HR-6494-119
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Stacey Plaskett (D-VI)
What it does
This bill would remove the existing caps on federal Medicaid funding for U.S. territories (Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa) and raise the federal matching rate (FMAP) for Puerto Rico to the same formula used for states. It would also increase Medicare payments to territory hospitals, eliminate Medicare Part B late-enrollment penalties for certain Puerto Rico residents, expand low-income prescription drug subsidies to territory Medicaid enrollees, and require HHS to publish detailed data on Medicaid and CHIP spending in territories. Additionally, it would direct HHS to report on the exclusion of territories from ACA insurance exchanges and create a mechanism for territory residents without access to any exchange plan to purchase coverage through the D.C. exchange.
Who benefits
Residents of Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa who rely on Medicaid, Medicare, or lack health insurance — an estimated 3.5 million U.S. nationals. Hospitals in territories that would receive higher Medicare disproportionate share (DSH) payments and rebased reimbursement rates. Low-income territory residents who would gain automatic eligibility for Medicare Part D premium and cost-sharing subsidies. Puerto Rico residents who became entitled to Medicare Part A in the past five years and would avoid late-enrollment penalties for Part B. Small businesses in territories that could gain access to SHOP marketplace coverage. Territory governments that would face reduced fiscal pressure from Medicaid spending. Researchers and policymakers who would benefit from improved HHS transparency data.
Who is hurt
Federal taxpayers who would bear the cost of significantly increased Medicaid and Medicare spending in territories — the elimination of Medicaid caps alone could represent billions in additional federal outlays. States that compete for finite federal healthcare dollars may face indirect budgetary pressure. Mainland insurers and pharmacy benefit managers who may face expanded subsidy obligations. The D.C. exchange and its existing enrollees, though the bill includes a hold-harmless provision. Territory governments that currently operate under capped Medicaid structures may face administrative transition costs in adapting to the new funding framework. Congressional budget negotiators who may face tradeoffs with other spending priorities.
Supporters argue
Supporters argue that U.S. territories have been systematically excluded from the full benefits of federal healthcare programs despite residents being U.S. nationals who pay into Medicare and are subject to federal law. Puerto Rico's Medicaid FMAP, capped at 55% regardless of poverty levels, would be 83% if calculated by the same formula applied to states — a disparity that has left the territory chronically underfunded. They contend that territory hospitals serving high proportions of low-income patients receive Medicare DSH payments far below what comparable mainland hospitals receive, directly undermining care quality, and that closing these gaps is a matter of equal treatment under federal law.
Opponents argue
Opponents argue that the existing funding caps reflect a longstanding congressional policy choice tied to the fact that territory residents do not pay federal income taxes and are not subject to the full federal tax burden that funds these programs. They contend that eliminating caps without corresponding revenue offsets would add substantial — and potentially uncapped — mandatory spending obligations to the federal budget at a time of fiscal strain, and that the Congressional Budget Office has previously estimated territory Medicaid parity provisions at tens of billions of dollars over a decade. Critics may also argue that territory governments' administrative capacity to manage a sudden large increase in federal Medicaid funds has not been fully assessed.
Constitutional context
Congress has broad authority under the Taxing and Spending Clause (Art. I, §8, cl. 1) to set conditions on federal healthcare funding. NFIB v. Sebelius (2012) established that Spending Clause conditions cannot be so coercive as to leave states (or territories) no genuine choice, though this bill expands funding rather than imposing new conditions. No active constitutional tension is raised, as the bill modifies existing statutory funding formulas rather than compelling new activity or delegating sweeping new regulatory authority to agencies.
Checks and balances
Congress would expand federal spending authority through statutory formula changes; HHS and CMS would implement the new payment and eligibility rules; the Office of Management and Budget and Congressional Budget Office would score the fiscal impact; and Congress retains authority to modify or repeal the changes through future legislation.
Historical precedent
The ACA (2010) temporarily increased Puerto Rico's Medicaid FMAP and provided additional territory funding through block grants, and subsequent legislation (e.g., the Bipartisan Budget Act of 2018 and COVID relief packages) has repeatedly provided temporary Medicaid funding boosts to territories, establishing a pattern of ad hoc fixes that this bill would make permanent.