Saturday, September 6, 2008

Puerto Rico Releases Health Care Reform Report

For a few brief days in March, citizens in the Commonwealth of Puerto Rico gathered together with a wide range of national experts to examine the curent status of their health care delivery system and to propose change. Under the leadership of the University of Puerto Rico, the report this workshop was released on September 5 during a press conference in San Juan. As I worked on this project and served as a primary author on this report, I became aware of just how formidable the challenges are. Because Puerto Rico's situation is relatively extreme, it serves as a potential laboratory both for Medicaid payment reform and for health care delivery reform in general.
As I worked on this project, I had other reflections that are not in the report and do not represent the views of the participants.

Among the diverse states and territories constituting the United States, Puerto Rico is unique. Puerto Rico was ceded from Spain to the United States through the Treaty of Paris in 1898; it has governed through a formal civilian structure since the passage of the Foraker Act in 1900. Since the passage in 1917of the Jones-Shafroth Act the United States Congress has characterized the Commonwealth as an “organized but unincorporated” territory of the United States. Under this Act, residents were granted U.S. citizenship by statute and since that time have served in the United States military service. This Act affirmed a primary responsibility of the United States in maintaining control over economic, defense, and other basic governmental affairs and reiterates the United States Congress’s authority to overrule actions taken by the Commonwealth Legislature.

In 1947, the U.S. Congress approved a law allowing the election of the governor by the people of Puerto Rico. On July 3, 1950, the U.S. Congress passed the Puerto Rican Federal Relations Act. This law gave Puerto Rico the right to establish a government and a constitution for the internal administration of the Puerto Rico government and “on matters of purely local concern.

In 1993 most of the government’s health care facilities and services were sold and their management turned over to non-government entities generally under managed care arrangements. This far more decentralized system radically changed the Department of Public Health’s influence and authority in provisioning care services.

Although the impact on efficiency and quality is controversial there is some consensus on the unintended consequences of these moves. As is the case in the 50 states, the health care delivery could benefit from less fragmentation; it would provide more good if organizations providing preventive services, health promotion, and health maintenance were better coordinated; its diverse regions and communities require a better fit of health care services; it needs a stronger infrastructure for monitoring quality, financing health care services, improving outcomes, and providing consumers with greater empowerment and choices. It is, in a nutshell, facing the same challenges as those of the 50 states and other territories - but one can argue that its situation is even more acute.

Puerto Rico’s ability to combine local and federal financing for health care programs is hobbled by its unique relationship with the Federal government. In contrast to “incorporated territories” that may petition for statehood, the “unincorporated territory” of Puerto Rico is not subject to the Constitution’s Tax Uniformity Clause on all Federal duties, imposts, and excise. Although Puerto Ricans do pay import/export taxes, commodity taxes, and payroll taxes (Medicare, Social Security) most are not required to pay Federal income tax.

Although Puerto Ricans do not pay federal income tax, few would have a significant tax burden: the median household income in Puerto Rico is only 34% of the U.S median household income (2000 census) and less than half of that of citizens in the State of Mississippi.

While many health indicators in Puerto Rico are more ominous even than those published for Mississippi, in 2006 the latter state received 78.6% in federal support for every Medicaid dollar spent (the FMAP or federal matching assistance percentage), while Federal spending caps first initiated in 1968 have limited Puerto Rico’s matching percentage to an effective rate of 18%.

The 50 states can receive up to 90% reimbursement through Medicaid for critical health information technologies; Puerto Rico is not eligible for these supplements. According to 2005 Congressional testimony by Governor Anibal Acevedo-Vila, had FMAP been allowed to operate without the cap instead of the 18% effective rate of the previous year, the Commonwealth would have received $1.7 billion dollars in federal Medicaid support instead of the $219 million received. Translated to monthly amounts, federal Medicaid support in the states approximated $330 per month per participant; the amount in Puerto Rico was about $20 per month.

Funding and health care status are only a part of the obstacles Puerto Rico faces. Its health care delivery system, health care resources, and health care financing mechanisms have been said to have been in a state of decline since the introduction of managed care programs in the early 1990s. The hospital beds per capita in the Commonwealth are less than 2/3 the average across the 50 states; salaries for health care professionals of all types are lower and emigration to the 50 states is common. As vital care resources emigrate from the Commonwealth, some believe that a growing number of Puerto Rican residents needing chronic or long-term care will emigrate as well, shifting the financial burden for care to these same states.

It is within this context of controversy, internal dispute, and at times acrimonious dialogue with the Congress and Federal Executive Branch that Puerto Rico must navigate a course to health care reform. The creation, financing, and administration of such reforms very much depends on the perception – in Washington, among the Congress, and within the Commonwealth – on the rights and responsibilities of all parties within this historically unique and volatile relationship.

Puerto Rico's voice - and their subsequent actions - may say a lot about how other parts of the Nation can address similar urgent health care financing and delivery concerns.



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