Medicaid operates in the five U.S. territories: American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico, and the U.S. Virgin Islands (USVI). Although territories are generally considered states for the purposes of Medicaid unless otherwise specified, their programs differ substantially from those in the states and from one another. Most notably, Medicaid in the territories operates on a capped allotment financing structure. Territories can only access federal funds up to an annual ceiling, sometimes referred to as the Section 1108 allotment or cap (§ 1108(g) of the Social Security Act (the Act)).1 In addition, the federal medical assistance percentage (FMAP) for the territories is statutorily set at 55 percent (§ 1905(b) of the Act).
For the last decade, territories have relied on time-limited increases in federal funding and temporarily enhanced FMAPs to finance their programs, including those currently in effect for fiscal years (FYs) 2020 and 2021. Congress is currently working on solutions to address the territories’ financing challenges in FY 2022 and future years. The debate on funding extensions for the territories has once again raised the question of whether the territories should be treated more like states in both their financing structure (i.e., provide open-ended financing with an FMAP determined in the same way state FMAPs are determined) and certain programmatic requirements (e.g., providing all mandatory benefits and covering all mandatory populations).
This presentation provided background information on territory Medicaid programs and how they differ from states and one another, as well as information on their financing structure and spending trends. Staff discussed the implications of the upcoming Medicaid fiscal cliff and reviewed the key elements of legislative proposals that would treat territories more like states. The presentations raised several considerations for policymakers contemplating a permanent solution to financing challenges in the territories.
Additional background information on territory Medicaid programs can be found in our fact sheet, Medicaid and CHIP in the Territories, and territory-specific fact sheets.