rico as a Category 4 hurricane, health care providers are still struggling. Almost all of the community health centers — which are a lifeline for the poorest people — on the western half of the island were still closed Friday or operating at partial capacity.1 There are serious concerns about how they and other health service providers will begin even basic recovery in many places where diesel is still scarce and communication almost nonexistent.

The immediate problems are severe. But even once clean water and power are restored, the concerns will be far from over. Puerto Rico’s health system was in financial crisis going into the storm. And because Puerto Rico is a territory as opposed to a state, its safety net — which includes community health centers and programs like Medicaid and Medicare — receives far less help from the federal government than those in the states, and the local government currently has much less flexibility to step in during crises.

With Puerto Rico in bankruptcy and its finances controlled by a congressionally appointed oversight board, it can’t just put additional money toward these programs. For the island to use the safety net to rebuild, as has happened after other disasters, Congress will need to inject more money. Lawmakers are currently debating providing $1 billion in additional Medicaid funds. That would help tide the system over for a period of time — 18 months or so at going spending rates — but the same problem is likely to recur when that money runs out.

In emergencies, Medicaid frequently boosts its spending to provide care to people without insurance who wouldn’t normally qualify for the program or to pay for special treatments. That happened after 9/11 and after Hurricane Katrina, as well as after the Flint water crisis and after Zika spread in parts of the United States. In Puerto Rico, however, where about half of the population relies on the public insurance — a much larger share than in any of the 50 states — the amount of money the federal government spends on Medicaid is capped each year, and the island, which is $72 billion in debt, currently has no way of increasing what it spends on the program without federal approval.

The problem for Puerto Rico is not only that it’s in debt, but also that it is responsible for paying a much larger share of Medicaid costs than it would if it were a state. Across the U.S. — in both the territories and the states — the federal government reimburses a share of the cost of the program. In poorer states, the federal government pays more — Mississippi, the poorest state, is reimbursed for 75.7 percent of the cost of providing care, while 14 states are reimbursed for 50 percent, the lowest level allowed.2

But in the territories, the amount is set at 55 percent. If Puerto Rico were reimbursed using the same poverty formula as the states, the federal government would cover 82 percent of the cost, according to the Medicaid and CHIP Payment and Access Commission, a nonpartisan agency that provides policy recommendations to Congress. The median annual income for Puerto Ricans was $20,078 in 2016, a fraction of the $57,617 earned across the U.S. In Mississippi, it was $41,754.

There’s also a limit on how much the federal government spends each year in the territories. Their reimbursement comes from a block grant and, at less than $400 million, the amount is far below 55 percent of the current annual cost of running the program. In recent years, Puerto Rico has used an additional pot of money made available by the Affordable Care Act to cover the bills; in fiscal year 2015, for example, $1.52 billion federal dollars went to Puerto Rico’s Medicaid program, which spent a total of $2.36 billion that year. Even before the storm hit, those ACA funds were expected to run out by the end of this year.

Puerto Rico’s Medicaid setup could be an omen for the states. Various proposals from Republicans in Congress this year to repeal and replace parts of the Affordable Care Act would have changed federal Medicaid funding to the states, in which the government pays a share of the cost of the program no matter how many people are enrolled or how much medical care is provided, to a limited sum of money, as is the case for Puerto Rico. Opponents have argued that states facing economic strain, or experiencing some kind of disaster, would struggle under a system with limited funding.

“This is the ghost of Christmas future of states taking the block grant here,” said Sara Rosenbaum, who has studied the island’s community health centers for years and is a founding commissioner and chair of the Medicaid and CHIP Payment and Access Commission.

In its budget this year, Congress made some additional money — $295 million — available to help pay for Medicaid in fiscal year 2018. But even still, the island will need $300 million more to keep the program up and running for the next 12 months, Puerto Rican health secretary Dr. Rafael Rodrígues-Mercado told Reuters earlier this year. If Congress doesn’t make more funding available, the island will be eligible for just a fraction of the annual cost of running the island’s Medicaid program.

Funding for community health centers across the U.S. is currently at risk as well, having lapsed at the end of September while the Senate tried to push through a bill to change the ACA. And the clinics play an outsized role in Puerto Rico. Nearly 10 percent of people use the 86 clinics spread across the island. They are required to have an emergency room, so they take care of a lot of rural injuries and emergencies, even outside of the storm. In many places post-Maria, they are currently operating the only functioning pharmacies, since private stores have yet to reopen, according to the National Association of Community Health Centers. But perhaps most importantly, because they have a mandate to provide care regardless of whether someone can pay for it, they have a lot of uninsured patients and see a lot of people who have Medicaid or Medicare. According to research on which Rosenbaum worked, about 54 percent of these health centers’ funding comes from Medicaid.

“They don’t have enough money to function,” Rosenbaum said.

With the limit on federal funding, and no way for the commonwealth to increase its spending, the island will struggle to repay doctors for the extra care they are providing at the health centers and other facilities as a result of the storm. Even if Medicaid waivers are granted, allowing providers to offer more services than the program will usually cover, there’s no way to pay for the care. “The Department of Health and Human Services can approve a waiver, but that doesn’t increase the amount of federal funding provided,” said Barbara Lyons, a Medicaid expert with the Kaiser Family Foundation.

Medicaid also isn’t the only program that gets less help in Puerto Rico than it does in the states; Medicare is also reimbursed at lower rates. Because of the way the program was enacted on the island, and the formulas used to determine payment, providers of Medicare Advantage (used by 74 percent of the island’s 750,000 Medicare recipients) are paid less on the island than they are in the states, despite Puerto Rico’s higher cost of living, higher rates of poverty and aging population. That means less money for a greater share of patients.

The net effect is that Puerto Rico is more reliant on its safety net — including the community health centers, Medicaid and Medicare — than other states, even as the federal government picks up a smaller share of the tab. Even if Congress approves the additional injection of short-term funds, that won’t necessarily go far toward fixing the long-term, structural problems. And now, it also needs to recover from one of the most catastrophic storms to hit the island in nearly a century.


  1. According to data compiled by Direct Relief, a humanitarian aid organization that has been working with health centers and other facilities to deliver emergency supplies to the island. The information comes largely from the Puerto Rican Primary Care Association.

  2. As with all things health care, the reimbursement formulas are complicated. The Kaiser Family Foundation has a full description of the formulas used to determine federal reimbursement for various parts of the program in different states.

Anna Maria Barry-Jester is a senior reporter at Kaiser Health News and California Healthline, and formerly a reporter for FiveThirtyEight.