Territories Health Equity Act of 2025
- Sponsor
- Del. Plaskett, Stacey E. [D-VI-At Large]
- Committees
- Ways and Means Committee (primary)
- Last action
- Dec 5, 2025
Bottom line
The bill aims to achieve greater health equity for U.S. territories by aligning their Medicare and Medicaid funding and access more closely with that of the 50 states and D.C., addressing long-standing disparities.
What it actually does
This bill significantly reforms federal healthcare funding and access for U.S. territories under Medicare and Medicaid. It eliminates Medicaid funding caps, adjusts federal matching rates, establishes Disproportionate Share Hospital (DSH) allotments, and streamlines Medicare Part D low-income subsidies. Crucially, it also creates a mechanism for residents in territories without health insurance exchanges to access coverage comparable to that of Members of Congress.
Proponents argue
Proponents argue that the bill rectifies historical inequities in federal healthcare policy that have severely disadvantaged U.S. territories, leading to underfunded healthcare systems and limited access to care. They contend that these changes are essential to improve health outcomes, stabilize healthcare infrastructure, and ensure that territorial residents receive the same federal support as their counterparts in the states.
Opponents contend
Potential opponents may raise concerns about the substantial increase in federal spending required to implement these changes, particularly the elimination of Medicaid funding caps and the creation of new subsidy mechanisms. They might also question the administrative feasibility of establishing new programs, such as the D.C. Exchange access, and the potential for setting precedents for other federal programs in territories.
The bill is moderately complex, requiring careful reading to understand the technical amendments to the Social Security Act. The estimated reading time is sufficient for a thorough review.
Title I, Sec. 101
Elimination of General Medicaid Funding Limitations (CAP) for Territories
This provision removes the federal funding cap on Medicaid expenditures for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, effective fiscal year 2026. This means federal matching funds for Medicaid in these territories would no longer be limited to a fixed annual amount, allowing for potentially greater federal contributions to their healthcare programs.
Supporters argue
Proponents argue that this change addresses a long-standing inequity, allowing territories to provide more comprehensive healthcare services without arbitrary federal funding limits that have historically strained their budgets and led to disparities in care compared to states.
Critics contend
Opponents may raise concerns about the increased federal financial commitment and the potential for unchecked spending without a cap, arguing for fiscal responsibility and careful management of federal outlays.
Tradeoffs
The provision balances the goal of achieving healthcare equity for territorial residents with the fiscal implications of increased federal financial responsibility.
Title I, Sec. 102
Elimination of Specific Federal Medical Assistance Percentage (FMAP) Limitation for Puerto Rico
This section amends the Social Security Act to remove the specific FMAP limitation for Puerto Rico for fiscal years beginning with 2026. Currently, Puerto Rico's FMAP is capped at 55%, which is significantly lower than most states. This change would allow Puerto Rico to receive a higher federal matching rate for its Medicaid program, bringing it closer to parity with states.
Title I, Sec. 103
Permitting Medicaid DSH Allotments for Territories
This provision establishes Disproportionate Share Hospital (DSH) allotments for U.S. territories (Puerto Rico, Virgin Islands, Guam, Northern Mariana Islands, and American Samoa) starting in fiscal year 2026. For FY2026, a $300 million pool is created, distributed based on the ratio of low-income or uninsured individuals in each territory. Subsequent years will see increases. DSH payments provide crucial financial support to hospitals that serve a high volume of Medicaid and uninsured patients.
Title II, Subtitle A, Sec. 201
Calculation of Medicare DSH Payments for IPPS Hospitals in Puerto Rico
This section amends Medicare DSH payment calculations for Inpatient Prospective Payment System (IPPS) hospitals in Puerto Rico. For discharges on or after October 1, 2025, it broadens the definition of "low-income" patients used in the DSH formula to include those eligible for medical assistance under a State plan (Medicaid) or receiving aid under other specified titles of the Social Security Act, in addition to SSI beneficiaries. This change is expected to increase DSH payments to Puerto Rico hospitals.
Title II, Subtitle B, Sec. 211
Eliminating Late Enrollment Penalties Under Part B of the Medicare Program for Certain Individuals Residing in Puerto Rico
This provision amends the Social Security Act to eliminate late enrollment penalties for Medicare Part B for individuals residing in Puerto Rico who become entitled to Part A benefits after a certain date (4 years before enactment) and enroll within a 5-year period. This addresses a historical issue where many Puerto Rico residents were not automatically enrolled in Part B and subsequently faced penalties for delayed enrollment.
Title II, Subtitle C, Sec. 221
Adjustment in Benchmark for Low-Base Payment Counties in Puerto Rico
This section amends the Social Security Act to ensure that the blended benchmark amount for Medicare Advantage (Part C) plans in territories (starting 2026) is not less than 80% of the national average of base payment amounts for areas within the 50 States and D.C. This aims to increase Medicare Advantage payments in territories, particularly Puerto Rico, which often have lower benchmarks, making plans more attractive to insurers and beneficiaries.
Title II, Subtitle D, Sec. 231
Automatic Eligibility of Certain Low-Income Territorial Residents for Premium and Cost-Sharing Subsidies Under the Medicare Program; Sunset of Enhanced Allotment Program
For plan years beginning January 1, 2026, this provision makes any Part D eligible individual enrolled in a territory's Medicaid plan automatically eligible for Medicare Part D premium and cost-sharing subsidies (Low-Income Subsidy, LIS). It also sunsets the existing enhanced allotment program for territories (Section 1935(e) of the Social Security Act), which provided federal funds to territories to help low-income Medicare beneficiaries with Part D costs, replacing it with direct LIS eligibility.
Title III, Sec. 303
Access to Coverage for Individuals in Certain Areas Without Any Available Exchange Plans
This section mandates the establishment of a mechanism, within 3 months of enactment, for individuals in U.S. possessions (territories) where no qualified health plan is offered through an Exchange to access health insurance coverage "at least as broad as the coverage available to Members of Congress and congressional staff" through the D.C. Exchange. These individuals would be eligible for premium tax credits and cost-sharing reductions, with the Secretary of the Treasury making payments to possessions to cover revenue losses from these credits.
These are technical amendments to existing Social Security Act sections 1108(f) and (g) to reference a new subsection (j), which contains the actual sunset of Medicaid funding limitations for territories.
Sec. 101(a)(1) and (2)
Why it matters:This is standard legislative drafting practice to ensure proper cross-referencing and internal consistency within the statute when new provisions are added or existing ones are modified.
Case for: Ensures the statutory language is internally consistent and correctly integrates the new policy changes into the existing legal framework.
Case against: None, as these are purely technical and structural amendments necessary for the bill's main policy to function correctly.
Estimated impact: No direct impact; these amendments are purely structural and enable the primary policy change of eliminating Medicaid funding caps for territories.
Mandates that health insurance coverage provided to territorial residents without Exchange access be "at least as broad as the coverage available to Members of Congress and congressional staff."
Sec. 303(a)(1)
Why it matters:This phrasing could be seen as a way to ensure a high standard of comprehensive coverage without explicitly detailing all benefits, or it could be a politically charged comparison intended to highlight the disparity in coverage.
Case for: Proponents would argue this ensures high-quality, comprehensive coverage for residents who have been historically underserved, aligning their benefits with those of federal employees and setting a strong standard.
Case against: Critics might argue this sets an unnecessarily high bar for coverage, potentially increasing costs, or that it's a rhetorical flourish rather than a practical, easily implementable standard for health plans.
Estimated impact: Potentially significant impact on the scope and cost of coverage provided to territorial residents, ensuring a robust benefit package and potentially higher federal subsidy costs.