The glaring health equity gap in the Democrats’ drug pricing plan

UASHINGTON — As Democrats near the biggest overhaul of Medicare prescription drug benefits in 20 years, they are ignoring an obvious health equity issue: unequal treatment of low-income adults 65 and older in Puerto Rico.

Puerto Ricans pay the same Medicare taxes as other Americans, but are entitled to less help than other seniors when it comes to paying pharmacy drug premiums and prescription drug costs. For all the Democrats’ talk of health care fairness this Congress, they haven’t included a bill to level the playing field.

Currently, only adults 65 and older who make below 85% of the federal poverty level, or $11,552 per year, are eligible for Supplemental Assistance in Puerto Rico. If the same patient lived in a state like Florida, he would be eligible even if he made up to 150 percent of the poverty level, or $20,385. One group representing the territory’s insurers estimates that roughly 120,000 to 150,000 people fall into that subsidy gap now.


“There is a human side. Is a grandmother’s health worth more in Florida, Alaska, Texas, or Tennessee than in Puerto Rico? From a moral standpoint, the answer is no,” said George Laws Garcia, executive director of the Puerto Rico Council of State.

Residents of Puerto Rico are US citizens, but they may be treated unequally under many federal programs because they live in a territory, not a state. Congress’s statutory authority to establish discriminatory policies for territorial residents comes from a set of Supreme Court decisions that were based on racist stereotypes but persist as the law of the land today. The insular cases, as they are known, set a legal framework where the Constitution does not fully apply to residents of US territories. The first cases were solved in 1901.


One case held that Puerto Ricans were not entitled to the full rights of U.S. citizens in part because the territories’ citizens were “an alien race, differing from us in religion, customs, laws, methods of taxation, and way of thinking.”

Puerto Ricans continue to struggle to receive equal federal benefits. In one case earlier this year, Jose Luis Vaelo-Madero sued the government because his federal disability benefits were taken away when he moved from New York to Puerto Rico. The Supreme Court decisively ruled against him in an 8-1 decision, but conservative Justice Neil Gorsuch indicated there may be a possibility of overturning the island cases in the future.

“The island cases have no basis in the constitution and instead rest on racial stereotypes. They deserve no place in our law,” he wrote in a concurring opinion.

eDemocratic lawmakers have introduced legislation over and over, starting in 2014, to fix the disparity in Puerto Rico’s prescription drug subsidies. The latest version is led by Sen. Bob Menendez (DN.J.).

Additional benefits can make a big difference to people who qualify. Subsidies help seniors pay monthly premiums, cover their annual deductibles and pay out-of-pocket costs when they pick up over-the-counter medications.

The Social Security Administration estimates that supplemental benefits cost about $5,100 a year. This is not a final number for every patient, as some people with higher incomes may receive partial assistance. This year, patients who received full subsidies paid no more than $3.95 for a generic drug or $8.85 for a brand-name drug.

Currently, adults 65 or older in Puerto Rico who have an income below 85% of the federal poverty level receive some subsidies to help with their prescription drug costs, but it is not equal to the level that state residents receive, said Roberto Pando Cintron, president of the Medicaid and Medicare Advantage Products Association of Puerto Rico. About 120,000 to 150,000 low-income beneficiaries in Puerto Rico, who now receive no assistance, could benefit if the territory’s residents received the same subsidies, he said.

Despite pleas from advocates, the policy will be ignored at the most critical time for Medicare prescription drug benefits in two decades.

Menendez believes the Democrats’ domestic spending package is not perfect, a spokesman said, but acknowledges that he is making investments to lower drug prices, expand insurance subsidies and address climate change.

“He will continue to be a champion for Americans in Puerto Rico, whether it’s Medicare, Medicaid or other areas,” the spokesman said.

If Congress succeeds in completely overhauling the Medicare Part D program, which it seems likely to do soon, it may not return to reforming the program for a long time.

Broader drug pricing reform includes elements that would undoubtedly benefit Territorians as well, such as a $2,000 annual cap on out-of-pocket costs, a negotiation mechanism that could lower the cost of some expensive drugs, and penalties for drug manufacturers who raise prices quickly.

However, it does not address the issue of fairness and leaves the status quo in place for residents of territories who are working with limited resources and trying to afford their medication.

“Puerto Rico is a huge blind spot in these policy debates,” Garcia said.

TThe Supreme Court’s permission to treat residents of Puerto Rico and other territories differently under federal programs has also fundamentally shaped what access territory residents have to health care.

Puerto Rico receives less Medicaid funding than if it were a state because of Congress’s maintenance of unfair payment formulas. And unlike the states, Puerto Rico’s Medicaid funding is also limited. Medicaid funding for the territory will plummet starting Dec. 13 unless Congress acts.

This means that it is difficult for doctors and hospitals to plan ahead and invest in their facilities. Uncertainty about funding also makes it harder to recruit and retain doctors, and the government has fewer funds to improve patient benefits.

And it’s not just people who were born and raised in Puerto Rico who get less health care. A US citizen might live, for example, in New Jersey for most of his life and pay Medicare taxes, but that person’s federal benefits would be reduced if he decided to retire in Puerto Rico.

“This different treatment leads to tangible differences in health. They have become a constant, discriminatory treatment,” said Jaime Torres, president of Latinos for Healthcare Equity.

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