The fiscal plan introduced by Governor Ricardo Rosselló is based on a series of projections that provide more questions than answers, demanding clear explanations to allay any doubts about the plan’s viability to reestablish Puerto Rico’s fiscal balance on the road to economic recovery.
The focus of all these questions arising from the document—which is now being considered by the Oversight Board—is whether the projected revenues and expenses for public operations will allow for the implementation of structural reforms and the management of obligations in the long run. This is necessary to fulfill PROMESA’s parameters and set our economy in motion.
Under this federal statute, it is priority to get the plan certified, so as to advance the Board’s fiscal agenda, which forces the Government to generate substantial additional revenues and savings, for a total of $3 billion, within two years, through an increase to the tax base, cutbacks to retirement pensions and savings, and the Mi Salud reform, which would affect almost half the population.
In general terms, the Governor has proposed increasing revenues by $1.291 billion per year, while government expenses would be reduced by $1.975 billion. He has also announced that he will add 50,000 beneficiaries to this plan.
A key question is how can he predict these budget cuts without changing the government’s payroll, for which the minimum wage has increased. And an explanation is also necessary for how the projections for savings were obtained, considering that there are measures like the tax reform and the elimination of government subsidies for the municipalities and the University of Puerto Rico in place.
These projections do not appear to consider either the consequences of implementing these proposals, which are intended to improve economic activity, given that reputed economists have forecast that these measures would cause a disastrous collapse.
Similarly, for the peace of mind of the 1.2 million beneficiaries of Mi Salud, the government must explain how they will continue to operate a fragile system that has been affected by hospital ward shutdowns, the exodus of physicians, a shortage of specialists, and late payments to healthcare providers.
At the heart of this concern, for those who depend entirely on Mi Salud for their healthcare, is the termination, at the end of this year, of the $1.2 billion granted to Puerto Rico under Obamacare. In fact, the starting point for any kind of projection should be the lack of certainty that there would be any allocated federal funds for the Medicaid program in a proportion equal to the states.
Regarding Obamacare—which still exists—and fund parity—which is our goal—, the Board asked Rosselló’s administration not to contemplate increases in federal funds.
That said, it must be noted that the cutbacks considered in the document fall very short of the $1 billion demanded by the Board forthe public healthcare system. Besides, according to the Governor’s own estimates, the highest amount that can be saved is $550 million. In fact, the estimated savings generated by the government would reach $2.5 billion within 10 years.
Under the new model of service delivery proposed by Rosselló, the Government’s plan proposes to reduce monthly premiums from $167 to $144 per patient, which would save $350 million. But this would be done by limiting dental services and prescription medications, among other patient services—some of the achievements attained by the healthcare reform.
Transparency is necessary to ensure the success of the fiscal plan that will serve as a basis for the Government’s future sustainability as an entity capable of creating economic activity.