The 2022 budget for the United States was presented by President Biden last week. This is just the beginning of a lengthy process, but one element of the budget is very important for Puerto Rico. It calls for equality for Puerto Rico and the other territories in federal programs.
“The President also supports eliminating Medicaid funding caps for Puerto Rico and other Territories while aligning their matching rate with States (and moving toward parity for other critical Federal programs including Supplemental Security Income and the Supplemental Nutrition Assistance Program),” the budget document states.
Medicaid in Puerto Rico
Medicaid operates differently in Puerto Rico than it does in the states. In states, the federal government reimburses a percentage of what the states spend on healthcare for the needy. The percentage ranges from 50% to 83%, depending on the financial wealth of the state. IF needs increase, as they did during the pandemic and during natural disasters, the amount the federal government provides also increases.
In Puerto Rico, the percentage is set at 55%.If Puerto Rico were a state, it would receive 83%.
There is also a cap on spending. Medicaid was established in 1965. In 1968, the government put a spending cap of $20 million on Puerto Rico. Each year, there is an annual block grant, and Puerto Rico is reimbursed for Medicaid expenses only up to that amount.
When the funds run out, Puerto Rico has only two choices: pay for the additional healthcare costs from the territory’s resources, or reduce the healthcare provided. The Island has done both of these things. The healthcare costs for Puerto Rico are much larger than for the states, and this has been one of the causes of Puerto Rico’s financial crisis.
Congress provides additional funds for Puerto Rico’s Medicaid program from time to time. For 2021, Puerto Rico’s Medicaid cap is $2.7 billion — seven times the amount it would have been without a temporary increase from Congress. The problem is that these temporary increases are temporary. Puerto Rico must beg for more funds each year and Congress must decide whether or not to provide more funds. The territory cannot make long-term plans or negotiate terms with vendors, and can never be sure of having enough funds to provide essential healthcare services.
SSI in Puerto Rico
SSI, or Supplemental Security Income, provides assistance to needy people over 65 with disabilities. It applies to the 50 states, the District of Columbia, and the Northern Mariana Islands, but not to Puerto Rico.
A district court determined that Supplement Security Income could not be withheld from people living in Puerto Rico. The federal government argued that it could for three reasons:
- Puerto Ricans don’t generally pay income tax.
- Congress is allowed to treat territories differently from states.
- It would cost the government a lot of money to provide SSI for Puerto Rico.
The court said that people poor enough to receive SSI don’t pay income tax, no matter where they live. They insisted that Congress can only treat Puerto Rico differently with a good reason, and said that there was no good reason in this case. And they disagreed that the possible cost was a good reason to exclude U.S. citizens living in Puerto Rico.
SNAP in Puerto Rico
Like Medicaid, the food stamps program expands to meet the needs of states, but is limited to an annual block grant in Puerto Rico. Puerto Rico started out as parti of the food stamps program, but the block grant system was put in place in the 1980s as part of a cost-cutting measure. The grant was originally set at about 75% of the amount states received.
As with Medicaid, Congress provides additional funds sometimes, but the amount of funding available does not change automatically when needs increase,as it does in the states.
The result is that people in Puerto Rico receive less assistance and the territory pays more of the costs.
Is this a solution?
Providing parity in government programs will be a good thing for Puerto Rico, and we hope this part of the budget is approved.
However, it is not a permanent solution. Just as Puerto Rico lost funding in these programs in the 20th century, the Island will be subject to the whims of Congress in the future. Congress can return to capped block grants at any time.
As a state, Puerto Rico will be able to count on being treated the same as the other states. That’s in the U.S. Constitution, which applies to every state –but only partially applies to the territories.