WASHINGTON – Congressional negotiations over including healthcare funding for Puerto Rico in a federal spending bill may have hit a roadblock after President Trump forcefully denounced the idea in tweets. However, there is an effort to negotiate health care assistance in return for Puerto Rico's agreement to a temporary hold on any use of bankruptcy-like provisions available under PROMESA, sources say.

Democrats in the House and Senate had been pushing to get Medicaid funding for the struggling commonwealth included in spending legislation meant to avert a government shutdown on Friday when the current continuing resolution expires. That CR has maintained funding for federal government programs, mostly at fiscal 2016 levels. Sources said Republican leaders have agreed that some type of Medicaid funding is needed for the commonwealth.

Puerto Rico is expected to run out of federal Medicaid funding under Obamacare by the end of the year, putting a huge strain on its ability to provide healthcare to its citizens. The looming “Medicaid cliff” led Puerto Rico Gov. Ricardo Rosselló to make a plea during a speech on Wednesday asking the federal government to provide the funding to avoid the cliff.

“This is not a bailout,” he said. “This is what was allotted to Puerto Rico in the first place and is what is needed for us to have a runway in the next year so we can execute certain changes to our health industry.”

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President Donald Trump blasted the possibility of Medicaid funding for Puerto Rico in a continuing resolution over the course of two tweets. Bloomberg News

But President Trump took the opposite view in a pair of tweets late Wednesday and early Thursday that linked Democrats’ calls for funding help in Puerto Rico with insurer subsidies under Obamacare.

“Democrats are trying to bail out insurance companies from disastrous #ObamaCare, and Puerto Rico with your tax dollars. Sad!” Trump tweeted Wednesday. He followed up on Thursday with a tweet saying, “The Democrats want to shut government if we don't bail out Puerto Rico and give billions to their insurance companies for OCare failure. NO!”

Observers said the tweets could hamper negotiations if Republican leadership decides to give Trump’s stance on the issue some weight in their decision-making. However, one source added they could just as easily see Trump as “coming out of left field” with the tweets.

They said they will be watching to see where rank-and-file Republicans fall on the issue of providing the Medicaid funding because even if Republican leadership wants to make the move, there is no guarantee they can get their members to go along.

The debate over Medicaid funding could spill into next week now that House Appropriations Committee chairman Rep. Rodney Frelinghuysen, R-N.J. has proposed a stopgap funding measure that would continue the current CR through May 5. The one-week extension would buy legislators more time to create a final, more permanent funding package, Frelinghuysen said on Wednesday.

The extension would give legislators more time to debate a deal that would delay the commonwealth’s ability to seek in-court restructuring of its debts in exchange for the Medicaid funding. The potential deal has raised concerns with Puerto Rico officials and stakeholders, including the minority leader of Puerto Rico’s Senate Eduardo Bhatia.
Bhatia called the potential deal, which he said originated from the conservative House Freedom Caucus, “blackmail” and an effort to reduce the commonwealth’s opportunity to use the tools it was given under PROMESA.

The proposed deal would put a yet-to-be-determined delay on the availability of PROMESA’s Title III, which is modeled on Chapter 9 bankruptcy and lays out the process for Puerto Rico to restructure its debts in court. The commonwealth would first have to get approval from the seven-person Puerto Rico oversight board, but if approval is given could ultimately use the title to tie creditors to unfavorable terms of repayment. Without a delay, Puerto Rico would be able to start making use of the title next week as the PROMESA-imposed stay on litigation related to Puerto Rican debt ends on May 1.

Rosselló has not indicated whether he supports such a deal, but said in a statement on Thursday that he remains confident Puerto Rico will be able to get the additional resources for its health programs.

Sources said the idea of the trade may gain traction with legislators who view any Medicaid funding as a government bailout.

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