Lara Merling
The Hill, October 17, 2017

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Weeks have passed since Puerto Rico was devastated by Hurricane Maria and there is still little indication that the unincorporated US territory is on the road to recovery. Thousands remain homeless, the vast majority of residents still have no power, and the economy has ground to a halt. Perhaps most worryingly, the island’s health care system, which has never been so critically needed, is barely functioning.    

Battered by the storm and running on unreliable power generators, hospitals are incapable of keeping up with the influx of patients. To make matters worse, doctors are running out of medical supplies.

But this dire picture is on the verge of growing darker. Barring immediate action by the US Congress, funding for Medicaid, a program that at least 40 percent of Puerto Ricans rely on, is about to run out. The storm has already taken a huge toll on the health of an untold number of Puerto Ricans who require urgent access to affordable health care. If Washington policymakers don’t act soon, the growing public health emergency in Puerto Rico could reach catastrophic proportions.

In the aftermath of Hurricane Maria, many Puerto Ricans have felt that they have been treated like second-class citizens. Compared to the rapid response and massive mobilization to respond to hurricanes in Texas and Florida just weeks prior, it seems that the suffering of Puerto Ricans is a low priority for the US government.

The response has been so slow that the Oxfam charitable organization, which normally offers disaster assistance in developing countries, took the rare step of stepping in to also support struggling Puerto Rican communities. As outrage and protests have mounted, US government relief efforts have been stepped up. But the critical situation in Puerto Rico is also in part the product of many years of neglect, of a sort that is highly uncommon in so-called developed nations. The island’s brewing Medicaid crisis is a clear example of this.

Ever since the US took control of Puerto Rico in 1898, all of the key political decisions concerning the island’s future have been taken in the US Congress, where the lone Puerto Rican representative is denied the ability to vote. Most recently, prior to the hurricane, Puerto Rico was dealing with a massive fiscal crisis, in part a product of economic policies decided in Washington. The island was already being plagued by a massive debt burden of about $74 billion that it could no longer repay, and was sentenced to debilitating austerity through a plan designed by a fiscal board appointed in Washington, DC.

While it is common for US politicians to blame Puerto Rico’s debt crisis on mismanagement and corruption, it is rare to see any acknowledgement of the role played by US policies. For example, while states receive generous reimbursements and support from the US federal government for their Medicaid programs, the US citizens living in Puerto Rico do not enjoy the same support.

As a result of an arbitrary funding cap set by the US Congress decades ago, Puerto Rico effectively receives less than 20 percent in reimbursements for Medicaid. If it were treated as a state, its reimbursement rate would be 83 percent. This difference is significant: just for 2016, the cap set for Puerto Rico meant that it received $700 million less in Medicaid reimbursement than what other US territories qualify for, and $1.7 billion less than if it received the same treatment as states.

For many years, Puerto Rico’s government covered the shortfall in funding by borrowing money ― one of the main factors behind its massive debt. After the Affordable Care Act was passed, in 2012, Puerto Rico received a one-time $6 billion grant to help cover Medicaid costs. However, those funds are about to run out at the end of this year. Without the grant, and locked out of capital markets, Puerto Rico can no longer fund the program without assistance from the US Congress.

A recent report that I co-authored for the Center for Economic and Policy Research shows that allowing Medicaid in Puerto Rico to collapse could also be a very costly move for the rest of the country. Puerto Ricans who no longer have access to affordable health care are more likely to migrate to US states with functioning Medicaid programs. We calculate that, by not funding Medicaid in Puerto Rico, the federal government, along with state governments, could end up spending $24 billion more over the next 10 years to provide Medicaid services for Puerto Ricans who relocate to states. This estimate assumes out-migration from the island to the mainland will double compared to the last five years, an estimate that given the current situation is, if anything, probably too optimistic.  

In this time of hardship for Puerto Ricans, Congress needs to act and show support for the island’s welfare not only through relief efforts and a major reconstruction program, but also by granting Puerto Ricans fair funding for Medicaid. After all, if Congress refuses to fund Medicaid in Puerto Rico, as US citizens, its residents can and will seek care in US states, where the additional expense of providing them with health care assistance will have to be picked up by all US taxpayers.


Lara Merling is a researcher at the Center for Economic and Policy Research (www.cepr.net) in Washington, DC.