Puerto Rico Daily Sun
Vicente Feliciano
November 24, 2008
Do I favor more funding for the Programa de Asistencia Nutricional (PAN)? Of course, it is paid by Washington. Do I favor more funding for the Pell Grant program? Of course, it is paid by Washington. Do I favor more funding for ASES / Health Reform? Wait a minute, I pay for this one.
Puerto Rico is facing a common welfare dilemma confronted by any economy with a major welfare program. The beneficiaries of Health Reform are not the ones who pay for it. In addition, health providers want to be well paid and offer the best possible care, which increases total cost. Thus, is the stage set for a classic case of political economy bargaining.
In the previous system, government controlled the budget. Therefore, the variable that balanced the equation was total services offered. Once the budget ran out, there were no medicines in the Centers for Diagnostic and Treatment (CDTs). A long waiting list existed for sophisticated diagnostic services such as CT Scan. Few dentists worked for the government program.
Once Health Reform is established, the government controls two variables: number of eligible individuals and coverage offered. Total expenditures are a result of these two decisions. And this year the expenditures amounted to $1,970 million compared to a budget allocation of $1,470 million.
Improving government efficiency and reducing government administrative expenditures are a non-starter with respect to Health Reform. The total direct expenditures by government to manage Health Reform are some $8 million out of a total deficit of $500 million.
Profits by insurance companies are small and limited by contract. Health Reform is not a high margin and particularly profitable market segment. Compare the difference between the Medicare Advantage program, where many companies entered the market, and Health Reform, where initially there were four participants and now there are only three.
There are only three alternatives open to the government in order to deal with the Health Reform Crisis: increase funding, reduce the number of eligible individuals, or change coverage to reduce cost.
With a $1 billion structural deficit and a commitment to tax reduction, it is unlikely that anywhere close to an additional $500 million could be found. If Washington steps in to cover the gap, we are saved. Otherwise, difficult choices must be made.
Thanks to Health Reform, Puerto Rico does not face the uninsured crisis observed in the United States. An increase in unemployment in the US leads to more individuals lacking health insurance, resulting in uncertainty and potential human suffering. An increase in unemployment in Puerto Rico leads to more individuals coming under the umbrella of Health Reform. This accomplishment should not be thrown aside.
This leaves coverage as the only variable to tackle. It will be painful. An obvious change in coverage would be the use of co-payments to control utilization. An experiment with co-payments led to a 50% decline in emergency room visits. Also, the list of approved medicines could be curtailed. Bottom line is that changes in coverage must lead to less utilization and a reduction in costs.
The government must uphold the right of the people to health services while dealing with the fiscal and tax implications typical of any welfare program. It must tax the middle class and the rich in order to pay for health insurance for the poor and the lower middle class. It is a difficult balancing act.
Puerto Rico is facing a common welfare dilemma confronted by any economy with a major welfare program. The beneficiaries of Health Reform are not the ones who pay for it. In addition, health providers want to be well paid and offer the best possible care, which increases total cost. Thus, is the stage set for a classic case of political economy bargaining.
In the previous system, government controlled the budget. Therefore, the variable that balanced the equation was total services offered. Once the budget ran out, there were no medicines in the Centers for Diagnostic and Treatment (CDTs). A long waiting list existed for sophisticated diagnostic services such as CT Scan. Few dentists worked for the government program.
Once Health Reform is established, the government controls two variables: number of eligible individuals and coverage offered. Total expenditures are a result of these two decisions. And this year the expenditures amounted to $1,970 million compared to a budget allocation of $1,470 million.
Improving government efficiency and reducing government administrative expenditures are a non-starter with respect to Health Reform. The total direct expenditures by government to manage Health Reform are some $8 million out of a total deficit of $500 million.
Profits by insurance companies are small and limited by contract. Health Reform is not a high margin and particularly profitable market segment. Compare the difference between the Medicare Advantage program, where many companies entered the market, and Health Reform, where initially there were four participants and now there are only three.
There are only three alternatives open to the government in order to deal with the Health Reform Crisis: increase funding, reduce the number of eligible individuals, or change coverage to reduce cost.
With a $1 billion structural deficit and a commitment to tax reduction, it is unlikely that anywhere close to an additional $500 million could be found. If Washington steps in to cover the gap, we are saved. Otherwise, difficult choices must be made.
Thanks to Health Reform, Puerto Rico does not face the uninsured crisis observed in the United States. An increase in unemployment in the US leads to more individuals lacking health insurance, resulting in uncertainty and potential human suffering. An increase in unemployment in Puerto Rico leads to more individuals coming under the umbrella of Health Reform. This accomplishment should not be thrown aside.
This leaves coverage as the only variable to tackle. It will be painful. An obvious change in coverage would be the use of co-payments to control utilization. An experiment with co-payments led to a 50% decline in emergency room visits. Also, the list of approved medicines could be curtailed. Bottom line is that changes in coverage must lead to less utilization and a reduction in costs.
The government must uphold the right of the people to health services while dealing with the fiscal and tax implications typical of any welfare program. It must tax the middle class and the rich in order to pay for health insurance for the poor and the lower middle class. It is a difficult balancing act.
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