Puerto Rico must reduce its healthcare spending; ensure better service quality and soon will have to stop depending on federal funds otherwise the island may face a health crisis in 10 years, according to economist José R. Oyola.

Oyola, former assistant director of the U.S. Government Accountability Office (GAO) and current adviser to the Inter-American Development Bank (IDB) and the U.S. Agency for International Development (USAID), said the spending pattern on health programs in Puerto Rico is unaffordable, a reality no one seems to accept.

For the economist, while in the past two decades, per capita spending in Medicaid grew 13 times and another five times in Medicare, insurers and, above all, the Center for Medicaid and Medicare Services (CMS) don´t seem to be doing what is necessary to ensure that every dollar allocated to the island is used for the benefit of patients.

Although disparity between Puerto Rico and U.S. jurisdictions persists, between 2000 and 2020, Medicare benefits for the island grew from about $1.196 billion to about $6.652 billion in 2018. In the same period, funds allocated to the local government Health Plan (PSG, Spanish acronym), now known as Vital, grew from about $308 million in 2001 to about $3.824 billion in this current fiscal year.

According to Oyola, data from the Planning Board indicate that all provider groups in Puerto Rico - that is, hospitals, medical offices, laboratories, among others, increased their profits between 2000 and 2018, a trend that could also be repeated with insurance companies, but which the economist has not yet analyzed.

"Now, it´s the Oversight Board who controls the budget and not the Legislature," Oyola said, adding that the entity created by the U.S. Congress cannot be relieved of its responsibility on the issue.

During the monthly meeting of the Puerto Rico Financial Analysts Association (APAF, Spanish acronym), Oyola warned of the unsustainability of the U.S. healthcare system, and therefore, of Puerto Rico's healthcare system,

While funds increase, Oyola continued, CMS data reflect that Puerto Rico does not even report how effective services through Medicaid and the Children's Health Insurance Program (CHIP) are.

The economist recalled that the most expensive health treatments are those for patients over 65, a group that is growing in Puerto Rico.

Relying on others´ money

On the other hand, according to Oyola, most healthcare services in Puerto Rico come from the federal government and even the United States itself will not be able to pay for its healthcare system within 10 years

"The U.S. healthcare system is largely funded through debt and, according to the CBO (Congressional Budget Office), by 2030, the debt ratio (to gross domestic product or GDP) of the United States will be 180 percent," Oyola said.

The problem is that, in this decade, federal spending on the Social Security program will double to $2 trillion. Medicare program - which now costs about $835 billion - will cost $1.7 trillion while Medicaid and CHIP will increase from about $493 billion to $823 billion.

In short, between now and 2030, healthcare spending per U.S. resident will grow by 5.3 percent annually, about twice the economy's growth rate, a gap that cannot be closed by a rise in the gross domestic product alone.

For Oyola, the United States has two alternatives: to continue issuing debt, which depends on external factors; or to increase taxes. But, according to Oyola, while there is "elasticity" to raise more taxes, "there is no political will to make that happen."

A board that operates "blindly"

Oyola insisted that Puerto Rico must require CMS to fulfill its oversight role to ensure service quality and that the Board must do the same to ensure the proper use of health funds. But, in the case of the Board, according to the economist, the fiscal entity is working "blindly."

Oyola believes that while in the past releasing government financial statements was essential to understand the government's ability to borrow, now, these statements would serve to verify whether the Board has contributed to improving public finances.

"No one can verify the effectiveness of the Board because there are no financial statements. We are operating blindly... In Washington, they overcame the situation in five years and here, we don't know when that will happen," Oyola said.


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