Puerto Rico Evacuees Could Strain Mainland Medicaid

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By Victoria Pelham

Hurricane Maria’s devastation of Puerto Rico and other nearby areas is moving a large population to the mainland U.S., where states’ Medicaid programs could incur big expenses.

More than 135,000 Puerto Ricans fled the island in the six months since Hurricane Maria, mostly to Florida and the Northeast, according to a March report from the Center for Puerto Rican Studies at the City University of New York. And the displacement is likely to continue. The CUNY center also estimated last fall that up to 470,335 will leave Puerto Rico by 2019—14 percent of the territory’s population. Many are likely to need some help.

Even before the devastation of the 2017 storm, Puerto Ricans tended to be poorer than other Americans, with Medicaid the primary insurer for almost half (40 percent) of the island’s residents. And the Kaiser Family Foundation noted that people in Puerto Rico are also more likely to have heart disease, diabetes, depression, disability, and low-birth-weight infants, compared to the rest of the U.S.

Now those residents are navigating a health-care system far costlier than what they’re used to and state programs that didn’t budget for their arrival. New York already spends the second-most in the U.S. on Medicaid: $62.9 billion in fiscal 2016, according to the Kaiser Family Foundation. Florida, where most of the post-Maria evacuees are settling, wasn’t far behind: fifth in the nation at a $21.8 billion cost.

The federal government has issued temporary Medicaid relief in Maria’s aftermath to the islands—but not to the host states absorbing some of the cost of care.

“If we’re expecting them to take care of this influx of people, totally outside of their control, I think it’s only fair and only right to think about how can the federal government play a ... larger role in financing that,” Matt Salo, head of the National Association of Medicaid Directors (NAMD), told Bloomberg Law. Salo’s group represents the states administering Medicaid to more than 67 million people across the country.

The N.Y. governor’s office, Florida’s Medicaid agency, and Florida Hospital Association didn’t respond to requests for comment by deadline.

Benefits for Displaced Residents

The catastrophic Category 5 storm decimated the Caribbean and interrupted services from running water to electricity, wiped homes off the map, and forced the closure of health systems.

Frail patients in need of oxygen or surgeries, for example, were transferred out of the territories, with the medical transport costs covered by programs in Puerto Rico or the U.S. Virgin Islands, Robin Rudowitz, associate director for Kaiser Family Foundation’s Program on Medicaid and the Uninsured, told Bloomberg Law.

Territories are also expected to shoulder the cost of the temporarily displaced who expect to return after a short stint. But the rest, many of whom could stay permanently on the mainland, are required to re-apply for Medicaid coverage once they’re in their new home states. Those programs will then pay for any non-emergency care.

“It’s definitely a shift to those states,” Salo said.

Judy Solomon, vice president at the Center on Budget and Policy Priorities, told Bloomberg Law April 3 the availability of benefits also depends on where the evacuees wind up: “It gets super complicated because every state has different eligibility rules,” she said.

For example, Florida chose not to expand its Medicaid program under the Affordable Care Act to adults making up to 138 percent of the poverty level, meaning younger, working-age adults might not be eligible for the benefits.

But “to the extent you have an increase in the number of people, your state costs would go up,” Solomon said.

The federal Centers for Medicare & Medicaid Services didn’t respond to specific questions about the impact of the population shift on state programs.

Possible Costs

Salo said that after Hurricane Katrina hit the Gulf Coast in 2005, lawmakers enacted changes that allowed the federal government to match 100 percent of the cost for hurricane evacuees in host states. No such change has happened for those taking in Puerto Rico and Virgin Islands residents.

He added that it “was ultimately in the good judgment of Congress who said Louisiana’s revenue base is so devastated, they’re not going to be able to figure out how to pay for all these people in Texas, Kansas... or wherever they ended up.” He said, it’s “also really unfair to expect the host state ... in their humanitarian efforts to absorb” evacuees to “expect them to continue to pay for it all.”

Medicaid cost Florida around $4,243 per person in fiscal 2014 and New York $7,806 per person, according to the Kaiser Family Foundation. The Empire State also receives on the low end of a federal reimbursement match because of higher per capita incomes, around 50 percent. Under the formula, poorer states—but not territories—get the highest federal match rate.

Responding to Need

States face budget imbalances all the time in Medicaid and are “pretty used to having their forecasts changed,” Solomon said.

“That’s what’s so important about the Medicaid program being able to respond to increased need, whether it’s enrollment or cost of health care” or a hurricane, she added.

Florida saw a 31.56 percent uptick in new Medicaid and Children’s Health Insurance Program applications in January, adding 197,710 to the rolls, according to the CMS.

Democratic lawmakers introduced a bill last fall that would have required a state to provide medical assistance to Hurricane Maria survivors and enhanced the federal match for these residents to 100 percent, alongside other relief in housing policy. The Disaster Displacement Act of 2017 was sponsored by Sen. Bill Nelson (D-Fla.) alongside Sens. Kamala Harris (D-Calif.) and Kirsten Gillibrand (D-N.Y.). A companion measure (H.R. 4249) in the House is sponsored by Reps. Stephanie Murphy (D-Fla.) and Darren Soto (D-Fla.).

The legislation hasn’t made it out of committee. But a congressional aide who asked not to be identified told Bloomberg Law the lawmakers would continue to fight for boosting federal support to the states hosting hurricane evacuees, to ensure they can continue to cover all beneficiaries.

Long-Term Effects?

Congress passed a spending bill this winter that secured $4.9 billion to fund Puerto Rico’s struggling Medicaid program, which insures nearly 1.4 million people, offering life support in the short term to a system that was already on shaky footing. It also bumped up the federal match in the island to a full federal match for two years.

But the storm and its after-effects raise questions for the long term, experts noted, since the situation on the islands likely will take decades to improve. “There’s a lot of concern about the cliff [after the new funding expires] ... and what might happen after September 2019,” Rudowitz said.

The economies in Puerto Rico and the U.S. Virgin Islands were dealt such a bad blow it could take a generation to recover, Salo added. Their Medicaid programs, especially, are precariously positioned.

Funding Structures

Medicaid funding structures for American territories are vastly different from states, a policy NAMD has long sought to change.

The federal government sets caps on both the federal match for Medicaid beneficiaries and the overall spending. In Puerto Rico, prior to the short-term congressional fix, the CMS matched at a 55 percent rate, versus an open-ended structure for states that can range from 50 percent to 83 percent based on a state’s income, according to the KFF. Medicaid payments to Puerto Rico also can’t exceed $357.8 million for fiscal 2018.

If the territories start to run out of Medicaid money, they will need to find ways to save by cutting enrollment and benefits, Salo said.

That would push people back to the mainland in states like New York and Florida, especially those well enough to travel but sick enough to feel effects on their wallet from cuts. He said it underscores the need to overhaul how the federal government pays for health coverage in the territories versus the states.

“We’re not done,” Salo said. “Let’s not put a feather in our cap and say we’ve fixed the problem—mission accomplished.”

To contact the reporter on this story: Victoria Pelham in Washington at vpelham@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

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