
         SECTION 12. SOCIAL WELFARE PROGRAMS IN THE TERRITORIES

                                CONTENTS

Coverage and Participation in Selected Programs
Expenditures for Selected Social Welfare Programs in the
        Territories
Special Rules
  SSI Coverage
  Nutrition Assistance Block Grant for Puerto Rico and Programs
            for the Northern Marianas and American Samoa
  Public Assistance Programs
Health Programs
  Medicaid
  State Children's Health Insurance Program
Consolidation of Certain Grants for Insular Areas Other than
        Puerto Rico
Certain Tax Provisions that Affect Low-Income Families with
        Children
References

            COVERAGE AND PARTICIPATION IN SELECTED PROGRAMS

     Most social welfare programs available to the 50 States
and the District of Columbia are also available to the
territories. The territories are: the Commonwealth of Puerto
Rico, Guam, the Virgin Islands, the Commonwealth of the
Northern Mariana Islands, and American Samoa.\1\ Social welfare
programs discussed in this chapter provide retirement and
disability benefits, financing of health care, unemployment
compensation, public assistance for low-income persons or
families, education benefits, job training, and social
services.
---------------------------------------------------------------------------
    \1\ For an overview of how the territories are politically
organized and their history see Brunno & Laney (1996). This section
discusses the availability of social programs in the five major
territories and provides an overview of special rules that apply there.
It does not discuss Federal financial assistance for three areas that
were formally part of the trust territories and are now independent in
``free association'' with the United States: the Marshall Islands, the
Federated States of Micronesia, and Palau. (The fourth area of the
trust territories, the Northern Marianas, became a Commonwealth of the
United States.) These areas remain eligible for some residual aid from
the United States.
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     Social welfare programs can be divided into two
categories:
 1. Federal programs that make direct payments for
        individuals.--These programs have Federal eligibility
        and benefit rules and are administered directly by the
        Federal Government.\2\
---------------------------------------------------------------------------
    \2\ This chapter's classification of programs as ``direct''
payments for individuals differs from that found in Federal budget
documents and the U.S. Census Bureau publication Consolidated Federal
Funds Report. This chapter classifies unemployment compensation (UC) as
a Federal-State program because States administer and design their own
programs within Federal guidelines. UC is not a grant-in-aid program,
so that other documents classify it as a direct payment for
individuals. Food stamps is also classified as a Federal-State program
because it is administered by the States.
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 2. Federal-State programs.--For these programs, States and
        sometimes localities have a role in the design,
        administration, and often financing of benefits and
        services. For the territories to participate in the
        joint Federal-State programs, Federal law must make
        them eligible, but the territory's government must act
        to meet conditions for Federal assistance.
     Table 12-1 shows the coverage of residents of the
territories by selected social welfare programs directly
administered by the Federal Government. With the exceptions of
Supplemental Security Income (SSI), residents of the
territories are eligible for social benefits on virtually the
same basis as residents of the States.

  TABLE 12-1.--COVERAGE OF RESIDENTS OR WORKERS IN THE TERRITORIES FOR
 SELECTED SOCIAL WELFARE PROGRAMS MAKING DIRECT PAYMENTS FOR INDIVIDUALS
------------------------------------------------------------------------

           Program             Puerto   Virgin  Guam  Northern  American
                                Rico   Islands        Marianas    Samoa
------------------------------------------------------------------------
Social Security..............  Yes     Yes      Yes   Yes       Yes
Medicare.....................  Yes     Yes      Yes   Yes       Yes
Supplemental Security Income.  No      No       No    Yes       No
Guaranteed student loans.....  Yes     Yes      Yes   Yes       Yes
Pell grants..................  Yes     Yes      Yes   Yes       Yes
------------------------------------------------------------------------
Source: Congressional Research Service.

    Table 12-2 summarizes the availability in each territory of
major social programs that are operated jointly by the Federal
Government and the respective territory. Coverage of the
Unemployment Compensation Program is determined in the Federal
Unemployment Tax Act (FUTA), which applies to Puerto Rico and
the Virgin Islands but not the other territories. Though
coverage is determined in FUTA, program design is left to the
territory. The Food Stamp Program itself operates only in the
Virgin Islands and Guam, with a special block grant operating
in Puerto Rico and special ``food-stamp-like'' grant programs
in the Northern Marianas and American Samoa. The other
nutrition programs, for which benefits are fully federally
financed but administration is left to the States, generally
apply in the territories.
     Most Federal-State social welfare programs other than
those discussed above are grant-in-aid programs by which the
Federal Government helps finance benefits and services in State
or local programs. Territories, like States, may choose not to
participate in grant programs. Participation in a program
entails accepting Federal rules and guidelines and sometimes
providing State or local dollars to match Federal dollars.
     Table 12-2 shows whether Federal law makes the territory
eligible to participate and whether the area participated in
the program in fiscal year 1999.

                                                     TABLE 12-2.--FEDERAL-STATE SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, FISCAL YEAR 1999
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Puerto Rico                    Virgin Islands                       Guam                    Northern Marianas                American Samoa
              Program              -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Eligible      Participating      Eligible      Participating     Eligible     Participating     Eligible     Participating     Eligible     Participating
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unemployment compensation:
     Unemployment Compensation....  Yes           Yes                Yes           Yes               No           NA                No           NA                No           NA
Public assistance and related
 programs:
     Temporary Assistance for       Yes           Yes                Yes           Yes               Yes          Yes               No           NA                Yes          No
     Needy Families.
     Aid to the Aged, Blind, or     Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                No           NA
     Disabled.
     Child Support Enforcement....  Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                Yes          No
     Foster Care and Adoption       Yes           Yes                Yes           No                Yes          No                No           NA                Yes          No
     Assistance.
Medical assistance:
     Medicaid.....................  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     State Children's Health        Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Insurance Program.
     Maternal and Child Health      Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Block Grant.
Social and support services:
     Child Care and Development     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Block Grant.
     Social Services Block Grant    Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     (title XX).
     Older Americans Act..........  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
Food and nutrition assistance:
    Food Stamp Program............  No            NA                 Yes           Yes               Yes          Yes               No           NA                No           NA
     Nutrition Assistance Block     Yes           Yes                No            NA                No           NA                Yes          Yes               Yes          Yes
     Grant (Puerto Rico) and
     special grants for ``food-
     stamp-like'' programs
     (Northern Marianas and
     American Samoa).
     Child nutrition..............  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Special Supplemental           Yes           Yes                Yes           Yes               Yes          Yes               Yes          No                Yes          Yes
     Nutrition Program for Women,
     Infants, and Children (WIC).
Education and training:
     Compensatory education for     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     the disadvantaged.
    Job Training Partnership Act..  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
Child protection:
     Child welfare services (title  Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     IV-B part 1).
     Promoting Safe and Stable      Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Families.
     Child Abuse Prevention and     Yes           Yes                Yes           Yes               Yes          Yes               Yes          Yes               Yes          Yes
     Treatment Act.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NA--Not applicable.

Source: Congressional Research Service.

  EXPENDITURES FOR SELECTED SOCIAL WELFARE PROGRAMS IN THE TERRITORIES

     Table 12-3 shows Federal expenditures for selected social
welfare programs in the territories. For some Federal-State
programs, such as Medicaid, State Children's Health Insurance
Program (SCHIP), child support, and the programs for the aged,
blind, and disabled, the table shows the Federal share of
expenditures. The territories are required to match Federal
expenditures with their own funds. (The territory's match is
not shown.) For programs that make direct payments to
individuals such as Social Security and Medicare, Federal
outlays represent the total amount spent by the program in the
territories.

          TABLE 12-3.--FEDERAL FUNDING FOR SOCIAL WELFARE PROGRAMS IN THE TERRITORIES, FISCAL YEAR 1998
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                     Virgin   Northern  American
                                                             Puerto Rico    Guam     Islands  Marianas    Samoa
----------------------------------------------------------------------------------------------------------------
Social insurance:
     Social Security.......................................   $3,439,770   $69,121   $86,978    $6,989   $21,003
     Medicare..............................................    1,111,074     1,088    19,273     (\1\)     (\1\)
     Unemployment Compensation.............................      281,781        NA     4,653        NA        NA
Public assistance:
     Supplemental Security Income..........................           NA        NA        NA     2,979        NA
     Aid to the Aged, Blind, or Disabled...................       12,940     1,300       532        NA        NA
     Temporary Assistance for Needy Families...............           UA        UA        UA        NA        NA
     Child Support Enforcement.............................       18,170     3,021     1,608        NA        NA
     Foster Care and Adoption Assistance...................       \2\ NA        NA        NA        NA        NA
Health care for low-income persons and families:
     Medicaid..............................................      167,000     5,090     5,260     1,810     1,810
     SCHIP.................................................        9,836       376       279       118       129
Social and support services:
     Social Services Block Grants..........................   \3\ 12,310   \3\ 410   \3\ 410    \3\ 83    \3\ 89
     Child Care and Development Block Grants...............   \3\ 23,355  \3\ 2,13  \3\ 1,30   \3\ 586   \3\ 984
                                                                                 6         6
     Older Americans Act Programs..........................    \3\ 7,944  \3\ 2,05  \3\ 2,05   \3\ 518  \3\ 1,20
                                                                                 1         1                   2
     Older Americans Act Programs (Department of               \3\ 6,609  \3\ 1,41  \3\ 1,21   \3\ 369   \3\ 721
     Agriculture nutrition programs).......................                      2         5
Nutrition assistance:
     Food stamps...........................................           NA    35,952    24,595        NA        NA
     Nutrition Assistance Block Grant (Puerto Rico) and      \3\ 1,204,0        NA        NA  \3\ 5,10  \3\ 5,30
     grants for food-stamp-like programs...................           00                             0         0
     Child nutrition.......................................      157,617     5,101     6,873  \3\ 3,55  \3\ 7,94
                                                                                                     0         5
     WIC...................................................  \3\ 145,908  \3\ 5,90  \3\ 6,04        NA  \3\ 4,78
                                                                                 2         3                  5
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500 in reported expenditures.
\2\ Puerto Rico began participating in the Foster Care Program in fiscal year 1999.
\3\ Grant award or obligations rather than expenditures.

Note.--UA denotes unavailable data. NA denotes not applicable to the territory either because it is ineligible
  or eligible but not participating in the program (see table 12-2).

Source: For programs providing direct payments for individuals (Social Security, Medicare, and Supplemental
  Security Income) and Unemployment Compensation, U.S. Bureau of the Census, Consolidated Federal Funds Report:
  1998 (April 1999). Aid to the Aged, Blind, or Disabled, Child Support Enforcement, Social Services Block
  Grant, Child Care and Development Block Grant, Medicaid, SCHIP, and Older Americans Act data are from the U.S.
  Department of Health and Human Services. Nutrition assistance (and Older Americans Act Department of
  Agriculture nutrition programs) are from the U.S. Department of Agriculture.

                              SPECIAL RULES

                              SSI Coverage

     The Social Security Amendments of 1972 (Public Law 92-603)
ended matching grant programs to the 50 States and the District
of Columbia for assistance to needy adults who were aged,
blind, or disabled and replaced them with Supplemental Security
Income (SSI). The new SSI Program provided a Federal
entitlement program of cash payments for individuals in these
groups. However, SSI was not extended to Puerto Rico, Guam, and
the Virgin Islands. The old grant programs for the needy, aged,
blind, and disabled authorized under four separate titles of
the Social Security Act \3\ continue there. The territories
determine benefit amounts. In contrast, the regular SSI Program
has federally determined benefits (though States may supplement
them). SSI also is fully federally financed. SSI is available
in the Northern Marianas.
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    \3\ Title I, Grants to States for Old-Aged Assistance for the Aged;
Title X, Grants to the States for Aid to the Blind; Title XIV, Aid to
the Permanently and Totally Disabled; and Title XVI, Grants to the
States for Aid to the Aged, Blind, or Disabled.
---------------------------------------------------------------------------

 Nutrition Assistance Block Grant for Puerto Rico and Programs for the
                  Northern Marianas and American Samoa

     Among the territories, the regular Food Stamp Program
operates only in Guam and the Virgin Islands. The Omnibus
Budget Reconciliation Act of 1981 (Public Law 95-35) replaced
the Food Stamp Program in Puerto Rico with a special Nutrition
Assistance Block Grant. Puerto Rico was given a great deal of
flexibility in program design. Funding is limited to an amount
set in law, which for fiscal year 1998 is $1.204 billion,
making it by far the largest Federal needs-tested program in
the Commonwealth. The Northern Marianas and American Samoa are
also given fixed grants with which they administer food-stamp-
like programs, though the program in American Samoa is limited
to the elderly and disabled.
     The programs that operate instead of the regular Food
Stamp Program in Puerto Rico, the Northern Marianas, and
American Samoa were generally unaffected by the changes to the
Food Stamp Program made in the 1996 welfare reform law.
Additionally, the limits on food stamp eligibility for
noncitizens does not apply in these programs. Instead, these
territories are governed by the law's rules for public benefits
that apply to needs-tested programs other than food stamps.
That is, the territory may aid those who arrive after August
22, 1996, after they have resided in the United States for 5
years.
     Regular food stamp rules apply in Guam and the Virgin
Islands, and many noncitizens are ineligible for food stamps in
these areas. Guam and the Virgin Islands have higher food stamp
benefits than are paid in the 48 contiguous States and the
District of Columbia (higher food stamp benefits are also paid
in Alaska and Hawaii), and households in these areas are also
subject to special rules governing deductions from gross income
when calculating countable income to determine food stamp
payments.

                       Public Assistance Programs

     Combined Federal funding for public assistance programs
for Puerto Rico, Guam, and the Virgin Islands is capped at a
maximum dollar amount. The cap for the territories covers the
combined Federal grants of Temporary Assistance for Needy
Families (TANF); the grant programs discussed above that
operate in these areas instead of SSI; and programs under title
IV-E of the Social Security Act (Foster Care, Adoption
Assistance, and Independent Living Programs).
     Table 12-4 shows the public assistance funding caps and
the TANF Block Grant and the total public assistance funding
caps for the territories. These caps are not subject to
adjustment or increases under current law. Funds above the TANF
State family assistance grant amount are available on a 75
percent matching basis for adult public assistance, TANF, or
title IV-E (Foster Care, Adoption Assistance, and Independent
Living) Programs. This superblock feature of funding for the
territories provides them with added flexibility in using
Federal funds to attack social problems.
    Puerto Rico, Guam, the Virgin Islands, and American Samoa
are also eligible for certain TANF funds in addition to these
caps. They can receive additional funding for the Welfare-to-
Work Grant Program, bonuses for high performance and reductions
in out-of-wedlock births, and evaluations.
     TANF operates in three territories: Puerto Rico, Guam, and
the Virgin Islands. American Samoa is eligible to operate TANF
but has declined to participate. All three territories failed
to meet fiscal year 1998 TANF work participation standards for
all families (the only jurisdictions to do so). Guam, the only
territory of the three that assists two-parent families, also
failed to meet fiscal year 1998 TANF work participation
standards for two-parent families. All three territories have
adopted the Federal 60-month time limit. They have retained
many features of their former Aid to Families with Dependent
Children (AFDC) Programs, including the former Federal AFDC
earnings disregards. Puerto Rico, Guam, and the Virgin Islands
operate adult assistance programs for the aged, blind, and
disabled (the Northern Marianas are in the Supplemental
Security Income Program). Only Puerto Rico claimed Federal
funding under title IV-E for foster care.

                           TABLE 12-4.--PUBLIC ASSISTANCE FUNDING FOR THE TERRITORIES
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Funds available
                                                                  TANF State       for adult
                                                                   family      assistance, child   Total funding
                          Territory                              assistance     protection, and         cap
                                                                    grant       1108(b) matching
                                                                                     grants
----------------------------------------------------------------------------------------------------------------
Puerto Rico..................................................         $71,563            $35,692        $107,255
Guam.........................................................           3,465              1,221           4,686
Virgin Islands...............................................           2,847                707           3,554
American Samoa \1\...........................................               0              1,000          1,000
----------------------------------------------------------------------------------------------------------------
\1\ American Samoa is not eligible for grants under the adult public assistance programs.

 Source: Congressional Research Service.

 Puerto Rico
     Puerto Rico's TANF Program requires work within 24 months,
lowered to 6 months for those judged work-ready. Exempt from
work requirements are single parents caring for children under
the age of 1; adults age 60 or older; pregnant women in their
last quarter of pregnancy; and disabled persons. As of January
1, 2000, the TANF resource limit for eligibility is $2,000 with
the first $4,000 of the equity value of a vehicle excluded. The
maximum monthly benefit for a family of three (including the
maximum shelter allowance) is $180.
     Puerto Rico's programs of assistance to needy aged, blind,
and disabled adults (that operate there instead of SSI) also
have a resource limit of $2,000. The income eligibility limit
for assistance for this program is $64 monthly, with a maximum
benefit of $32 per person per month.
 Guam
     The TANF Program in Guam requires community service after
2 months for those not exempt from work activities. Exempt from
work requirements are single parents caring for a child under
the age of 1; adults age 60 or older; or those ill or disabled.
As of January 1, 2000, the TANF resource limit for eligibility
is $2,000. The entire value of one licensed vehicle is excluded
for one-parent households. The entire value of two licensed
vehicles is excluded for two-parent households. The maximum
monthly benefit is $240. Guam's program of aid to needy persons
who are aged, blind, or disabled (that operates there instead
of SSI) has an asset eligibility limit of $2,000. Income
eligibility limits and maximum monthly benefits for a single
aged person is $420 and for a couple is $537.
 Virgin Islands
     The Virgin Island's TANF Program requires work within 24
months (as required by Federal law). Exempt from work are
single mothers caring for a child under 6 months of age. As of
January 1, 2000, the asset eligibility limit is $1,000 with
$1,500 of the equity value of a vehicle excluded. The maximum
monthly benefit for a family of three is $240. The Virgin
Island's programs of aid to needy aged, blind, and disabled
persons also have an asset eligibility limit of $1,000. Monthly
income eligibility limits and benefits for these programs is
$120 per month per person.

                            HEALTH PROGRAMS

                                Medicaid

Financing
     In the 50 States and the District of Columbia, Medicaid is
an individual entitlement. There are no limits on the Federal
payments for Medicaid as long as the State is able to
contribute its share of the matching funds. In contrast,
Medicaid Programs in the territories are subject to spending
caps. Table 12-5 shows Medicaid caps for fiscal years 1983-2000
for each of the territories. For fiscal year 1999 and
subsequent fiscal years, these caps are increased by the
percentage change in the medical care component of the Consumer
Price Index (CPI-U) for All Urban Consumers (as published by
the Bureau of Labor Statistics). The Federal Medicaid matching
rate, which determines the share of Medicaid expenditures paid
for by the Federal Government, is statutorily set at 50 percent
for the territories.
 Administration of Medicaid Programs in the territories
    The territories operate their Medicaid Programs under rules
different from those that apply to the 50 States and the
District of Columbia. The territories are not required to cover
the same eligibility groups and they use different financial
standards (income and assets tests) in determining eligibility.
For example, Medicaid requires States to cover certain
mandatory eligibility groups such as poverty-related pregnant
women and children, qualified Medicare beneficiaries, and
specified low-income Medicare beneficiaries. For the
territories, on the other hand, coverage of these groups is
optional. Furthermore, because the territories must operate
their programs under funding caps, the Health Care Financing
Administration is more flexible in its oversight of Medicaid
Program rules and regulations with regard to services required
to be covered by the plan. Finally, the territories are exempt
from the requirement to offer program beneficiaries freedom of
choice of providers. However, the territories are required to
meet certain rules that apply to the States. For example, with
regard to rules about amount, duration, and scope of covered
services, the territories must meet the same standards that
apply to the States and the District of Columbia so long as
they are using Federal matching payments for their services.

                       TABLE 12-5.--MEDICAID FEDERAL SHARE LIMITS, FISCAL YEARS 1983-2000
----------------------------------------------------------------------------------------------------------------
                                                                                Virgin     Northern    American
                   Fiscal year                     Puerto Rico      Guam       Islands     Marianas      Samoa
----------------------------------------------------------------------------------------------------------------
1983............................................   $45,000,000   $1,400,000   $1,500,000    $350,000    $750,000
1984-1987.......................................    63,400,000    2,000,000    2,100,000     550,000   1,150,000
1988............................................    73,400,000    2,320,000    2,430,000     636,700   1,330,000
1989............................................    76,200,000    2,410,000    2,515,000     693,350   1,390,000
1990-1992.......................................    79,000,000    2,500,000    2,600,000     750,000   1,450,000
1994............................................   116,500,000    3,685,000    3,837,500   1,110,000   2,140,000
1995............................................   122,200,000    3,870,000    4,030,000   1,160,000   2,240,000
1996............................................   128,100,000    4,060,000    4,220,000   1,220,000   2,350,000
1997............................................   133,000,000    4,210,000    4,380,000   1,270,000   2,440,000
1998............................................   167,000,000    5,090,000    5,260,000   1,810,000   3,010,000
1999............................................   171,500,000    5,230,000    5,400,000   1,860,000   3,090,000
2000............................................   177,500,000    5,410,000    5,590,000   1,930,000   3,200,000
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on data from the Health Care Financing
  Administration.

     Puerto Rico.\4\--Puerto Rico uses its own poverty level
(the Commonwealth poverty level) to determine eligibility for
the program. The Commonwealth poverty level of $8,220 per year
for a family of four in 1998, is substantially lower than the
mainland level. The Medicaid Program extends coverage to both
the categorically needy (AFDC and TANF-related groups) and the
medically needy. Puerto Rico does not have an SSI Program, but
SSI-related eligibility groups such as Old-Age Assistance, Aid
to the Blind, Aid to the Permanently and Totally Disabled, and
so forth, do exist. The medically needy income level for a
family of four is $8,220 with a resource level of $900. The
yearly categorically needy income standard for a family of four
is $1,536. Mandatory and many optional services are covered.
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    \4\ Medicaid Program descriptions come from the U.S. Department of
Health and Human Services, Health Care Financing Administration,
Jurisdictional Summit, October 27-28, 1999, Bethesda, MD.
---------------------------------------------------------------------------
     In addition to their Medicaid Program, Puerto Rico
provides Medicaid services to its medically indigent population
with ``territory-only'' funding. One hundred percent of the
Commonwealth's poverty level is the income standard used to
determine Medicaid eligibility for federally supported
applicants; 200 percent of that level is the income standard
for the ``State-only'' Medically Indigent Program.
     Guam.--Guam's Medicaid Program claims Federal funds only
for covered services to the categorically needy. The medically
needy were included until October 1984, but now are covered
with territorial funds only. Guam has chosen to cover certain
optional categorical groups, and does pay Medicare premiums
(i.e., buy-in) for individuals entitled to both Medicare and
Medicaid. All mandated services, except rural health clinics
and nurse-midwife services, are provided, as well as many
optional services. When these services are not available on
Guam, but are medically necessary, off-island services
including transportation are provided. Almost all patients are
sent to Hawaii, or occasionally to California. All off-island
care, except emergency care, must be preapproved and is based
on negotiated rates.
     Virgin Islands.--The Virgin Islands' Medicaid Program
covers the categorically and medically needy. The Virgin
Islands does not have an SSI Program, but the mainland
eligibility classifications of Aid to the Blind, Old-Age
Assistance, and Aid to the Permanently and Totally Disabled
also exist. The Virgin Islands does not cover poverty-level
eligibility groups, but their Medicaid does pay Medicare
premiums (i.e., buy-in) for those eligible for both programs.
The medically needy income level for a family of four is $8,500
with a resource level of $1,800; the categorically needy
standard for a family of four is $3,156. Mandatory and many
optional services are provided. Medicaid beneficiaries
requiring services not available within the islands are sent to
Puerto Rico or the mainland for care.
     Commonwealth of the Northern Mariana Islands (CNMI).--CNMI
is the only U.S. territory which has SSI, and its entire
Medicaid Program is based on SSI requirements. All individuals
receiving SSI cash payments are eligible for Medicaid simply by
filling out an application. In addition, although CNMI does not
have a medically needy program as such, anyone can spend down
to become eligible for any month in which medical costs reduce
income to the appropriate level. CNMI does pay Medicare
premiums (i.e., buy-in) for dually entitled individuals. All
mandated services, except rural health clinics and nurse-
midwife services, are provided, as well as several optional
services. Within CNMI almost all health care, inpatient or
outpatient, is provided by the Commonwealth Health Center on
Saipan. Certain covered services, such as nursing facility and
home health services are only available off-island. For
medically necessary care which cannot be provided in CNMI,
patients are sent to Guam, Hawaii, or occasionally the
mainland--generally to California.
     American Samoa.--In American Samoa, Medicaid eligibility
determinations are based on a system they call ``presumptive
eligibility.'' \5\ Annually, American Samoa estimates the
number of individuals who fall below an estimated-needs or
poverty level. Individuals whose income falls below this level
are determined to be poor and are thus eligible for the
territory's Medicaid Program. The poverty level for American
Samoa is computed by multiplying the poverty level for the
United States, as determined by the Office of Management and
Budget, by the lower of (1) the ratio of American Samoa's
median income to the U.S. median income or (2) the ratio of the
territory's median income to that of the State receiving the
highest Federal match rate, and then adjusting this computation
by a deflator factor. The number of ``presumed eligibles'' are
determined by comparing census data, previous year tax returns,
or survey data with the estimated poverty levels.
---------------------------------------------------------------------------
    \5\ Presumptive eligibility under Medicaid and SCHIP normally means
a period of time for which a person is ``presumed eligible'' for
Medicaid or SCHIP benefits. During this time, services may be rendered
and billed to the Medicaid or SCHIP Program with the understanding that
an official eligibility determination will be made and the beneficiary
will be properly enrolled shortly after receiving services. American
Samoa uses the term ``presumptive eligibility'' to refer to its process
for setting its income eligibility limit for coverage under its
Medicaid Program.
---------------------------------------------------------------------------
     All mandated services except rural health clinics, early
and periodic screening, diagnosis, and treatment, and nurse-
midwife services are covered; however, nursing facility
services and home health are not provided on-island. American
Samoa also provides coverage for a number of optional services.
Other practitioner services and private duty nursing are
provided off-island. Off-island services are generally provided
in Hawaii, or occasionally on the mainland.

               State Children's Health Insurance Program

Financing
     All of the territories have chosen to participate in the
State Children's Health Insurance Program (SCHIP) created in
the Balanced Budget Act of 1997 (Public Law 105-33). Each has
an approved State plan and will match their Federal program
dollars with territory funds. Except for a special rule for
funding, SCHIP will operate in the territories on the same
terms as in the States. The program provides funds at a 65
percent matching rate to the territories up to a maximum cap.
The cap for the territories is a special set-aside--0.25
percent of the total available funding. Of this total Puerto
Rico receives 91.6 percent of the set-aside, Guam receives 3.5
percent, the Virgin Islands receives 2.6 percent, American
Samoa's share is 1.2 percent, and the Northern Mariana Islands
receives 1.1 percent (table 12-6).
     The fiscal year 1999 Omnibus Appropriations Act provided
an additional $32 million in appropriations for the territories
only for that year. These additional funds brought the fiscal
year 1999 Federal share available to the territories for SCHIP
to $42.69 million. In fiscal year 2000, the territories will
share (as specified above) $44.89 million, consisting of their
original fiscal year 2000 allotment plus an additional sum of
$34.20 million provided by the fiscal year 2000 Omnibus
Appropriations Act.
 Administration of SCHIP Programs in the territories
     All territories have opted to use their SCHIP funds to
expand their Medicaid Programs. As noted above, the
territories' Medicaid Programs operate under a cap on their
regular Medicaid expenditures. Once those caps are reached, the
territories provide coverage to eligible children with
territory-only funds. \6\ Guam, American Samoa, the Northern
Marianas and the Virgin Islands (not Puerto Rico) may use SCHIP
funds to cover Medicaid eligible children after their Medicaid
Federal caps have been exhausted. \7\ Puerto Rico may use SCHIP
funds to insure eligible children between 100 and 200 percent
of the Commonwealth poverty level. Finally, the territories are
different from the 50 States and the District of Columbia in
their reporting requirements for their SCHIP Programs. Under
rules proposed by the U.S. Department of Health and Human
Services (DHHS), the territories are exempt from the definition
of a ``State'' for the purposes of the requirements of
quarterly statistical reporting. In each of the territories,
the benefit package for the title XXI program is the same as is
offered by the Medicaid Program.
---------------------------------------------------------------------------
    \6\ Under an interpretation of the law by the U.S. Department of
Health and Human Services, funds provided by SCHIP to expand Medicaid
Programs do not count against the caps on Medicaid funding.
    \7\ This is under the Health Care Financing Administration's
interpretation of section 2110(b)(3) of the Social Security Act that
waives the rule that SCHIP funds can be used only for children
ineligible for Medicaid or a group health plan if that coverage was
provided by a health insurance program that was in operation before
July 1, 1997, and received no Federal funding.

                   TABLE 12-6.--SCHIP FINANCIAL PROGRAM INFORMATION, FISCAL YEARS 1998 AND 1999
----------------------------------------------------------------------------------------------------------------
                                                                                                      Potential
                                                                Enhanced     Required     Federal       total
                                                     Total       Federal    State match   dollars      program
                   Territory                        Federal      medical    for maximum   for each  expenditures
                                                 allotment in  assistance     Federal    territory    (Federal
                                                    dollars    percentage     dollars      dollar      share +
                                                                                                    territories)
----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal year 1998
                                                ----------------------------------------------------------------
Puerto Rico....................................    $9,835,550      65.00     $5,296,065      1.86    $15,131,731
Guam...........................................       375,813      65.00        202,361      1.86        578,289
Virgin Islands.................................       279,175      65.00        150,325      1.86        429,615
Northern Marianas..............................       118,113      65.00         63,599      1.86        181,828
American Samoa.................................       128,850      65.00         69,381      1.86       198,346
                                                                        Fiscal year 1999
                                                ----------------------------------------------------------------
Puerto Rico....................................    39,101,750      65.00     21,054,788      1.86     60,156,538
Guam...........................................     1,494,063      65.00        804,495      1.86      2,298,558
Virgin Islands.................................     1,109,875      65.00        597,625      1.86      1,707,500
Northern Marianas..............................       469,563      65.00        252,842      1.86        722,405
American Samoa.................................       512,250      65.00        275,827      1.86        788,077
----------------------------------------------------------------------------------------------------------------
Source: Table prepared by the Congressional Research Service based on data from the Health Care Financing
  Administration.

  CONSOLIDATION OF CERTAIN GRANTS FOR INSULAR AREAS OTHER THAN PUERTO
                                  RICO

     Public Law 95-134 authorized any Federal agency to
consolidate grants for the territories of Guam, the Virgin
Islands, the Northern Marianas, and American Samoa. Each of
these areas is permitted to submit a single application and are
paid a single sum that could be expended on any purpose
allowable under any of the programs in the consolidated grant.
The areas are permitted to determine the proportion of the
consolidated grant to be spent on various activities. Public
Law 95-134 also permits the administering agency to waive
matching and application or reporting requirements.
     The U.S. Department of Health and Human Services permits
Guam, the Virgin Islands, the Northern Marianas, and American
Samoa to consolidate up to 22 grant programs, including the
Social Services Block Grant (title XX), Maternal and Child
Health, child welfare services, and Child Abuse and Neglect
State Grants.\8\ DHHS permits these areas to submit a single
report in lieu of individual reports required for the
individual programs.
---------------------------------------------------------------------------
    \8\ See regulations at 45 CFR 97.10-97.16. The regulations list 21
programs that may be consolidated. In addition to these 21 programs,
information from DHHS indicates that the territories can also
consolidate the title IV-B subpart B program for family preservation
(which is not listed in the regulations).
---------------------------------------------------------------------------

 CERTAIN TAX PROVISIONS THAT AFFECT LOW-INCOME FAMILIES WITH CHILDREN
                                  \9\
---------------------------------------------------------------------------

    \9\ For a general discussion of the application of Federal taxes in
the territories see Brumbaugh (1994).
---------------------------------------------------------------------------
     Residents of Puerto Rico are exempt from the Federal
personal income tax, and hence are not eligible for tax
provisions that affect low-income families with children such
as the earned income credit (EIC) and the dependent care tax
credit (DCTC). Residents of the other territories also do not
pay Federal personal income taxes. However, residents of the
Virgin Islands, Guam, and the Northern Marianas benefit from
the EIC and the DCTC of the Federal Tax Code because their
territorial tax systems ``mirror'' the Federal income tax.
Territories generally use the Federal income tax system as
their own, though residents pay their taxes to the territory
and not the Federal Government. Federal law requires the Virgin
Islands to use the Federal income tax system as the territorial
tax system. Guam, the Northern Marianas, and American Samoa are
also required to mirror the Federal income tax unless they
execute an agreement with the Treasury Department meeting
conditions required to establish an independent tax system.
Only American Samoa has executed such an agreement.
     The corporate Tax Code includes two tax credits offered to
employers who hire welfare recipients: the work opportunity tax
credit and the welfare-to-work tax credit enacted in Public Law
105-34. U.S. chartered corporations operating in the
territories are eligible for these two credits because the
Federal corporate tax is levied on their worldwide income.
However, U.S. chartered corporations operating in the
territories may already have their Federal tax liability
eliminated or significantly reduced by the possession's tax
credit, a special incentive provided to companies that operate
in the territories.
     Corporations chartered in territories are considered
``foreign'' corporations under the Federal Tax Code. Therefore,
companies chartered in Puerto Rico would not benefit from
Federal tax credits for employers that hire welfare recipients.
However, companies chartered in the Virgin Islands, Guam, and
the Northern Marianas that operate under mirror tax systems do
benefit from these credits under territorial tax systems.

                               REFERENCES

Brumbaugh, D.L. (1994, June). Federal taxes and the
        territories: An overview (CRS 94-498E). Washington, DC:
        Congressional Research Service.
Brunno, A., & Laney, G.P. (1996). U.S. insular areas and their
        political development (CRS Report 96-579 GOV).
        Washington, DC: Congressional Research Service.
U.S. Bureau of the Census. (1999, April). Consolidated Federal
        Funds Report. Washington, DC: U.S. Department of
        Commerce.
