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Health & Education Austerity Measures to Be Reevaluated

Several members of Congress have written a letter to the chair of the PROMESA Fiscal Oversight and Management Board requesting reconsideration of austerity measures instituted in Puerto Rico.

Rep. Nydia M. Velázquez (D-NY), U.S. Senator Bob Menendez (D-NJ), Chairman of the House Natural Resources Committee Rep. Raúl Grijalva (D-AZ), and Rep. Alexandria Ocasio-Cortez (D-NY) asked the Board to evaluate cuts related to health care and education in particular.

Health care cuts

Health care funding in Puerto Rico has long been affected by major differences between the funding rules for States and those for territories. While a State with poverty levels like those of Puerto Rico would receive 83% matching federal funds in the Medicaid program, with no upper limits, Puerto Rico actually receives as little as 15% matching due to its cap.

It is well established that low income affects health. Therefore, a State or territory with higher poverty levels will inevitably have greater health care needs. The long-reaching effects of Hurricane Maria in 2017 have added to the healthcare needs in Puerto Rico.

Inadequate federal funding for healthcare means that Puerto Rico has had to come up with funds to meet the Island’s healthcare costs… or to leave residents without sufficient care. Both these outcomes have taken place, adding to Puerto Rico’s financial woes and creating a vicious spiral in health and employment on the Island. Lack of adequate health care has also contributed to the exodus from the Island, which again interferes with financial development and growth.

One of the specific requests made in the letter is to stop furnishing patients in Puerto Rico with needed medications that have no generic alternative. Another concern expressed in the letter is the possibility of reduced coverage for dental care. There already are required federal Medicaid benefits that are not provided in Puerto Rico simply because the territory’s government cannot afford them. Adding more would exacerbate the problem further.

Congress is currently working on bills intended to solve the inequity in federal funding for Puerto Rico’s Medicaid program. However, the Board is focusing on cuts in care, not on improvements in funding.

Higher education

The Board has set a target for funding Puerto Rico University which is less than half its previous funding level. In the past, the 11 campuses of the PRU system — a prominent opportunity for higher education on the Island — has been funded at $879 million. Cuts have already been made, and the budgeted goal is $400 million. The main strategies for reaching that goal: tuition increases and cuts in pensions.

PRU serves some 60,000 students each year. The average household income for these students is $19,343 per year. An educated, bilingual population has been one of Puerto Rico’s most important draws for business investment. Losing that advantage will be harmful to Puerto Rico’s economy going forward.

More young people may have to leave the Island in search of educational opportunities, and more faculty members will have to pursue job opportunities in the States.

Not only would this affect the quality of Puerto Rico’s future workforce, it also threatens to severely diminish research and development in Puerto Rico, which relies primarily on Puerto Rico University.

The Congressional letter points out that such stringent cuts could result in a loss of accreditation for PRU, effectively eliminating higher education for most of the rising generation in Puerto Rico.

“Austerity alone is not a path to recovery”

Pointing out that multiple experts have stated that austerity alone won’t cause economic recovery in Puerto Rico, the authors of the letter conclude,

…[w]e believe that pursuing austerity measures in education and healthcare is ill-advised and will have dire consequences on Puerto Rico’s ability to overcome its economic crisis. We invite the FOMB to take a step back and rethink these deep cuts.  Puerto Ricans have suffered enough and are desperately asking for some breathing room.

Read the full letter.


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