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Updated July 30, 2019
Medicaid Funding for the Territories
Medicaid is a joint federal-state program that finances the
Figure 1. Proportion of Federal Medicaid Funding
delivery of primary and acute medical services, as well as
from Annual Capped Funding and ACA Funding
long-term services and supports. Participation in Medicaid
(FY2017)
is voluntary, though all states, the District of Columbia
(DC), and the territories (i.e., American Samoa,
Commonwealth of the Northern Mariana Islands [CNMI],
Guam, Puerto Rico, and the U.S. Virgin Islands) choose to
participate. The territories operate Medicaid programs
under rules that differ from those applicable to the 50 states
and DC.
Medicaid in the Territories
American Samoa and CNMI operate their Medicaid
programs under the Section 1902(j) waiver authority. Under
these waivers, the only Medicaid requirements that may not
be waived by the Secretary of Health and Human Services
(HHS) are (1) the federal medical assistance percentage
(FMAP) rate (i.e., federal matching rate); (2) the annual
Source: CRS analysis of data received from the Centers for
federal capped funding; and (3) the requirement that
Medicare & Medicaid Services (CMS) on May 9, 2018.
payment be made for services otherwise coverable under
Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111-
Medicaid.
148, as amended); CNMI = Commonwealth of the Northern Mariana
Islands.
For Guam, Puerto Rico, and the U.S. Virgin Islands, most
of the eligibility and benefit requirements for the 50 states
The territories also receive SSA Section 1935(e) funding in
and DC apply. However, it has been documented that these
addition to the annual federal capped funding. This funding
three territories do not cover all of the federally mandated
is sometimes referred to as the enhanced allotment program
coverage groups or benefits.
(or EAP), and territories receive these funds in lieu of their
residents being eligible for low-income subsidies under
The five territories all have the same FMAP rate of 55%.
Medicare Part D. The territories can use this funding to
By contrast, the FMAP for the 50 states and DC varies by
provide prescription drug coverage under Medicaid for low-
state according to each state’s per capita income and can
income Medicare beneficiaries.
range from 50% to 83%.
The following provides additional information about the
Federal Medicaid funding to the states and DC is open-
annual federal capped funding, the ACA funding, and the
ended, but the Medicaid programs in the territories are
additional funding provided to Puerto Rico and the U.S.
subject to annual federal capped funding.
Virgin Islands.
Federal Medicaid Funding
Annual Federal Capped Funding
The federal Medicaid funding for the territories comes from
The Medicaid programs in the territories are subject to
a few different sources. The permanent source of federal
annual federal capped funding. These Medicaid cap
Medicaid funding for the territories is the annual federal
amounts vary by territory and increase annually according
capped funding, which has been supplemented by Patient
to the change in the medical component of the Consumer
Protection and Affordable Care Act (ACA; P.L. 111-148, as
Price Index for All Urban Consumers. Once the cap is
amended) funding since July 1, 2011. Two territories
reached, the territories assume the full cost of Medicaid
(Puerto Rico and the U.S. Virgin Islands) have requested
services or, in some instances, may suspend services or
and received funding in addition to the ACA funding.
cease payments to providers until the next fiscal year.
Figure 1 shows the proportion of annual federal capped
Certain Medicaid expenditures are disregarded for purposes
funding and ACA Medicaid funding used by each territory
of the annual federal capped funding, such as (1) Medicaid
in FY2017. The aggregate total of the annual federal capped
Electronic Health Record Incentive Program payments and
funding for the territories was $400.0 million. Each territory
(2) design and operation of the claims and eligibility
spent through its capped funding, at which point, the
systems. Also, for Puerto Rico and the U.S. Virgin Islands,
territories used an aggregate of $1.2 billion in ACA
Medicaid Fraud Control Unit (MFCU) expenditures are
funding.
disregarded.
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Medicaid Funding for the Territories
ACA Funding
relief. In September and October 2018, CNMI and Guam
Prior to the ACA, all five territories typically exhausted
were affected by Typhoons Mangkhut and Yutu.
their federal Medicaid annual federal capped funding before
the end of the fiscal year. For this reason, the ACA included
In February 2018, the Bipartisan Budget Act of 2018 (BBA
a provision that provides $6.3 billion in additional Medicaid
2018; P.L. 115-123) increased the federal Medicaid funding
federal funding to the territories available between July 1,
for the period of January 1, 2018, through September 30,
2011, and September 30, 2019. The $6.3 billion was
2019, by $3.6 billion for Puerto Rico and $106.9 million for
distributed among the territories in an amount proportional
the U.S. Virgin Islands.
to the annual capped amounts: Puerto Rico ($5.5 billion),
the U.S. Virgin Islands ($273.8 million), Guam ($268.3
This funding may be further increased by $1.2 billion for
million), American Samoa ($181.3 million), and CNMI
Puerto Rico and $35.6 million for U.S. Virgin Islands if the
($100.1 million).
HHS Secretary certifies that each territory has taken steps
to (1) report reliable data to the Transformed-Medicaid
ACA Section 1323 provides $1.0 billion in additional
Statistical Information System (T-MSIS) and (2) establish
Medicaid funding to the territories that did not establish
an MFCU.
health insurance exchanges. Because none of the territories
established exchanges, the territories all received additional
For all the additional federal Medicaid funding for Puerto
federal Medicaid funds. The provision specified that Puerto
Rico and the U.S. Virgin Islands provided in BBA 2018,
Rico receive $925 million, and the HHS Secretary
the FMAP (i.e., federal matching rate) is increased from
distributed the remaining funding among the other four
55% to 100% (i.e., fully federally funded).
territories. This funding is available January 1, 2014,
through December 31, 2019.
Disaster Supplemental
The Additional Supplemental Appropriations for Disaster
Figure 2 shows the percentage of each territory’s ACA
Relief Act, 2019 (P.L. 116-20), included some Medicaid
funding that each territory utilized from FY2011 through
financing provisions impacting CNMI, American Samoa,
FY2017. Puerto Rico used 94% of its ACA funding during
and Guam.
this period; it is the only territory that had used any of the
ACA Section 1323 funding through FY2017.
For CNMI, P.L. 116-20 increased the federal Medicaid
funding for the period of January 1, 2019, through
Figure 2. Percentage of ACA Funding Utilized
September 30, 2019, by $36 million. For this additional
(FY2011 through FY2017)
funding, the FMAP is increased from 55% to 100%.
For American Samoa and Guam, P.L. 116-20 increased the
FMAP from 55% to 100% for the territories’ share of the
$6.3 billion in additional Medicaid federal funding provided
in the ACA. Separately, American Samoa and Guam are
supposed to submit plans to report reliable data to the T-
MSIS by September 30, 2019.
Conclusion
The territories are increasingly relying on the ACA funding
for their Medicaid programs. Since FY2012, in every year,
a majority of the federal Medicaid funding has come from
the ACA funding.
Source: CRS analysis of data received from CMS on May 9, 2018.
Notes: See notes from Figure 1.
The $6.3 billion in additional Medicaid federal funding and
the funding provided in the Consolidated Appropriations
Additional Funding for Puerto Rico
Act, 2017; BBA 2018; and the Additional Supplemental
Appropriations for Disaster Relief Act, 2019, will expire
Because Puerto Rico had spent most of its ACA funding, in
after September 30, 2019, and the $1.0 billion in ACA
May 2017, Puerto Rico was provided an additional $296
Section 1323 funding will expire after December 31, 2019.
million in federal Medicaid funding through the
Each territory will need to make decisions about how to
Consolidated Appropriations Act, 2017 (P.L. 115-31). That
deal with its loss of this federal funding. The territories
funding is available through September 30, 2019.
could (1) make programmatic changes (e.g., restrict
The Bipartisan Budget Act of 2018
eligibility or cut benefits); (2) suspend Medicaid programs
when the annual spending cap is exhausted; or (3) increase
In spite of the additional funding from P.L. 115-31, Puerto
territory funding of Medicaid (if possible).
Rico still did not have enough funding to cover the federal
share of Medicaid for FY2018 and FY2019. Then, in
September 2017, both Puerto Rico and the U.S. Virgin
Alison Mitchell, Specialist in Health Care Financing
Islands were affected by Hurricane Irma and Hurricane
IF11012
Maria, and both territories requested federal Medicaid
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Medicaid Funding for the Territories
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