Territories Health Equity Act of 2025

Bill Number

H.R. 6494

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Health

Status

Introduced

Latest Action

2025-12-05: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-06-11T23:26:36Z

AI-Generated Summary

Purpose of the Legislation

The Territories Health Equity Act of 2025 aims to improve how U.S. territories—specifically Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa—are treated under the Medicare and Medicaid programs. It seeks to eliminate funding disparities and enhance access to healthcare benefits, subsidies, and payments for residents and providers in these areas, promoting equity compared to states.

Key Provisions

The bill is structured into three titles, focusing on Medicaid enhancements, Medicare adjustments across its parts, and miscellaneous reporting requirements.

Title I: Medicaid

• Elimination of Funding Caps (Section 101): Removes overall spending limits (known as "caps") on federal Medicaid funding for territories starting in fiscal year 2026, allowing them to receive funding based on need like states.
• Removal of FMAP Limit for Puerto Rico (Section 102): Ends the specific cap on the Federal Medical Assistance Percentage (FMAP, the share of costs covered by the federal government) for Puerto Rico after fiscal year 2025, aligning it closer to state levels.
• DSH Allotments for Territories (Section 103): Allows territories to receive Disproportionate Share Hospital (DSH) payments—extra funds for hospitals serving many low-income or uninsured patients—starting in fiscal year 2026, with allotments based on population needs and annual increases.

Title II: Medicare

• Subtitle A: Part A (Hospital Insurance)
• DSH Payments for Puerto Rico Hospitals (Section 201): Updates calculations for DSH payments to hospitals in Puerto Rico under the Inpatient Prospective Payment System (IPPS), including more patient categories like those eligible for Medicaid or other aid programs, effective October 1, 2025.
• Rebasing Target Amounts (Section 202): Resets (or "rebases") payment targets for territorial hospitals using 2017 cost data or the highest recent settled costs, potentially increasing payments if beneficial, starting October 1, 2025.
• DSH Target Adjustments (Section 203): Provides payment boosts for hospitals in territories (except Puerto Rico) based on their "disproportionate patient percentage" (share of low-income patients), with increases of 10% or more depending on the percentage, effective October 1, 2025.
• Subtitle B: Part B (Medical Insurance)
• No Late Enrollment Penalties in Puerto Rico (Section 211): Waives lifelong premium penalties for late enrollment in Medicare Part B for certain Puerto Rico residents who were entitled to Part A benefits within a 5-year window after the bill's enactment, if they lived there at the time.
• Subtitle C: Medicare Advantage (Part C)
• Benchmark Adjustments for Puerto Rico (Section 221): Ensures blended benchmark amounts (payment rates for Medicare Advantage plans) in low-payment areas of Puerto Rico are at least 80% of the national average but not higher than the lowest state benchmark, starting in 2026.
• Subtitle D: Part D (Prescription Drug Coverage)
• Automatic Subsidies for Low-Income Residents (Section 231): Makes low-income territorial residents automatically eligible for premium and cost-sharing subsidies in Medicare Part D if enrolled in Medicaid, starting January 1, 2026; ends a prior enhanced funding program for territories.

Title III: Miscellaneous

• Transparency for Medicaid and CHIP (Section 301): Requires the Secretary of Health and Human Services (HHS) to publish and update online information about Medicaid and the Children's Health Insurance Program (CHIP) in territories, including eligibility rules, enrollment numbers, waivers, funding shares, and service delivery systems, within 180 days of enactment.
• Report on Exchange Exclusions (Section 302): Mandates a HHS report to Congress by February 1, 2026, detailing impacts of excluding territories from Affordable Care Act (ACA) health insurance exchanges, including estimates of uninsured individuals, denied subsidies, and small business effects.
• Access to Coverage Without Exchanges (Section 303): Creates a mechanism for residents of territories without ACA exchange plans to access coverage through the District of Columbia's exchange, including premium tax credits and cost-sharing reductions; includes federal payments to territories to offset tax losses and ensures no double-dipping on credits.

Significant Changes to Existing Law

• Funding Parity: Ends territory-specific caps on Medicaid funding (Sections 101–102) and extends DSH eligibility (Section 103), shifting from fixed limits to need-based allocations like those for states.
• Medicare Payment Reforms: Introduces rebasing and adjustments for hospital payments (Sections 202–203, 221), expands DSH criteria (Section 201), waives penalties (Section 211), and automates Part D subsidies (Section 231), replacing outdated or limited provisions.
• ACA-Related Additions: Adds a new section to the ACA (Section 303) for exchange access in underserved areas and requires reporting (Section 302), addressing prior exclusions of territories from key marketplaces.
• Sunset Provisions: Phases out temporary programs, like enhanced Medicaid allotments (Section 231(b)), to integrate permanent eligibility.

These changes apply mostly from fiscal year 2026 or October 1, 2025, with some immediate reporting requirements.

Potential Impacts

• On Citizens: Improves healthcare access and affordability for millions in territories by increasing federal funding, reducing premiums/penalties, and providing subsidies; could lower uninsured rates and enhance hospital services for low-income groups.
• On Government Agencies: HHS and the Centers for Medicare & Medicaid Services (CMS) will face higher administrative burdens for data publication, reporting, and new eligibility mechanisms; increased federal spending on Medicaid/Medicare (potentially billions annually) may strain budgets but reduce disparities.
• On International Relations: Minimal direct impact, as it focuses on domestic U.S. territories; however, it could indirectly support U.S. soft power in Pacific territories like Guam by bolstering health infrastructure amid regional geopolitical tensions.
• Broader Effects: May reduce healthcare disparities, but could lead to higher national deficits without offsetting revenue; territories gain fiscal flexibility, potentially improving local economies through better health outcomes.

Main Stakeholders Affected

• Residents of Territories: Primary beneficiaries, especially low-income, uninsured, or elderly individuals gaining subsidies, penalty waivers, and expanded coverage.
• Healthcare Providers and Hospitals: Territorial hospitals and clinics receive boosted payments (e.g., DSH, rebasing), aiding financial stability and service expansion.
• Federal and Territorial Governments: HHS/CMS handle implementation and reporting; territorial governments gain funding autonomy and must manage new systems, with federal reimbursements for tax credits.
• Insurers and Small Businesses: Medicare Advantage plans and small employers in territories benefit from adjusted benchmarks and potential SHOP marketplace access via ACA provisions.
• Low-Income and Uninsured Populations: Explicitly targeted through DSH and subsidy expansions.

Notable Legal, Constitutional, or Political Implications

• Legal: Aligns territories more closely with constitutional equal protection principles under the Fifth Amendment by reducing discriminatory funding caps; requires coordination across agencies (HHS, Treasury, OPM) for ACA mechanisms, potentially inviting litigation if implementation delays occur.
• Constitutional: No direct challenges, but enhances equity for non-voting territorial citizens, addressing long-standing debates on territorial rights without altering citizenship status.
• Political: Promotes bipartisan equity for underserved areas (introduced by delegates from territories); could set precedent for further parity in federal programs, influencing future budgets and elections in affected regions; neutral on partisanship, focusing on administrative fixes rather than ideological shifts.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Del. Plaskett, Stacey E. [D-VI-At Large]

Cosponsors (4)

Del. Radewagen, Aumua Amata Coleman [R-AS-At Large], Rescom. Hernández, Pablo Jose [D-PR-At Large], Del. Moylan, James C. [R-GU-At Large], Del. King-Hinds, Kimberlyn [R-MP-At Large]

Recent Actions

• 2025-12-05: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-12-05: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2025-12-05: Introduced in House
• 2025-12-05: Introduced in House

Bill Versions

• Territories Health Equity Act of 2025 — issued 2025-12-05 — PDF (23 pages)