Medicaid in the Territories: Program Features, Challenges, and Changes

Executive Summary

Individuals born in the U.S. territories are U.S. citizens or nationals, but the territories differ from the states on key demographic, economic, and health status indicators. Most of the territories have a larger share of people living in poverty and longstanding fiscal challenges. Recent hurricanes, typhoons, and the North Korean missile crisis exacerbated pre-existing fiscal issues by damaging infrastructure and limiting tourism. In addition, a larger share of residents in the territories report that they are in fair or poor health than in the states. However, Medicaid, the program that serves low-income and vulnerable individuals, operates differently in the territories. The most fundamental difference is that federal funding for Medicaid in the territories is subject to a statutory cap and a fixed federal matching rate, unlike in the states, where federal Medicaid funding is not capped, and the federal share varies based on states’ per capita income. This brief draws on a survey of and interviews with territory Medicaid officials, as well as other research, to examine key issues and trends in their Medicaid programs.¹ Key findings include the following:

• The expiration in September 2019 of most of the temporary federal Medicaid funds provided for all territories through the Affordable Care Act (ACA) is expected to result in what some territory officials describe as a fiscal cliff. All of the territories have increasingly relied on the ACA funds to finance their Medicaid programs, and Puerto Rico and the U.S. Virgin Islands have also used hurricane relief funds that are set to expire at the end of September 2019.
• Medicaid enrollment trends have been relatively stable in the territories, except in Puerto Rico and the U.S. Virgin Islands, where enrollment increases followed recent hurricanes, although future trends are somewhat uncertain.
• Medicaid benefits and delivery systems vary in the territories. Only Guam offers long-term services, and Guam, American Samoa, and the Northern Mariana Islands provide nearly all Medicaid services through one public hospital. Puerto Rico is the only territory to operate a managed care delivery system, with new reforms implemented in November 2018.
• The territories have struggled with provider shortages, which are often tied to outmigration and poor infrastructure and are most prominent for specialty care and mental health services.
• Looking ahead, long-term Medicaid financing reforms such as increased federal matching rates, increased spending caps, or elimination of the caps could help the territories meet the health care needs of their Medicaid populations. Conversely, the expiration of temporary Medicaid funds without new resources to address the resulting fiscal cliff could have negative consequences for Medicaid coverage and services.