The Puerto Rican Medicaid debate

My cover story on Puerto Rico in the Dec. 26 issue of WORLD Magazine (released digitally this morning) promises I would discuss nuances on our website. Here’s one of the biggest questions regarding Puerto Rico’s debt problems: Is Washington playing unfair with Medicaid, thus contributing to a humanitarian crisis unless billions of dollars head south?

Some facts, according to the Congressional Research Service: The median age in Puerto Rico was 38.6 years in 2013, and 38 percent of the population was in the “prime” working age range, 25 to 54 years. Those figures aren’t all that different from those in para afuera (translation: over there), what Puerto Ricans call the 50 states and the District of Columbia. The para afuera median age in 2013 was 37.5 years, and the 25- to 54-year-old population was 40 percent.

One big difference: About one-in-four Puerto Ricans 25 years and older did not graduate from high school, and that’s double the rate in the United States. Puerto Rico’s unemployment rate is also double the para afuera rate, and its percentage of below-poverty residents about three times as large (45 percent to 15 percent).

Those demographics all suggest that Medicaid use in Puerto Rico would be greater than in the United States generally, and it is: In 2012, about 46 percent of island residents had Medicaid coverage, compared to 18 percent para afuera. The federal government pays 55 percent of all Medicaid cost in U.S. territories, and its payment percentages to states range in fiscal year 2015 from 50 percent (in 13 states) to 74 percent in the poorest state, Mississippi.

Should the federal government pay a higher percentage of Puerto Rico’s Medicaid costs? Some say no, since Puerto Ricans do not pay the U.S. income taxes that make Medicaid payments possible. Others, calling Puerto Rico “the last colony,” say the special treatment for Puerto Rico (and other, much smaller U.S. territories, such as Guam) is unfair.

The Affordable Care Act (aka “Obamacare”) made some special provisions for Puerto Rico. The island’s rate for extra money heading out of Washington for Medicaid expansion in connection with Obamacare was not 55 percent but 78 percent. The ACA provided $5.4 billion in additional Medicaid federal funding to Puerto Rico for the period from July 1, 2011, to Sept. 30, 2019, plus $950 million specifically for providing premium and cost-sharing assistance for 2014–2019, plus 90 percent of the cost of designing a new claims process and information retrieval systems, and 75 percent of the cost for operating them.

Last year, two congressional Republican committee heads—Rep. Fred Upton of Michigan and Sen. Orin Hatch of Utah—expressed concern about federal Medicaid spending in Massachusetts and Puerto Rico. They asked—in a letter to Marilyn Tavenner, then administrator of the Centers for Medicare and Medicaid Services (CMS)—whether “Medicaid expenditures in Puerto Rico remained under the spending cap established by federal statute.”

Upton and Hatch also observed, “Because Puerto Rico does not have a federal Medicaid Fraud Control Unit, the administration has noted the program could be especially susceptible to waste, fraud, and abuse.” They asked, “What steps have been taken in conjunction with Puerto Rico’s Medicaid program managers and CMS contractors to review the appropriateness of the Territory’s Medicaid expenditures on behalf of its 1.6 million beneficiaries? What steps have been taken in conjunction with the territory and CMS contractors to minimize program vulnerabilities?”

Tavenner, best known for supervising Obamacare’s disastrous rollout, responded that expenditures were under the spending cap and that “CMS is committed to doing all it can to ensure program integrity.” For that purpose, administrators in New York reviewed quarterly financial reports, monitored funding allocations, and approved expenditures before sending reimbursements.

Tavenner earlier this year left her $165,300 government job to become head of America’s Health Insurance Plans (AHIP), the trade association that represents medical insurance companies. (By the way, CMS regulates those companies.) Tavenner’s predecessor, Karen Ignagni, received more than $2 million in salary and benefits in 2013, according to AHIP’s IRS form 990.