Medicaid and CHIP: Opportunities Exist to Improve U.S. Insular Area Demographic Data That Could Be Used to Help Determine Federal Funding

The five largest insular areas of the United States--American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico, and the U.S. Virgin Islands--receive federal funding through Medicaid and the State Children's Health Insurance Program (CHIP), joint federal-state programs that finance health care for certain low-income individuals. These programs are administered and funded differently in the insular areas when compared to the states. For example, while states must extend Medicaid eligibility to certain individuals whose incomes are at or below a percentage of the federal poverty level (FPL), the insular areas are not required to cover this population. In addition, under both Medicaid and CHIP, the federal government matches state or local government spending. However, federal law establishes the federal matching rate for expenditures by the insular areas at the lowest rate available to states, while matching rates for the states are determined each year based on a formula that takes into account variations in per capita income in each state. Furthermore, federal Medicaid spending in the insular areas is subject to an annual limit that does not apply to the states. Finally, while CHIP funding is subject to annual limits for both states and insular areas, the formula for determining each state's CHIP allotment differs from the formula used for allotments for the insular areas. Taken together, these differences in funding formulas have contributed to per capita federal Medicaid and CHIP spending that has been lower in the insular areas than in the states. Some insular area governors and other insular area officials contend that federal Medicaid and CHIP spending in the insular areas is not sufficient to meet the needs of the areas and have recommended that the Medicaid spending limits be removed and the federal matching rates for Medicaid and CHIP be increased. However, Congress and others have raised concerns that limitations in Medicaid and CHIP program data and in available demographic data for the insular areas make it difficult to accurately assess the needs of the areas. For example, states are required to report all of their Medicaid and CHIP spending to the Centers for Medicare & Medicaid Services (CMS)--the agency that oversees these programs. In contrast, insular areas must report only spending up to their annual limits. Furthermore, while the Bureau of the Census (Census) collects household demographic data from the states annually, it generally only collects household demographic data for the insular areas once every 10 years as part of the decennial census.