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Healthcare And Economic Development


February 10, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

During my two terms as mayor of San Juan from January 1969 to January 1977, I became aware of the growing influence and importance of healthcare and education in the economic development and welfare of Puerto Rico. However, because of the wealthiest international corporations, the misguided and the economic development strategy of the Commonwealth status supporters, namely the Popular Democratic Party leaders, healthcare and education practically were ignored as being important to the economic development of Puerto Rico.

As far as the populares of the 1960s, ‘70s, ‘80s, ‘90s, and even now in the 21st century, Puerto Rico is doomed economically unless federal and state income-tax exemption is available to the multibillion-dollar manufacturing companies on the island. Their fixation on creating tax obstacles to the solution of the status dilemma prevents them from looking after Puerto Rico’s best interests. Even in the pro-statehood party, many of our leaders were afraid of taking on the manufacturing companies and actually believed the absurd allegations of massive unemployment with which Commonwealth supporters threatened our people if Section 936 of the Internal Revenue Code were repealed.

Today, much more than in the ‘70s, Puerto Rico’s economic development would be much more stimulated and strengthened if we paid greater attention to stimulating the growth of service industries, particularly the health and education industries, which are two of the fastest growing service industries in the world.

Back in the 1970s, the only person in Luis Ferré’s administration who spoke to me about the need to stimulate service industries and their growing importance, was Manny Casiano, then Puerto Rico’s Economic Development administrator. When I became governor in January 1977, one of my pro bono, informal, economic consultants on a "need-for" basis, was Casiano. It was during one of our informal conversations that he suggested to me that to underscore the growing importance of service industries in our increasingly modern society, we should grant them tax benefits similar to the manufacturing industry. It was as a result of this suggestion that we worked on and drafted a law that granted tax benefits to service industries. The tax benefits were limited to no more than 50% and only for services rendered outside of Puerto Rico. In other words, for "export services."

We also created Afica as a subsidiary of the Government Development Bank, which granted financing benefits through bond issues for raising capital for health and educational services industries, among others. However, even though these first steps were taken, those efforts were almost neutralized by the eight years of the Rafael Hernández Colón administration from January 1985 to January 1993. Our efforts to privatize, develop, and improve the health-service industries, through what I called the "democratization of health services" by assorting medical and health-service groups to take over the administration of hospital and health services in Puerto Rico, were rolled back by the Hernández Colón administration. It wasn’t until Pedro Rosselló was sworn-in in January 1993, that his efforts to privatize all health services through his health card program, that the health-service industry began to receive further stimulus. When Sila Calderón was sworn into office in January 2001, again the health card program began to be dismantled.

However, there is one health program that has helped the development of health-service industries in Puerto Rico, which the populares haven’t been able to dismantle or undermine. That program is Medicare. Although Medicare frequently is criticized by doctors and hospitals, there is ample evidence that if it weren’t for Medicare, many if not most, of the health services and equipment in clinics and hospitals such as Auxilio Mutuo, San Pablo, Pavia, and others wouldn’t be available in Puerto Rico today.

But, there is another medical and health-services program sponsored by the federal government, in which Puerto Rico doesn’t participate, because we aren’t a state. It is called Medicaid. At present, we are granted somewhere around $200 million a year as a token. If we were to participate as a state, we would receive over $2 billion a year under the Medicaid program. With the economic stimulus of over $2 billion a year, our health-service industry would flourish.

We could raise our nurses’ and medical technician’s salaries and improve our facilities and equipment considerably. With that economic stimulus, Puerto Rico could become the center for medical and health services in Latin America. We have first-rate doctors but, unless we start offering them the best facilities and equipment and the best nursing and medical technician groups to support them, we will start losing them as fast as we are losing our most qualified nurses and medical technicians.

When President Clinton decided "corporate welfare" was an unnecessary privileged benefit to the wealthiest companies, I supported him but asked for the Medicaid program in return. The populares, the Puerto Rico Manufacturers Association, and others in Puerto Rico, including the media, didn’t support my proposal and wasted their time, effort, and money in trying to save a tax-exemption program for companies that didn’t need it. As a result, beginning next year, we have neither the tax-exemption for distribution of dividends, which Section 936 provided, nor do we have Medicaid. If we had Medicaid, or if Puerto Rico were a state, we would have an additional $2 billion flowing into our economy through the health-service industry. How much better facilities, equipment, and services would we have today? How many more qualified nurses and technicians would we have today? Although not yet the medical and health-service center for Latin America, we would be well on our way to becoming the center.

What having ample, modern, and the latest technological equipment and facilities with qualified physicians and human resources support, that is, nurses and medical technicians, would mean in terms of jobs and tourism would be substantial. With our enviable climate and our island’s natural beauty, with its beaches and mountains, we could attract the top physicians and surgeons who also would provide the knowledge and know-how for development of bilingual medical and health education. Our medical school could become one of the world’s best. But, we need the economic resources that only a program like Medicaid with its $2 billion can provide, and we also must shed ourselves of the prejudices and discrimination that raise barriers and obstacles to the best talent, which we need from beyond our shores.

I recently have seen living proof of what I have long hoped for Puerto Rico. I was told by a cardiologist I needed catheterization to check and see if there was any obstruction in my cardiovascular system. In case I needed an angioplasty procedure, if any obstruction were found, it was recommended I go to the Cleveland Clinic where the remedy could be done the same day the angioplasty procedure was recommended. The Cleveland Clinic has been rated by U.S. News & World Report as providing the best cardiovascular care in the nation for the past 10 years. I couldn’t have been in better hands. Fortunately, there was no need for any type of procedure. Exercise, diet, and medicine to reduce cholesterol and triglycerides would take care of everything.

Why am I talking about my own personal health? Because it was this trip to Cleveland that gave me the opportunity to see what the Cleveland Clinic has meant for Cleveland. In the first place, it has put Cleveland on the world map as far as medical facilities and health services are concerned. It has considerably strengthened and improved the education facilities in Cleveland and will continue to do so. It has stimulated the establishment of several (I don’t know how many, but quite a few) hotels to accommodate patients and their families from all over the nation and from all over the world and numerous other businesses such as restaurants and stores of all kinds. Thousands of well-paid jobs were created as a direct result of the Cleveland Clinic. The resulting benefits to Cleveland and the state of Ohio are many. Let us stop trying to offer tax-exemption to industries that provide little in exchange for what they give us, and let’s combine all our efforts to develop our service industries, particularly our health and educational services, which also will help improve our quality of life and our prestige.

Carlos Romero Barceló is a two-term former governor of Puerto Rico (1977-84), a two-term former resident commissioner (1993-2000), and a two-term former mayor of San Juan (1969-78). He was president of the New Progressive Party for 11 years.

This Caribbean Business article appears courtesy of Casiano Communications.
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