Editorial:​ Puerto​ Rico​ deserves​ fair​ Medicaid​ and​ Medicare​ funding

The Puerto Rican healthcare system, which serves the 3.4 million people devastated by Hurricane Maria, operates under patently unfair Medicaid and Medicare funding rules.

As Americans gear up to help their fellow citizens, it's critical that Congress and the Trump administration correct this injustice. Not only should they offer immediate aid, they should revise the inequitable formulas that systematically shortchange the 69 hospitals and approximately 20 federally qualified health centers with nearly 90 facilities that dot the Caribbean island.

Scant attention has been paid to this long-standing policy blunder. But as a recent report by the Puerto Rican consulting firm Impactivo noted, it has been a major contributor to the ongoing exodus of people and medical personnel from the island and has actually been a net drain on the U.S. Treasury.

Puerto Rico, a U.S. territory, is poor. Nearly half of its households (46%) earn less than the federal poverty level.

While those wage earners are exempt from federal income taxes, they pay Social Security and Medicare taxes, which makes them eligible for federal entitlement programs. As a result, an estimated 49% of its residents are on Medicaid or the Children's Health Insurance Program, including nearly 300,000 seniors who are dually eligible for Medicare and Medicaid.

Yet what Puerto Rico draws from the federal government for those two programs remains far below the levels in the states. Medicaid's federal match has a statutory floor of 50% of the total cost of the program. In states with high poverty levels, the match can go substantially higher.

In Mississippi, for instance, the federal match will be 76% in the next fiscal year, according to the Kaiser Family Foundation. Another nine states and the District of Columbia had federal matches over 70%. Just 12 states received the statutory minimum.

Puerto Rico's Medicaid program, on the other hand, receives just 19% of its total cost in federal matching funds, an arbitrary cap contained in the Social Security Act. The Affordable Care Act sought to correct the injustice with a one-time appropriation that grossed up the island's reimbursement to about 55% of total costs.

However, the special appropriation of about $1.3 billion a year runs out at the end of this year. While the CHIP reauthorization bill pending before Congress contains an additional $1 billion for Puerto Rico, that's less than previous funding and well short of the 83% match the island would get if operating under the same rules as the states.

Medicare rules also shortchange Puerto Rico. Island residents are not eligible for Social Security Supplemental Income, leaving that component for setting hospital disproportionate-share payments at zero. The result is Medicare payments that are 42% below the U.S. average.

The Federal Emergency Management Agency, the Centers for Disease Control and Prevention and other federal agencies face the immediate challenge of heading off a public health catastrophe. About 40% of the island still does not have potable water. Electricity outages are common, leaving hospital and clinic backup generators, designed to operate for a few hours or days, running for weeks on end.

The incidence of water-borne diseases is growing. A boil-water alert was issued in response to widespread gastroenteritis, and a few reported cases of leptospirosis (spread through animal wastes) are fueling fears of wider, more serious infectious-disease outbreaks.

Charitable efforts can help fill some gaps in the short run. The Greater New York Hospital Association led the way by marshaling private planes to deliver needed medicines. The American Hospital Association and its Puerto Rico affiliate have teamed up to create a fund to help displaced hospital employees continue working. (You can donate at thecarefund.net.)

But Puerto Rico and the U.S. will eventually turn their attention to rebuilding the island's ailing infrastructure, including healthcare. Putting its Medicaid and Medicare reimbursements on an equal footing with the rest of the country will make that task a lot easier.