Puerto Rico: Isle of Disenchantment

With $70 billion in debt and a shrinking economy, Puerto Rico is in the throes of the worst crisis in generations. The U.S. territory is running out of cash to operate the government and at risk of defaulting on bond payments. As the government closes schools and warns of cutbacks for workers, residents are leaving for the mainland U.S. at the fastest pace in at least a decade. Now the island’s officials are looking for a solution from Congress to stave off catastrophe. Photographer: Christopher Gregory for Bloomberg Businessweek

About 60 percent of the island’s 3.5 million residents receive health-care coverage through the federal Medicare and Medicaid programs. Yet, Puerto Ricans are reimbursed at a lower rate than citizens on the mainland U.S. Some 10,000 people marched through San Juan on Nov. 5 to call for equal benefits.

The island’s population is shrinking—a net 1,200 people left per week last year. One in three medical school students leave Puerto Rico after graduating, according to an association of professors. "We’re educating doctors who are working in the United States,’’ said Yohana De Jesus Berrios, a professor of pulmonary medicine at the University of Puerto Rico.

The administration of Governor Alejandro Garcia Padilla (center) has called for congressional action as it tries to restructure its debt with bond holders. He has drawn support from prominent U.S. politicians, including New York Governor Andrew Cuomo (center right) and New York City Mayor Bill de Blasio. "One of the strongest comparisons is to the bailout of 2008. The banks were in trouble. The federal government moved heaven and earth to address that crisis. Here are 3.5 million people in crisis. We should move heaven and earth to get them the help they need,’’ de Blasio said. 

A bill introduced in Congress in August by New York Democratic Senator Chuck Schumer would equalize reimbursement rates. Like other congressional legislation to assist Puerto Rico, it has stalled. 

To cut costs, the government has closed and consolidated schools across the island. The Josefa Rivera Miranda elementary school in Manatí educated 106 students until it closed this summer despite objections from community members.

The government said it might not be able to meet payroll in December and it’s considering further cuts, including reducing work hours for government employees. 

Since her neighborhood elementary school closed this summer, Marielys Feliciano, a single mother of four, has been waking at 4 a.m. to get her daughters, Esther (left) and Quiana, to another school. "I see the future here, and the doors are closing,’’ she said.

U.S. lawmakers may hold hearings before Christmas on the Obama administration’s proposed assistance package, which would increase Medicaid reimbursements and offer some bankruptcy protections. Officials on the island said they can’t wait any longer. "We are fast approaching a catastrophe,’’ said Melba Acosta, president of the Government Development Bank, which oversees finances and debt.