President Donald Trump intervened to cut the federal government’s Medicaid funding for Puerto Rico as part of a larger government spending deal, according to four sources with knowledge of the discussions.
The budget deal unveiled by lawmakers this week allocates up to $5.7 billion in Medicaid funds for the island over two years — instead of $12 billion over four years that Republican and Democratic leaders on two key congressional committees had endorsed after months of negotiating a long-term financial path for Puerto Rico.
Puerto Rico has frequently been in Trump’s crosshairs, with the president calling the island “one of the most corrupt places on Earth” and its politicians “either incompetent or corrupt.” Puerto Rico officials have also frequently been critical of the president, especially in the wake of the federal government’s response to the catastrophic Hurricane Maria in 2017.
Puerto Rico’s Medicaid program has been relying on a series of short-term funding extensions since the fall, after confronting a fiscal cliff on Sept. 30 when a temporary boost in money — one of several that Congress has enacted in recent years — was set to expire. Its latest pool of funding expires Friday.
The territory’s funding negotiations to secure a longer-term agreement for its Medicaid program, which covers roughly 1.4 million low-income people, have been particularly fraught after it experienced massive political upheaval and struggled to recover from hurricanes.
In Congress, lawmakers have pushed stronger measures to prevent inappropriate spending by territory officials and monitor its contracting practices, after federal authorities earlier this year arrested a former top Puerto Rico health official and other territory leaders as part of a corruption probe.
Republicans and Democrats on both the House Energy and Commerce Committee and the Senate Finance Committee had endorsed legislation providing roughly $12 billion in Medicaid funds to Puerto Rico over four years, a rare area of bipartisan backing. But over the weekend the president balked at that amount because he believed it was too much, three sources said, potentially throwing a wrench into negotiations to prevent a government shutdown at the end of this week. When lawmakers unveiled the spending package on Monday, it included the two-year funding provision.
A White House spokesperson characterized the Puerto Rico funding deal as a “win for President Trump and the American people.”
“This administration remains committed to properly prioritizing U.S. taxpayer dollars,” said Chase Jennings, a spokesperson for the White House Office of Management and Budget. “With the historical waste we have faced in Puerto Rico, additional funding was not needed or fiscally responsible.”
Puerto Rico officials hailed the funding agreement included in the $1.4 trillion spending bill that the House passed on Tuesday, saying they were “pleased” to have the two-year extension.
“We will continue to work hand-in-hand with the federal government to achieve a longer-term funding mechanism that provides stable healthcare to the people of Puerto Rico,” said Jennifer Storipan, executive director of the Puerto Rico Federal Affairs Administration, the primary liaison between island officials and the federal government.
But the deal wasn’t without its critics.
“With another funding cliff looming in two years under the new agreement, Puerto Rico may continue to lack the certainty it needs to commit to long-term increases of its very low payment rates to health care providers to stem their alarming exodus to the mainland, to provide coverage for such key health treatments as drugs to treat Hepatitis C, and to cover more poor, uninsured residents,” said Robert Greenstein with the Center on Budget and Policy Priorities, a left-leaning think tank.
Puerto Rico’s fiscal 2020 budget includes more than $900 million in local funds to finance its Medicaid program, which has long been underfunded because of how federal law structures its payments. Unlike the Medicaid program in the 50 states — where the federal government and states share costs without strict limits on overall spending — federal funding for territories is capped.
