The Inequities of Medicaid in Puerto Rico

Author: Gabrielle Meyers, MPP

February 18, 2025

[Image source: Puerto Rico 51st]

Medicaid is a U.S. public healthcare program that offers health insurance to low-income individuals. It is regulated by the federal government, administered by state governments, and funded by both. Its purpose is to increase healthcare access.

Medicaid is also administered in the territories, such as Puerto Rico. However, territory Medicaid programs are funded differently from state programs, using a block grant structure and federal caps for matching funds. Puerto Rico’s funding structure has been proposed as a way of cutting Medicaid costs nationwide. However, this structure has meant fewer benefits for fewer recipients in Puerto Rico.

Despite being American citizens, Puerto Rican residents face a different quality of healthcare from Medicaid than citizens who live in the States. The discrepancies between state Medicaid programs and Puerto Rico’s Medicaid program signal a violation of Puerto Ricans’ right to health.

Funding

Funding for Medicaid is based on the Federal Medical Assistance Percentage (FMAP), which varies by state. For Puerto Rico, that FMAP is currently 76 percent, as it will be through fiscal year 2027 (FY27). This means that for every one dollar Puerto Rico spends on Medicaid, the federal government will cover $0.76. FMAPs are usually calculated using a formula, which calculates higher FMAPs for poorer states. The territories’ FMAPs are not based on this formula; if they were, Puerto Rico would be eligible for the maximum FMAP, currently 83 percent. If there was no maximum, it would be calculated to be even higher. Puerto Rico has only ever received equal healthcare funding from the federal government during the COVID-19 pandemic.

Unlike the States, U.S. territories like Puerto Rico are subject to funding caps. Once Puerto Rico reaches its funding ceiling for the year, the federal government will no longer match its Medicaid spending. Puerto Rico’s Medicaid funding is a block grant, rendering it inflexible to emergencies like recessions or another pandemic that could raise health costs. There is no cap for states, so they can accommodate everyone who meets their eligibility criteria and provide all of the Medicaid benefits. Because of the cap, Puerto Rico cannot afford to cover everyone who meets the eligibility criteria, and they cannot afford to cover all of Medicaid’s included benefits. This cap has not grown at the same rate as general Medicaid funding.

The main justification in favor of this discrepancy is that Puerto Ricans do not pay federal income tax. However, from a human rights perspective, this does not justify inadequate healthcare. According to the Committee on Economic, Social and Cultural Rights (CESCR), everyone has the right to “a system of health protection which provides equality of opportunity for the people to enjoy the highest attainable level of health.” CESCR explicitly lists “insufficient expenditure or misallocation of public resources which results in the non-enjoyment of the right to health by individuals or groups” as a violation of a government’s obligation to fulfill that right. Thus, subjecting Puerto Ricans to a different funding structure from their fellow American citizens, one that clearly affords them fewer healthcare benefits and less healthcare access, is a human rights violation.

Eligibility Discrepancies

Unlike in the States, which fashion their eligibility criteria around the federal poverty level (FPL), Puerto Rico bases its eligibility requirements on its own poverty metric, PRPL. Thus, there are citizens living in Puerto Rico that are not eligible in Puerto Rico, but would be if they lived in one of the States. On the mainland, a family of four must have a household income of no more than $35,535 to qualify for Medicaid. In Puerto Rico, this income would have to be below $13,566.

Puerto Rico is more reliant on Medicaid for healthcare than any other U.S. state. Forty-seven percent of adults and 62 percent of children have Medicaid, according to the 2021 American Community Survey. In comparison, only about 27 percent of people in the states are on Medicaid.

Discrepancies in Benefits

There are 17 benefits Medicaid programs are required to deliver, but due to a lack of funding Puerto Rico only provides ten of those. Those that are not covered include nursing facility services, non-emergency transportation to medical care, and certified pediatric and family nurse practitioner services. Puerto Rico also cannot afford to cover optional Medicaid benefits like hospice (which is covered by 46 states) and intermediate care facilities for individuals with intellectual disabilities (covered by 44 states).

Puerto Rico has half as many specialists as the states do. There are only 2.5 physicians per 1,000 people, and there are even fewer specialists. Healthcare providers are also unevenly distributed throughout the island, so many residents have limited access to care -- especially given that Medicaid does not cover non-emergency transportation to medical care. Seventy-two out of 78 municipalities have been classified as medically underserved areas by the U.S. Health Resources and Services Administration. Thirty-two of those areas have a primary care health professional shortage, which is defined as a 3500:1 population to doctor ratio, or greater. Twenty-three percent of municipalities have a pediatrician shortage, 64 percent have a shortage of psychiatrists, and 68 percent are short on OBGYNs (bearing in mind that Puerto Rico also does not cover nurse midwife services, another mandatory Medicaid benefit). This is because of, among other things, low payment rates for healthcare professionals in Puerto Rico.

Disparities in Medicaid benefits are particularly jarring when you consider that Puerto Ricans are disproportionately more inclined toward certain conditions compared to the US in general. For example:

• Puerto Ricans are 20 percent more likely to have diabetes. Meanwhile, two studies found that Medicaid expansion led to improvements in diabetes biomarkers among community health center patients.

• Puerto Ricans are two percent more likely to have heart disease. Studies also found that Medicaid expansion contributed to increased insurance coverage for those with cardiovascular disease, as well as improved access to care and better health outcomes.

• The rate of HIV incidence is larger in Puerto Rico (543 cases per 100 thousand people) than that of the mainland (384 cases per 100 thousand people). Medicaid expansion has been linked to increased HIV screenings; one study found that there were increases in diagnosis rates “despite no change in actual HIV incidence.” Expansion was also linked with higher coverage and increased use of PrEP, an HIV treatment drug.

Healthcare is a human right, and according to CESCR, the government is obligated to provide for that right. Thus, we need policy reform that ensures equal health access for all U.S. citizens, regardless of where they live.

If Puerto Rico’s Medicaid had the same funding structure as a state, they would not be inhibited by the federal matching cap. They would also qualify for the highest FMAP. With this, they would be able to cover everyone on the island who was eligible for Medicaid. Furthermore, they would be able to use the standard metric of 138 percent of the FPL, instead of 133 percent of the PRPL. Puerto Rico would also have the funds to administer those seven mandatory Medicaid benefits they are not currently covering.

However, the federal government could implement the opposite change, in which they impose Puerto Rico’s block grant structure nationwide instead of eliminating Puerto Rico’s funding cap and block grant structure. According to CBO, roughly 50 percent of Medicaid enrollees could lose their coverage if Puerto Rico’s Medicaid policy was implemented nationwide, leading to more medical debt.

So, it is not enough to say that Puerto Rico should have the same access to Medicaid funding as the states. We should eliminate Puerto Rico’s federal cap on matching funds so that they can afford to provide for their residents just as states provide for their residents now.

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Glossary

• Biomarkers: measurable characteristics that indicate the presence, progression, or response to a disease or condition

• Block grant: a grant from the federal government to a state or local government to be used at their discretion to pay for social service

• Cardiovascular Disease: a group of conditions that affect the blood and heart vessels

• Committee on Economic, Social and Cultural Rights (CESCR): a body of the United Nations, consisting of 18 experts that oversee the implementation of the International Covenant on Economic, Social, and Cultural Rights

• Diagnosis: the identification of an illness or other problem by examination of the symptoms

• Discrepancy: a lack of similarity

• Disproportionately: to the extent that is too large or too small in comparison with something else

• Eligibility Criteria: the requirements a person must meet to qualify for, in this case, Medicaid

• Expenditure: spending of funds

• Federal Medical Assistance Percentage (FMAP): the result of a formula that calculates on a state-by-state basis to what extent the federal government will match state spending on social services like Medicaid

• Federal Poverty Level (FPL): a level of household income, below which one is classified as poor according to the federal government

• Funding cap: an annual maximum amount of funds provided by the federal government

• Health Resources and Services Administration (HRSA): an agency of the federal Department of Health and Human Services that promotes equitable healthcare access regardless of geographic, economic, or medical difficulties

• Hospice: an array of services offered to terminally ill patients, including nursing, counseling, medical services, and home care

• Inadequate: lacking the quality or quantity required for its purpose

• Incidence: the occurrence, rate, or frequency of a disease

• Insufficient: not enough

• Medicaid: a public healthcare program that increases access to healthcare to those who cannot afford regular health insurance

• Misallocation: to distribute money or resources poorly or incorrectly

• Municipality: an administrative division with governing powers, like a city or a town

• Nurse Midwife: a registered nurse who specializes in women’s reproductive health and childbirth

• Nurse Practitioner: a registered nurse with advanced training

• OBGYN: Obstetrician-Gynecologists; medical professionals that specialize in the healthcare of women’s reproductive systems, such as pregnancy and childbirth (Obstetricians) as well as other conditions of the female reproductive system (Gynecologists)

• Pediatric: relating to the branch of medicine dealing with children and their ailments

• Puerto Rico Poverty Level (PRPL): a level of household income, below which one is classified as poor according to Puerto Rico’s government

• Psychiatrist: a medical doctor that treats patients with mental health conditions

• Recession: a period of significantly reduced economic activity that lasts more than a few months; marked by declines in employment rates and production

• Recipient: a person who has been provided with healthcare 

• Rendering: causing it to be

• Territory: an area that is part of the United States but is not an official state, subject to the jurisdiction of the local government and federal government

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Sources

1. Recent Changes in Medicaid Financing in Puerto Rico and Other U.S. Territories | KFF

2. Report (Vertical)

3. Medicaid in Puerto Rico: the Effects of the Block Grant on Health Outcomes

4. Consolidated Appropriations Act, 2023: Medicaid and CHIP Provisions Explained – Center For Children and Families

5. United States Federal Policies Contributing to Health and Health Care Inequities in Puerto Rico | AJPH | Vol. 114 Issue S6

6. Puerto Rico Health Care Infrastructure Assessment

7. Medicaid Threats in the Upcoming Congress | Center on Budget and Policy Priorities

8. Building on the Evidence Base: Studies on the Effects of Medicaid Expansion, February 2020 to March 2021 | KFF

9. CESCR

10. https://www.medicaid.gov/medicaid/index.html