The Impact of COVID-19 on U.S. Territories

The U.S. Senate Committee on Energy and Natural Resources held a hearing on June 30th exploring the impact of COVID-19 on the U.S. territories, including Puerto Rico.  Jenniffer Gonzalez-Colon, the Resident Commissioner of Puerto Rico and the Island’s only representative in Congress, testified before the Committee.

Gonzalez-Colon began with a reminder of the economic costs of the pandemic in Puerto Rico, where it is estimated that COVID-19 has cost the territory some $4 billion.

“Throughout my tenure in Congress,” she said, “I have sought to generate economic growth and turning many of the recommendations of the bicameral, bipartisan Congressional Task Force on Economic Growth in Puerto Rico into bipartisan legislation. The 2017 hurricanes, the earthquakes that began last December and continue, and now the pandemic, have created major unexpected challenges for a territory that, because of its political status, has always lagged the states economically and has been in depression for almost all of the last 14 years.”

“But Puerto Rico can recover, short term and long term,” Gonzalez-Colon continued.

Healthcare funding

Medicaid is funded differently in Puerto Rico and the other territories than the states. Territories have a block grant which is capped at a certain amount. In the States, Medicaid expands to cover increased need, but not in Puerto Rico and the other territories.

Medicaid can be used to cover 100% of COVID-19 testing under the Families First Coronavirus and Response Act, which was enacted in March.  Yet Puerto Rico’s limited Medicaid funding is creating an additional burden on the island as the testing costs are eating up Medicaid funding on the Island.

The Medicaid cap should be removed, said Gonzalez-Colon, or special funding should be provided for the testing.

Nutrition assistance

NAP, the equivalent of the SNAP food stamps program used in the States, is also capped in Puerto Rico. It provides just about half the buying power of the equivalent program in the States.

Puerto Rico is also excluded from both Disaster- SNAP and the Pandemic-EBT program for kids who rely on school meals. “Congress should increase our capped grant by 30%, bringing us closer to SNAP levels, and provide an additional $1.27 billion for NAP to cover the current ongoing health emergency,” said Gonzalez-Colon.

Manufacturing support

“Consistent with widespread, bipartisan advocacy for increased domestic production of medical goods, I am introducing the Medical Manufacturing, Economic Development, and Sustainability (MMEDS) Act,” said Gonzalez-Colon. “This bipartisan and bicameral bill — which Senator Rubio supports on this side of the Capitol  — would establish federal tax and other incentives for current and repatriated manufacturing operations in ‘distressed zones’, areas of extremely high poverty and prevalent unemployment, such as in the states that you, Madame Chairman and the Ranking Member represent. The bill also seeks to incentivize research, development, and manufacturing of ‘population health drugs’ that because of their low costs are especially prone to offshoring.”

The resident commissioner reported that the bill in question has the support of the Puerto Rico government and of health advocacy organizations like the American Heart Association.

“Currently, 12 of the top 20 pharmaceutical and biotechnology companies in the world have manufacturing operations in Puerto Rico, including Amgen, Eli Lilly, Pfizer, Bristol-Myers Squibb, and AbbVie. Puerto Rico manufactures half of the 2018 world’s top 10 bestselling drugs. Since 2005, manufacturers have invested more than $65.9 million in infrastructure with Puerto Rico boasting the world’s largest modular biotechnology plant for producing recombinant human insulin,” Gonzalez-Colon pointed out to the committee. “Puerto Rico is also home to over 70 medical devices manufacturing plants producing surgical and medical instruments, ophthalmic goods, dental equipment and supplies, orthodontic goods, dentures and appliances, and laboratory apparatus and furniture.”

She continued, “Puerto Rico has had a long history of pharmaceutical manufacturing and counts with a highly experienced workforce knowledgeable in GMP, FDA and other global regulations. The Island’s university system has also invested in a highly skilled workforce by turning out a steady stream of new talent. According to statistics from the Government of Puerto Rico, colleges and universities in Puerto Rico had a total of 22,172 students involved in STEM-related concentrations during the 2017-2018 academic year. We have a unique opportunity to bring jobs back, spur the economy of distressed areas like Puerto Rico, and enhance our national and health security.”

Coronavirus relief acts

Gonzalez-Colon pointed out that direct funding to cities under the CARES act was limited to cities with populations of 500,000 or more. Puerto Rico has no cities of that size.

Gonzalez-Colon also asked for the Child Tax Credit and the Earned Income Tax Credit to be extended to Puerto Rico. Currently, Puerto Rico’s working families are not eligible for the EITC, and receive the Child Tax Credit only for a third or later child. Since the average family in Puerto Rico has just one child, these tax credits are essentially unavailable in Puerto Rico. These tax changes were included in the House’s HEROES Act, which has not yet been considered by the Senate.

The resident commissioner also asked that stimulus checks, if they are included in future relief bills, be made available in a faster and more efficient fashion.

Wind and water

Gonzalez-Colon also brought up two existing pieces of legislation which would make a difference for Puerto Rico and the other territories.

One is the Offshore Wind for Territories Act, already passed by the House. “The Offshore Wind for Territories Act seeks to apply the Outer Continental Shelf Lands Act to the submerged lands off the territories and possessions of the United States for renewable energy purposes. Additionally, the bill directs the Department of the Interior to conduct feasibility studies on offshore wind lease sales off all territories. Should a study determine that a wind lease is viable, the Secretary is directed to conduct a lease sale off said territory,” said Gonzalez-Colon. “Notably, the Offshore Wind for Territories Act would guarantee each territory a state-equivalent share of all royalty payments made to the federal government by offshore wind developers for projects in their respective Exclusive Economic Zones. Territories would receive 37.5% of qualifying revenues, consistent with the revenue sharing structure established for the Gulf Coast states under the Gulf of Mexico Energy Security Act. The bill also directs that 12.5% of revenues be deposited into a Coral Reef Conservation Fund, thus providing dedicated funding for coral reef conservation in U.S. territories and elsewhere, at no additional cost to the American taxpayer.”

The other bill is the Puerto Rico WaterSMART Grants Eligibility Act, which would make Puerto Rico eligible for WaterSMART grants. Since Puerto Rico is currently facing a drought and serious water supply issues, eligibility for these grants could make a significant difference.

Read the full statement to the committee.

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