Set on stressing the differences between the Wanda Vázquez Garced administration and that of former Governor Ricardo Rosselló Nevares, the draft revised fiscal plan released by the Fiscal Agency Financial Advisory Authority (FAFAA) proposes new models to restructure the services, as well as to generate efficiencies in several government agencies.
The document focuses on implementing a series of reforms in the areas of infrastructure, energy, economic development, and human capital and welfare.
The plan will also seek a tax reform that, rather than generating income for the government, will focus on relief for individuals and corporations as an instrument to boost economic development. Government revenues, however, are projected to be higher through measures to increase tax collection, either through the use of technology, by simplifying administrative processes and agreements with online stores to collect Sales and Use Tax (SUT).
The government projects a gross domestic product growth rate of 2.2 percent for fiscal year 2024 with these structural reforms.
One of the main adjustments this economic growth will allow is the allocation of $5.3 billion approved by Congress for the government's health plan for federal fiscal years 2020 and 2021.
The plan will also allow the island to receive an additional $200 million annually for Medicaid as long as the Health secretary can prove they comply with payments to providers and that they audit payments to insurers.
This Medicaid appropriation will prevent an increase in Vital Health Plan costs and will allow increasing reimbursements to health care providers for serving Vital Health participants. Although there is a cap on the funds the island receives to provide medical services to vulnerable populations when compared to those granted to states in the mainland, the Vázquez Garced administration proposes an increase in payments to these professionals so what they get becomes similar to what other jurisdictions pay.
"The low reimbursement rates have caused provider shortages, lack of access to certain specialty services, and lengthy wait times," states the draft published by FAFAA.
The draft fiscal plan - which must be approved by the Oversight Board - also proposes that the Vital plan offer coverage for hepatitis C drugs, which would benefit some 14,000 patients on the island. It also seeks to adjust the criteria for determining poverty levels on the island so that more people will be eligible for federally-funded government health plan services.
"With the incremental federal money granted ... the Government will implement several critical sustainability measures that are aimed to stabilize, strengthen, and improve the healthcare system," the draft states.
No Health Insurance Administration (PRHIA) official was available yesterday to explain the impact of the proposed changes. Nor was it possible to have an interview with FAFAA officials.
This new version of the fiscal plan overturns measures that had previously been proposed to change the government's health plan. In previous fiscal plans, the government had proposed the creation of "premium" services for which patients would have to pay higher deductibles. The 2017 fiscal plan, for example, only provided for an $800 million federal cash injection for Medicaid.
Government plans to access more federal health funds also underline the need for the General Psychiatric Hospital in Río Piedras to be certified under the Medicare program, which is aimed primarily at serving the medical needs of adults over 65. This certification required a $12 million investment over fiscal years 2020 and 2021 but the Mental Health And Anti-addiction Services Administration (ASSMCA) was not granted these funds.
As part of the measures to generate efficiencies, the government noted that there is a proposal to consolidate six agencies and public corporations under the Department of Health, including PRHIA, ASSMCA, the Medical Services Administration, and the Cardiovascular Center of Puerto Rico and the Caribbean.
Nutrition Assistance
Among the reforms identified to boost citizens' welfare, the draft fiscal plan establishes that a four-year transition period as of July 1, 2021, for adult beneficiaries - between the ages of 18 and 60 - of the Nutrition Assistance Program (PAN) who can work.
"The work requirement may be satisfied with 80 hours per month of paid work, volunteer work, and/or qualified training and education," states the document which estimates that some 150,000 individuals would have to comply with this new requirement.
The Board had already ordered early this term that adults who did not have significant impediments to work should find a job to access PAN. The fiscal entity determined to implement this requirement by mid-2019. Former Family Secretary Glorimar Andújar opposed the date set and argued that the change could begin to be implemented, in phases, as of October 2020.
Education
In addition to Health and the Treasury, another agency at the heart of the draft revised fiscal plan is the Education Department
Unlike the Health Department, Education would be reorganized internally, as it would remain as an independent agency.
"Throughout the last decade, PRDE has encountered longstanding challenges which have affected academic performance," reads the document and adds that these " include bureaucratic hurdles associated with operating as a single local education agency (LEA), inability to execute professional evaluations tied to student outcomes in the classroom, lack of a cohesive strategy for academic improvement, and most recently the devastation suffered from natural disasters of hurricanes and earthquakes."
Education should achieve savings of $266 million in payroll and $119 million in other non-staff costs by fiscal year 2021. Among non-payroll efficiencies, the document suggests consolidating central-level offices into fewer buildings, using agency structures not in use at the moment (such as schools) to reduce rental expenses, centralizing purchasing processes, and improving administrative processes through technology.
Unlike previous versions, the revised 2020 fiscal plan does not mention closing public schools. It does, however, use language associated with consolidation in the past, such as "optimizing" space or "right-sizing" the system.
According to the document, “student enrollment declined considerably over the past few decades. with an expected additional student decline of ~15% over the coming years, PRDE has room to right-size its education system relative to student enrollment. Optimization will help give PRDE the flexibility and funding to focus on improving the quality of education provided."
In addition to savings, the revised fiscal plan notes the need to invest in teacher development and retention, provide a salary increase for school principals, new educational materials and promoting a curriculum reform so that education serves as a spearhead for the island's economic growth.
"While labor costs remain high, staffing levels are close to other state’s Departments of Education and significant reductions from current overall staffing levels would destabilize transformation efforts and impact students," the draft states.
