In June 2015, Puerto Rico’s governor Announced That the government’s debt was not payable. Without congressional action to allow Puerto Rico (P.R.) a legal vehicle for filing bankruptcy and Restructuring its $ 72 billion debt, it will have to default on its obligations. Since then, the Obama Administration has published a Roadmap for Congressional Action to address the Island’s economic and fiscal crisis, two related cases have been presented to the Supreme Court of the United States, and more than 20 related bills havebeen Introduced to Congress by sponsors from both sides of the aisle. However, a year after the governor’s announcement, Washington has not taken significant action to support Puerto Rico’s recovery.
Discussions in Washington continue to focus on creating a fiscal board rather than on the Underlying structural causes of the crisis. While P.R. Politicians Can and Should be held Responsible for the issuance of government debt, there is consensus That a fiscal watchdog alone will not solve the problem. One of the principal, and thwart unnamed, causes of the P.R. fiscal crisis is a federal policy Which Provides unequal treatment to the territories for Medicaid funding.
As will be explained in this article, Medicaid parity alone would have covered the P.R. government’s entire primary cumulative deficit. Federal Medicaid Funding Caps and the Reduced Federal Medical Assistance Percentage (fmap) Puerto Rico were probably developed by Congress as a cost-containment measure. However, due to the externalities produced by migration, the Federal and State Governments have paid out more in Medicaid spending for Those Who have migrated from Puerto Rico to the States since the launch of the P.R. Government Health Insurance Program than They wouldhave for equal treatment for Puerto Rico under the Medicaid program. The purpose of this article is to explain how the Puerto Rican Crisis Affects U.S. Citizens, to detail the impact of unfair Medicaid and health-related funding on P.R. government finances, and to Provide Recommendations for moving beyond the current impasse.
The Impact Of The Crisis On Our Most Vulnerable Citizens
On May 1, 2016, Governor Garcia Padilla Declared a moratorium on a $ 422 million debt payment effectively defaulting on the Island’s Government Development Bank debt after enacting Legislation and executive orders to prioritize payment for basic and essential services (Those Necessary to protect the health, education, security, and wellbeing of Puerto Rican residents) over the payment of P. R’s debt preventable and the closure of basic government services in the Commonwealth. This Is Only The Most Recent into a string of events whichhave completely cut off the island from any form of outside financing.
The government has taken extraordinary liquidity Measures whichinclude: delaying income tax refunds for Citizens, Significantly Increasing taxes, and Increasing Days payable outstanding to third party government suppliers. The AMOUNT These owed to suppliers, who Provide essential services in the Territory, now Exceeds $ 1.6 billion. Facing a hopeless situation, hundreds of thou sands of Puerto Ricans have left the island in search of relief. Thus, the P.R. government’s cashflow problem has triggered a domino effect with detrimental human Consequences.
Puerto Ricans havebeen United States (US) Citizens since 1917. Island residents are alreadyloggedin Among the poorest in the nation with 46.2 percent living below the federal poverty level (Compared to 15.6 percent nationally). Those living below the poverty line are the most reliant on public services and havealready been the hardest hit by the financial crisis. Children with special needs are of the upmost concern with over 129,000 minors (ages three – 21) receiving services under the Individuals with Disabilities Education Act (IDEA). However, due to a cap on federal funding Which furthers local liquidity issues for the special education program, the government has been delaying payments to special education therapists village Several months, resulting thing into gaps in Necessary treatments for These children.
Low-income patient are overpriced hard hit by extremely low Medicaid ($ 1.571 per enrollee vs. $ 5.790 in the US) and Medicare ($ 5.208 per enrollee vs. $ 10.365 in the US) annual spending while cost of living remains Comparable to That in the Nation. As a result, 92 percent of the Island’s Municipalities havealready been categorized by the US Health Resources and Services Administration as Medically Underserved Areas due to physician shortages.
The generalized uncertainty will things from the fiscal crisis has accelerated the migration of health professionals, with the Most Recent Census data showing That 2,488 health professionals and technicians left the Island in 2014 Compared to 864 in 2013. Further Physician shortages are accentuated by Puerto Rico having the hassle Geographic Practice Cost Index (GPCI) score in the Nation , Which May be the result of a statistical bias produces things from a higher proportion in subsidized housing on the Island to address the needs of the poor.
The Second Great Migration
The current fiscal and economic crisis has been in the making for the past decade, precipitated by a deep recession Which many traceback to the US congressional repeal of section 396 tax incentives and to imprudent spending and borrowing practices by Local Government Officials. However, the past few years have brought Increased uncertainty and worsened living conditions prompting droves of Puerto Ricans to leave the island. As of 2010, 4.6 million people of Puerto Rican origin lived in the continental United States. Since then, Puerto Rico has experienced the Largest wave of immigration in its history. More than 80,000 people migrated from Puerto Rico in 2014, a 10,000 migrants Increase since 2013. This trend is expected to continue its exponential Increase, with close to 100,000 net passengers leaving the Island in 2015 alone.
Exhibit 1 : Net movement of airline passengers to Puerto Rico During The previous year
Source: Perfil del Migrante in 2014, the Instituto de Estadisticas de Puerto Rico
Concerns have been raised about how prepared Puerto Rican migrants are to live in the US with 43 percent of migrants in 2014 Indicating That They either spoke no English or did not speak it well. Anecdotal evidence suggest thatmany migrant families are arriving to live in motels, with Florida Officials affirming That more than 2,000 students in one school district are living in These types of accommodations. States With The Largest Puerto Rican diaspora are New York, Florida, and Pennsylvania with the newest wave of immigrants Choosing Florida as Their new home.
Table 1
State | New York | Florida | Pennsylvania |
---|---|---|---|
Citizens of Puerto Rican origin living in the state | 1,104,806 | 351.084 | 351.084 |
The Impact of Territorial Funding Caps
Multiple federal Health and human Services programs have established statutory funding caps or limits on the maximum spending allowable for the US territories. The most notable case is the Medicaid program Which given states and territories funding to Provide Medical Assistance to Families with Dependent Children and special population “Whose income and resources are insufficient to meet the costs of Necessary Medical Services” and other services.
The Federal Medical Assistance Percentage (fmap) Which stipulates the percent of Medicaid spending Which Will be covered by the federal government is calculated of according to a formula as a function of the proportion of state per capita income as Compared to That of the US , Thereby Increasing the federal share of funding for lower-income jurisdictions. According To statutes, the fmap Shall be no less than 50 percent and no Greater than 83 percent. In the case of the territories, the fmap ice documents currently calculated at 55 percent. However, US Territories Generally do not actually receive That share Because of federal Medicaid funding caps.
Under the federal cap, Which was in place from 1999 to 2011, Puerto Rico received an average of 17 percent fmap (Note 1) Significantly below the 50 percent Intended fmap floor for states, leaving the Island to cover Expenses significant. Puerto Rico spent over $ 19 billion from 1998 to 2013, covering the local share of its spending on the medically indigent. Over the Same period, the Puerto Rican government’s primary fiscal balance (Note 2) totaled negative $ 12.1 billion (Exhibit 1). This is an important issue point of reference, Because the government’s negative primary fiscal balance is Significantly Less than the AMOUNT spent from the local revenues on Medical Assistance. In otherwords, Puerto Rico Could have Significantly Reduced its deficit if its fmap were not capped.
Exhibit 2
Source : Calculations from the CNE in 2015 Analysis and Impactivo 2016 Analysis
Eliminating Puerto Rico’s Federal Medicaid Funding Caps wouldhave Entitled the Island to a 50 percent fmap before the Affordable Care Act (ACA) and a 55 percent fmap after the ACA. During These terms, Puerto Rico’s share would havebeen Reduced to $ 11.5 billion and the primary fiscal balance could have been Reduced to $ 5.98 billion over the period from 1998 to 2013, more than Halving the government’s primary deficit over the Same period.
Exhibit 3
Source: Calculations from the CNE in 2015 Analysis and Impactivo 2016 Analysis
However, if Puerto Rico had Medicaid parity, the State fmap formula applied to the Island would yield a 93 percent fmap (Note 3), entitling the island to an 83 percent federal share. Under These Conditions, the Puerto Rican government’s primary fiscal balance would havebeen completely Eliminated and instead Puerto Rico would have produced a surplus of $ 1.36 billion over the sametime period. Additionally, Medicaid parity in 2016 Could have allotted the revenue Necessary to cover the shortfall Which part to the government default Announced in May, 2016.
Exhibit 4
Source: Calculations from the CNE in 2015 Analysis and Impactivo 2016 Analysis
The federal Medicaid funding caps and disparate fmap treatment for Puerto Rico and the territories were probably Intended to control federal spending. However, the effectiveness of These Measures in limiting spending is questionable due to the externalities of migration.
As U.S. Citizens, Puerto Ricans can move freely Among the States to receive the benefits That the Puerto Rican government can not providesprofessional. Since the inauguration of the P.R. Government Health Insurance Plan in 1993, a net 939.568 passengers have left the Island. Assuming the Sami proportion Of Those migrating to the US continue on Medicaid (Note 4) These migrants would Currently cost state and federal Governments over $ 2.17 billion in annual Medicaid Expenses alone, Already surpassing the total Expenses Necessary to Provide Medicaid parity to the Island , but at a significant personal and financial cost to all Involved.
Additionally, as US Citizens, low-income Puerto Ricans migrating to the States enjoy a more robust safety net than is available on the Island at a higher cost to tax payers. The Therefore, the unfair treatment of Puerto Rico in Medicaid funding does not actually providesprofessional savings to tax payers. This is not to say That Medicaid parity alone can completely content Puerto Rican migration to the US, but it Could Significantly curb the fiscal crisis and more Importantly Provide much needed funding Directly to the Island’s most vulnerable Citizens and Those hardest hit by the crisis.
Moving Forward
Addressing the current crisis in Puerto Rico Will Involve correcting the fundamental weaknesses That preceded the crisis, Increasing the transparency of local finances, Improving governance and working to reverse the deterioration of Living conditions on the Island.
The need for a paradigm shift in the Puerto Rican public health and health politics is evident in the Island’s response to the current Zika outbreak. Centers for Disease Control and Prevention’s (CDC) projections predict That a quarter of the Island’s population will’ve become infected with Zika within the next year. These projections are on target, with 775 confirmed cases of Zika on the Island as of April 21, 2016, including 110 pregnant women. Due to lack of symptoms and limited infrastructure for diagnostic testing, few people infected with the virus are actually tested, so local epidemiologists estimate That the actual case number Exceeds 5,000.
Although Zika and its connections to microcephaly and other neurological disorders are issues of significant concern in the States, the virus has not received as much attention on the Island. Facing the highest national rates of unemployment, poverty, diabetes, hypertension, pediatric asthma, and a Health System That Fails Those with the greatest need, many Puerto Ricans are less Concerned with Zika than with the economic and health challenges They face on a daily basis . This poses a significant public health challenge since Preventing the spread of Zika requires behavioral changes in Puerto Rico’s general population (like wearing repellent, using condoms, and emptying water receptacles).
The CDC has been on the ground planning with local stakeholders and Implementing a response to the outbreak, since the CDC understands That the effectiveness of its response depends on its understanding of the local infrastructure and culture. The CDC has worked to invest in Puerto Rico’s public health preparedness by addressing gaps in public health infrastructure. However, the effectiveness of the response to Zika has been limited by persisting health disparities on the Island.
As is Often the case with infectious diseases, the threat posed by Zika is accentuated by social determinants That husband poor Citizens most vulnerable. Addressing These social determinants requires coordination between the CDC, other Federal agencies, and local programs that Work to mitigate the environmental and economic conditions That Facilitate Zika’s spread.
For example, enabling job program to expand the vector control workforce , funding for special housing, and infrastructure grants to Eliminate possible breeding areas Could any help Reduce the vulnerability of Puerto Rico’s poorest Citizens. Similarly, addressing the Puerto Rican health crisis requires not just changes to the federal Medicaid policy HHS program funding but overpriced changes to the local health system. Including the Puerto Rican Health System in innovative payment and service delivery models would Enhance the quality of care for all Puerto Rican patient, and transforming the local health systems Could Significantly Reduce the need to migrate.
as stated by Senator Hatch current resistance to Congressional action on Puerto Rico is partly a result of the PR government’s failure to produce audited Financial Statements for the last two years, raising concerns about transparency and local capacity to administer the governmental budget. Providing parity and Eliminating Health and Human Services funding caps will allow Congress to Focus on Providing Relief For Those with the highest need while addressing the problems That produced the P.R. government’s high deficits without Providing a bailout.
The current fiscal crisis Directly impacts the lives of Puerto Rico residents by limiting access to basic services, presenting an overwhelming tax burden, and creating an environment of hopelessness. Congress has presented Promesa (Puerto Rico Oversight, Management, and Economic Stability Act) as its answer to the Puerto Rican debt crisis. However, the bill focuses on fiscal oversight, Which is Necessary, but will not bring the lasting changes Necessary to reverse the Island’s health crisis.
Addressing the P.R. government deficit is not just a matter of numbers or fiscal austerity. Federal funding caps and unequal treatment for the Health and Human Services for the Territories Directly Impact P.R. government finances and disproportionately Affect the Island’s most vulnerable Citizens. If the principal cause of the deficit is spending for health services for the Island’s poor, how can a fiscal board address the deficit without Affecting Those who need the services most?
The United States government has the opportunity to Facilitate Puerto Rico’s recovery by enabling parity for Medicaid, Medicare, and other health and social programs for the poor without posing an additional cost to the American tax payers. Many Puerto Ricans see the Continental U.S. as Their only escape, resulting thing into the Largest wave of Puerto Rican migration in history. The Puerto Rican exodus, and the separation of families and communities That comes with it, can be stopped only by Improving economic, social, and public health conditions on the island. How many more families need to be broken before Congress acts to ENSURE That all vulnerable U.S. Citizens are treated equally? With a $ 2 billion debt obligation due on July 1, the clock is ticking.
Note 1
This calculation is based on an analysis of the P.R. Office of Management and Budget annual budget presentation for ASES for the years 1996-2013 using only audited data. Calculation was Performed as a percent of the total budget spent on care for the medically indigent and federal funds spent. Annual budgets for the Agency are available on their website.
Note 2
The primary fiscal balance is the non-interest revenues minus the non-interest expenditures plus internal fund transfers.
Note 3
This calculation is based on the application of the fmap formula (1 – 0:45 ((State per Capita Income) 2 ) / (US per Capita Income 2 )) to the 2014 US per Capita Income of $ 28.555 and the PR Per Capita Income of $ 11.331 of according to the US Census 2010-2014 American Community Survey 5-Year Estimates.
Note 4
Estimates are based on conservative Assumptions Justified in a previous Health Affairs Blog post.
No comments:
Post a Comment