Bringing the U.S. Territories Closer to Medicaid Equity

January 13, 2023 | Carolyn McCoy, Alex Wheatley

Bronze statue of Lady Justice on an orange background. ASTHO Federal Health Policy Update banner in the upper-right cornerOver the past five years, ASTHO has consistently advocated for permanent, sustainable Medicaid financing in the U.S. territories. Medicaid funding makes up a more significant portion of the territories' budgets than it does in the continental United States. It is critical in light of the islands' remote locations, reduced economies of scale, limited access to care, and significant population health needs. In this sense, Medicaid funding structures have an outsized impact on the territories’ population health.

After years of advocacy, ASTHO and our partners are celebrating the recently signed Consolidated Appropriations Act, 2023 (H.R. 2617), a new bill which includes a permanent increase of the federal medical assistance percentage (FMAP) to 83% for American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the U.S. Virgin Islands (USVI), as well as a five year extension of Puerto Rico's 76% FMAP. Medicaid statute sets the FMAP at 55%, however, through the years, Congress has increased this for various amounts of time. The law also establishes a new framework for Puerto Rico’s enhanced allotments for the next five fiscal years.

A Big Leap for the Territories 

The law aims to improve the territories' Medicaid programs by requiring increased provider payment rates, improving contracting practices for Puerto Rico, and providing 100% funding for qualifying data system improvements for American Samoa, CNMI, Guam, and USVI.

These changes are critical. Historically, the federal portion of the territories' Medicaid budgets have not been guaranteed at sufficient annual levels, leaving territorial governments to maintain small treasuries with limited capacity to support unplanned healthcare costs. Adding to that equation are increased operating expenses due to the cost of doing business on an island, e.g., imported food, medical supplies, and fuel.

Maintaining sufficient staff also posed challenges. Lifesaving treatments, such as dialysis, may require a re-location to areas where services are available, as patients often have to do in CNMI. Compared to the financing options available in the states, the position these territories' health systems have operated under for decades is both more stressful and inequitable.

Before this bill was signed into law, territorial and state Medicaid funding differed in two ways. First, territories have a "cap" on the total federal Medicaid dollars available (states have no cap). Second, the FMAP for the territories’ Medicaid program is set by statute rather than by per capita income. That previous statute sets the rate at a disproportionally low 55%. If Congress were to apply the FMAP formula used for states to the territories, the rate would be significantly higher.

Starting in 2017, ASTHO worked diligently with territorial health officials to educate Congress on the need to provide a permanent and sustainable Medicaid financing solution for the territories. ASTHO firmly believed that individuals living in the territories should have equitable access to health services through an adequately financed and high quality healthcare system.

A Long Fight for Change

Year after year, Congress didn’t provide a permanent solution, opting instead to provide a patchwork of short-term enhanced funding fixes. In July 2021, the bipartisan bill, Supporting Medicaid in the U.S. Territories Act of 2021 (H.R. 4406), sponsored by Rep. Darren Soto (D-FL), was passed out of the House Energy and Commerce Committee. ASTHO brought Rep. Soto onto ASTHO’s newscast in October 2021 to describe how his legislation would help the U.S. territories. Then, in November 2021, a permanent fix for the Medicaid programs in the U.S. territories was included among the machinations of a Democratic-led reconciliation package—a bill that only needed a simple majority to pass. Unfortunately, the bill did not reach the finish line. Still, it demonstrated that a permanent fix to Medicaid funding could be approved by a majority of the formerly Democrat-controlled House of Representatives.

ASTHO and its members wrote letters, conducted meetings on Capitol Hill, and partnered with other public health organizations and their advocates to continue spreading the message of a fix’s impact on the U.S. territories. ASTHO’s members sat at the hearing table alongside their public health and Medicaid colleagues to make the case, broadcasted their stories on the ASTHO’s newscast, and penned opinion columns.

Since President Biden signed the bill into law on Dec. 29, territorial leaders have applauded the move. Guam Governor Lou Leon Guerrero and Delegate San Nicolas underscored that "this bill will help us provide greater access to healthcare and critical health services to those in our community most in need." U.S. Virgin Islands Congressional delegate Stacey Plaskett said, "This law will create the certainty of continued access to health care coverage for tens of thousands of Virgin Islanders, a third of our population, indefinitely." Senate Majority Charles Schumer (D-NY) also touted the deal, remarking on how it will expand access to care for American citizens in Puerto Rico.

ASTHO Looks Ahead

ASTHO and its members understand that more work must be done. We will continue to advocate for equity for Puerto Rico's FMAP and permanently remove the funding allocation caps (moving off of a block grant funding scheme) for all territories. Ensuring adequate funding that meets the needs of Americans on all island jurisdictions allows public health professionals to move their focus and care upstream toward the root causes of poor health outcomes and supporting healthy and thriving communities.