Medicaid in Puerto Rico: The Effects of the Block Grant on Health Outcomes

Abstract

The Commonwealth of Puerto Rico is a United States territory where the residents have worse health outcomes than residents of the mainland United States. Specifically, Puerto Rico has higher rates of heart disease, diabetes, hypertension, asthma, and self-reported poor health than does the mainland United States. Yet Puerto Rico’s health system is under-researched, and the research that exists has produced different theories as to why these health disparities exist. This study explores the role of three factors that make Puerto Rico distinctive and their effects on health outcomes: its distinctive Medicaid block grant funding scheme, its high poverty rates, and its lack of physicians. While these factors are intertwined, in this study, I work to tease out each one’s impact in contributing to Puerto Rico’s poor health outcomes.

In order to examine the effect of each of these three factors on chronic diseases, I perform a fixed-effect regression with controls for extraneous variables. The results showed that total Medicaid funding has a significant and inverse relationship with the rates of health conditions. Poverty and physicians supply also do have an association with health outcomes, but their estimated magnitudes are less precise, and therefore their true effects are less certain.

Given these results, increased Medicaid funding would greatly benefit Puerto Rico and could be expected to improve the health of the residents. Since, Puerto Rico operates under a block grant system, legislators should consider converting Puerto Rico’s Medicaid structure to that of the other mainland states who do not received capped funding.