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The glaring health equity gap in Democrats’ drug pricing plan

By admin | September 10, 2022

Rachel Cohrs STAT News 8-6-22

WASHINGTON — As Democrats approach the biggest overhaul of the Medicare prescription drug benefit in 20 years, they are ignoring a glaring health issue: the unequal treatment of low-income adults 65 and older in Puerto Rico.

Residents of Puerto Rico pay the same Medicare tax as other Americans, but they are entitled to less help with pharmacy drug premiums and prescription drug costs than other seniors. For all the Democrats have talked about health equity in this Congress, they haven’t included a bill that would level the playing field.

Currently, in Puerto Rico, only those 65 and older who earn less than 85% of the federal poverty level, or $11,552 a year, are eligible for supplemental assistance. If the same patient lived in a state like Florida, he would qualify even if he made 150% of the poverty level, or $20,385. A group representing insurers in the area estimates that about 120,000 to 150,000 people currently fall into this subsidy gap.

“There is a human side to it. Is the health status of a grandmother in Florida, Alaska, Texas or Tennessee worth more than Puerto Rico? Morally, the answer is no,” said George Laws García, executive director of the Puerto Rico Statehood Council.

Residents of Puerto Rico are American citizens, but may be treated unequally under many federal programs because they live in a territory instead of a state. Congress’s authority to enact discriminatory policies for territorial residents derives from a series of Supreme Court decisions based on racist stereotypes that continue to be the law of the land today. The Insular Cases, as they are known, establish a legal framework that says the Constitution does not fully apply to residents of US territories. The first cases were decided in 1901.

One case held that the residents of Puerto Rico were not entitled to receive the full rights of US citizens in part because the citizens of the territories were “an alien race different from us in religion, customs, laws, methods of taxation, and ways of thinking.”

Puerto Rico residents continue to fight for equal federal benefits. In one case earlier this year, Jose Luis Vaello-Madero sued the government because his federal disability benefits were taken away when he moved from New York to Puerto Rico. The Supreme Court ruled against it in an 8-1 decision, but conservative Justice Neil Gorsuch said there could be an opening to overturn the Insular Cases in the future.

“The Insular Cases have no basis in the Constitution and are instead based on racial stereotypes. They do not deserve a place in our law”, he writes in the same opinion.


Democratic lawmakers have repeatedly introduced legislation since 2014 to fix prescription drug subsidies in Puerto Rico. The latest version is led by Sen. Bob Menendez (DN.J.).

Additional benefits can make a big difference for people who qualify. Subsidies help older adults pay monthly premiums, meet annual deductibles, and cover out-of-pocket costs when they buy drugs over the pharmacy counter.

The Social Security Administration estimates that additional benefits are worth about $5,100 a year. This is not a definitive figure for every patient, as some people with higher income levels may receive partial assistance. This year, patients receiving the full subsidy paid more than $3.95 for a generic drug or $8.85 for any brand name drug.

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

Despite pleas from advocates, the policy will not be considered at the most critical time in two decades for the Medicare prescription drug benefit.

Menendez believes the Democrats’ domestic spending package isn’t perfect, but he acknowledges it has made investments to lower drug prices, expand insurance subsidies and fight climate change.

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

If Congress succeeds in completely redesigning the Medicare Part D program, which it likely will soon, it won’t go back to reforming the program for a long time.

Broader drug price reform includes elements that will undoubtedly benefit area residents as well, such as a $2,000 annual cap on out-of-pocket costs, a negotiation mechanism that could lower costs for some expensive drugs, and penalties for drug makers who quickly raise prices.

However, this does not address the equity issue and leaves the status quo in place for area residents who are working with limited resources and struggling to afford their medications.

“Puerto Rico is a big blind spot in these policy discussions,” García said.

The Supreme Court’s authorization of Puerto Rico and other territories to treat residents differently under federal programs has also fundamentally shaped territorial residents’ access to health care.

Puerto Rico receives less Medicaid funding than it would if it were a state because Congress has maintained inequitable payment formulas. And unlike states, Puerto Rico’s Medicaid funding is also limited. Unless Congress intervenes, Medicaid funding for the area will be cut starting Dec. 13.

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 less funding to improve patient benefits.

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

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

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