Search the archive.

Considering its implications, the impending Puerto Rico healthcare crisis should not be overlooked. To fix it, the Puerto Rico Healthcare Crisis Coalition suggests that Medical Advantage reimbursement rates will need to be restored by CMS; that federal funds will need to be provided for local health insurance to meet the Medicaid/Medicare match obligations; that the Health Insurance Tax (amounting to $200 million) on small businesses in the island to help pay for the ACA should be eliminated, considering the limited benefit to the population; and that the local health plan (Mi Salud) will need to be stabilized, which will require Congress to increase federal payments by 2017. Finally, the group stresses that Puerto Rico’s healthcare system is a patchwork of rules and suggests that the system be reengineered by CMS (17). Clearly, this is a complex problem, but one that needs tackling soon before it spirals out of control. Although politics, race, and economics may cloud the issue, let’s remember that the health of Americans is at stake. Bailey Ashford could never have predicted what would become of the healthcare system in Puerto Rico, but there is no doubt that if he were to live today, he would have galvanized physicians, healthcare advocates, foundations, industry, and federal and local government officials to find a solution to this problem to, as he put it, “salvage this man, this woman, this child for one hundred percent efficiency in the future.”

The Puerto Rican healthcare system, which serves the 3.4 million people devastated by Hurricane Maria, operates under patently unfair Medicaid and Medicare funding rules. As Americans gear up to help their fellow citizens, it's critical that Congress and the Trump administration correct this injustice. Not only should they offer immediate aid, they should revise the inequitable formulas that systematically shortchange the 69 hospitals and 20 federally qualified health centers with nearly 90 facilities that dot the Caribbean island. Scant attention has been paid to this long-standing policy blunder. But as a recent report by the Puerto Rican consulting firm Impactivo noted, it has been a major contributor to the ongoing exodus of people and medical personnel from the island and has actually been a net drain on the U.S. Treasury. Puerto Rico, a U.S. territory, is poor. Nearly half of its households (46%) earn less than the federal poverty level. While those wage earners are exempt from federal income taxes, they pay Social Security and Medicare taxes, which makes them eligible for federal entitlement programs. As a result, an estimated 49% of its residents are on Medicaid or the Children's Health Insurance Program, including nearly 300,000 seniors who are dually eligible for Medicare and Medicaid. Yet what Puerto Rico draws from the federal government for those two programs remains far below the levels in the states. Medicaid's federal match has a statutory floor of 50% of the total cost of the program. In states with high poverty levels, the match can go substantially higher. In Mississippi, for instance, the federal match will be 76% in the next fiscal year, according to the Kaiser Family Foundation. Another nine states and the District of Columbia had federal matches over 70%. Just 12 states received the statutory minimum. Puerto Rico's Medicaid program, on the other hand, receives just 19% of its total cost in federal matching funds, an arbitrary cap contained in the Social Security Act. The Affordable Care Act sought to correct the injustice with a one-time appropriation that grossed up the island's reimbursement to about 55% of total costs. However, the special appropriation of about $1.3 billion a year runs out at the end of this year. While the CHIP reauthorization bill pending before Congress contains an additional $1 billion for Puerto Rico, that's less than previous funding and well short of the 83% match the island would get if operating under the same rules as the states. Medicare rules also shortchange Puerto Rico. Island residents are not eligible for Social Security Supplemental Income, leaving that component for setting hospital disproportionate-share payments at zero. The result is Medicare payments that are 42% below the U.S. average. The Federal Emergency Management Agency, the Centers for Disease Control and Prevention and other federal agencies face the immediate challenge of heading off a public health catastrophe. About 40% of the island still does not have potable water. Electricity outages are common, leaving hospital and clinic backup generators, designed to operate for a few hours or days, running for weeks on end. The incidence of water-borne diseases is growing. A boil-water alert was issued in response to widespread gastroenteritis, and a few reported cases of leptospirosis (spread through animal wastes) are fueling fears of wider, more serious infectious-disease outbreaks. Charitable efforts can help fill some gaps in the short run. The Greater New York Hospital Association led the way by marshaling private planes to deliver needed medicines. The American Hospital Association and its Puerto Rico affiliate have teamed up to create a fund to help displaced hospital employees continue working. (You can donate at thecarefund.net.) But Puerto Rico and the U.S. will eventually turn their attention to rebuilding the island's ailing infrastructure, including healthcare. Putting its Medicaid and Medicare reimbursements on an equal footing with the rest of the country will make that task a lot easier.

In the end, the broad outlines of what has to happen in Puerto Rico are fairly clear. The territory’s debt obligations need to be pared back. The stark reality is that it cannot service its existing debt stock. Structural changes need to be implemented as well. Puerto Rico (and the USA) needs to enact and enforce policies that will start the economy moving in the right direction. Without an entity that has the right to force the solution, however, it is fraught as to how things will proceed. In the current environment, only the USA has the ability to overcome the hurdles that lie in the path of a successful resolution to the current crisis. While there is the power, however, it is unclear what path will be ultimately taken. Possibilities include access to Chapter 9 of the Bankruptcy Code for some (or all) of the entities that have issued debt; a bailout of some sort, presumably in exchange for some structural reforms; or perhaps a new procedure designed specifically for the situation at hand. Moreover, the cost of whatever path is taken will not be cheap. It is almost inevitable that much control will shift to a control board of some sort. Lurking in the background is the precedential effect of any action as it relates to American states. Some states face fiscal distress that seems almost as daunting as that of Puerto Rico. 38 Puerto Rico is in unchartered territory. How matters are resolved there could well lead to the creation of a path that states will eventually follow.

So what if Puerto Ricans did pay the federal personal income tax? Imposing more taxes on an impoverished population sounds counterproductive. But given the high poverty rate, many Puerto Ricans would not be liable for the tax. Even a family with earnings equal to Puerto Rico’s median income, $18,626 in 2015, would receive more in refundable tax credits than they would pay in federal income taxes.3

Revenue from the income tax could pay for more equitable federal Medicaid funding. The GAO estimates that if Puerto Rico had been a state in 2010, the island would have paid as much as $2.3 billion in individual income taxes after accounting for refundable tax credits. Federal Medicaid funding would have been between $1.1 and $2.1 billion in FY 2011 if Puerto Rico were a state, according to the GAO. (Actual funding that year was $685 million.)

SSI: In fiscal year 2011, actual federal spending for a similar program in Puerto Rico was $24 million; if Puerto Rico had been a state in calendar year 2011, residents would have been eligible for SSI, and estimated federal spending would have ranged from $1.5 billion to $1.8 billion.

All the federal revenue sources GAO reviewed—individual and corporate income taxes, employment tax, excise tax, estate and gift taxes, and customs duties—could be affected if Puerto Rico became a state. For example, under statehood, Puerto Rico residents would be subject to federal tax on all their income: currently, they are subject to federal tax only on income from sources outside of Puerto Rico. Also, some sources of income, such as pension income, are taxed differently in Puerto Rico than in the states. As a result, for 2010, Puerto Rico filers' adjusted gross income for federal tax purposes would have been higher than that for Puerto Rico tax purposes. For some revenue sources, the extent to which federal revenue would change depends on various assumptions. For example, for the two largest revenue sources that would be affected substantially by statehood—individual and corporate income taxes—GAO used various assumptions to estimate a range of federal revenue. The estimate ranges, as described below, are based on Puerto Rico being treated the same as the states in either 2009 or 2010, based on the year for which GAO had the most recent data.

In our view, rundown apartment units located in desperately poor neighborhoods are a root cause of many quality-of-life issues. And these issues will only become more widespread, intractable, and irreversible as the crisis of unaffordable housing continues to spread from poor, underclass households to those earning average median incomes and above. According to a study by the NYU Furman Center and Capital One, from 2006 to 2013 the percentage of low- and moderate-income renters facing severe rent burdens increased substantially in many large metro areas across the country. The number of U.S. households that spend at least half their income on rent could increase 25% to 14.8 million over the next decade, according to a report by Harvard University’s Joint Center for Housing Studies (JCHS) and Enterprise Community Partners. According to the report, significant numbers of households in higher income brackets—80% to 120% of area median income—also struggle to find affordable rental units in all 50 states. This lack of “workforce housing” results in their inability to live in or near the places where they work. In high-cost metro areas, two-thirds of renters earning between $30,000 to $45,000 and half of those earning $45,000 to $75,000 have disproportionately high housing costs. This is at a time when average median incomes in America’s largest metro areas range from around $50,000 to just over $63,000, according to the U.S. Census Bureau. The need for affordable housing subsidies is already overwhelming the resources of federal, state, and local governments, leaving them unable to provide adequate assistance. And regrettably, the philanthropic community has basically abandoned funding services that improve the lives of the residents—after-school programs, summer camps, health and wellness, and financial literacy, to name a few. Government must increase its commitment to affordable housing. It is clear, if we are to tackle social inequality in this country, housing and related services must become a top priority of these funders. Fifty years ago, President Lyndon B. Johnson launched his Great Society, a set of domestic programs to eliminate poverty and racial injustice in America. According to some estimates, we’ve spent upward of $22 trillion of taxpayer dollars in hopes of creating such a society. Yet fundamentally little in the way of poverty and racial injustice has changed. Today, 46.5 million Americans live in poverty, 16.1 million of whom are children. Millions live on the edge, one job loss or one illness away from an impoverished existence. Why has this monumental—and costly—social endeavor failed? While there are a number of reasons, a key component of social inequality is our housing policies, which for decades have simply created islands of poor and low-income families who, for all intents and purposes, have been ignored and cut off from mainstream society. Our housing policies have forced entire generations of Americans into neighborhoods—whether labeled public housing, low-income housing, or undercapitalized affordable housing—offering little supportive educational or social services. The result has been unemployment, ever increasing crime rates, drugs, gangs, domestic violence, child abuse, high rates of incarceration, and premature deaths. Where and how people live either provides or deprives them of opportunities to engage in healthy and prosperous lives. However, the fact is that it’s not only those who live in unhealthy homes and environments who are affected. All of society suffers when people are denied decent, safe, affordable housing. When people are forced to spend as much as 50% of their income on housing, the following are often the result: · They live in substandard housing. For many, however, the infrastructure of their neighborhoods is important to them—churches, relatives, and friends nearby, public transportation, social services, etc. Moving new affordable housing to the suburbs is not the panacea some believe. Much needs to be done to preserve deteriorating housing and improve neighborhoods in the urban cores. · Those who seek nicer housing at affordable rent farther from urban areas find themselves pushed greater distances from their work. This not only places a strain on them and their families with respect to commuting times and costs, but also on their employers who often experience higher absenteeism and worker turnover rates, greatly adding to the cost of doing business. · They are often forced to rely on fast food establishments for their caloric intake. A family can buy a lot more calories for $10 at McDonald’s than at the fresh fruit and vegetable section in a grocery store (if they have access to a grocery store) plus there’s no preparation required after a long workday and commute. According to the Centers for Disease Control and Prevention, the estimated annual medical cost of obesity in the United States was a staggering $147 billion in 2008 U.S. dollars. · They cannot afford to, or have the opportunity to, educate themselves or their children in order to achieve higher-paying jobs and work opportunities that would help them break their cycle of financial struggle and poverty. Substandard urban schools are the norm, and job training is inadequate at best. This places a greater burden on our already costly social and entitlement programs. · The above lead to higher degrees of stress, frustration, and hopelessness, creating a downward spiral of human suffering and an increase in public costs. Clean, safe affordable housing can stabilize neighborhoods and be a springboard for greater opportunity. Anyone who works a 40-hour week in the United States, the world’s richest nation, should be able to afford life’s basic necessities, especially decent, safe housing. Yet, according to the National Low Income Housing Coalition, a family with one full-time worker earning the minimum wage cannot afford the fair-market rent for a two-bedroom apartment anywhere in the United States. Local community development corporations and other mission-driven nonprofit housing groups must compete with well-capitalized, market-rate private developers in an already tight housing market. Research tells us that without support for affordable housing, affordable housing developers are unable to supply new rental units at rents that are low enough for low-income households. With rental restrictions expiring for roughly 30% of the 1.34 million units of affordable housing created by a Department of Housing and Urban Development program known as Sec. 8 project-based rental assistance (400,000 affordable units), housing advocates fear that these properties will be converted to market-rate properties by developers seeking to cash in on gentrifying neighborhoods, typically displacing the existing tenants. The low-income housing tax credit program (LIHTC) has been an extremely effective tool to create and preserve affordable housing; it is a prototypical public/private program. According to the National Council of State Housing Agencies, the LIHTC program has provided the financing for the development or preservation of nearly 2.8 million units. But the number of tax credits allocated to the states annually doesn’t come close to meeting the needs of communities nationwide. Typically, there are applications submitted for two to three times the number of housing credits the state agencies have to allocate. The need for quality affordable housing has never been more critical. In 2012, there were 11.5 million extremely low-income renters and only 3.3 million affordable apartments available to them—a gap of 8.2 million units. Without the LIHTC, it is uneconomic to develop apartments for low-income families. According to Harvard’s JCHS, in order to develop new apartments affordable to people working full time earning the minimum wage, without subsidy construction costs would have to be reduced by 72% of the current construction cost average. Since the 1980s, wages have failed to keep up with the cost of housing, whether one rented or owned. During the late 1990s and early 2000s, housing prices were rising 10% to 20% or more per year, depending on where in the country one lived. Yet, according to the Economic Policy Institute, wages have grown only 6% since 1979, after accounting for inflation. In more recent years, real income for the median household has been level or declining each year since the recession that began in 2008, according to the U.S. Census Bureau. In 2014, that number remained 6.5% lower than it was in 2007. More than 55% of American adults—approximately 138 million people—are struggling financially, reports the Stewards of Affordable Housing for the Future. Unless wages begin to rise or affordable rents become more available, there will be no housing relief in the foreseeable future for millions of families. To add insult to injury, the last recession served to exert enormous pressure on an American middle class struggling for decades to purchase housing they could comfortably afford. From the early- to late-2000s, the only way many first-time buyers were able to get into the housing market was through highly leveraged mortgage products. After they purchased their homes, which they thought would continue to increase in value, these families believed that they had arrived, that they were now living the American Dream—only to be rudely disappointed when the downturn came. As of June 15, 2015, as a result of the 2008 housing collapse, 5.1 million households owed more on their mortgages than the current value of their homes, according to CoreLogic. Worse yet, since 2004, more than 7 million families have already lost their homes to foreclosure (with an additional 1.4 million still in the foreclosure pipeline) and are now forced to rent—or in the worst-case scenario, are homeless! From 2004 to the second quarter of 2015, homeownership rates have fallen from a record high of 69.2% to 63.4%, the lowest level of homeownership since 1967, according to a study by Harvard’s JCHS and Enterprise. Consequently, there are more renters now than at any other time in U.S. history, which places greater stress on an already short supply of affordable rental units. This does not paint an encouraging picture for a middle class that’s continually being hollowed out by low-paying jobs, stagnant wages, and high housing costs.

These are boom times for investors flocking to idyllic towns all over Puerto Rico, some of them seeking to take advantage of tax incentives intended to attract new people and outside money to the cash-strapped island, which is working its way out of bankruptcy. The tax breaks’ appeal accelerated after the coronavirus pandemic prompted many companies to shift to remote work, inspiring Americans who live on the mainland to move to more temperate climes.

But the influx of the affluent new settlers, who must acquire residency and buy property in Puerto Rico within two years of moving in order to keep the tax breaks, has pushed up home prices and displaced residents who can no longer afford to live in their hometowns. Hurricane Maria, which heavily damaged thousands of homes in 2017, had already prompted many residents to leave the island.

Puerto Rico has long been a tropical paradise for Americans seeking a tax haven. However, this has come at a cost to local Puerto Rican communities. The Act 22 tax incentive, enacted in 2012, has been the most effective tool to attract rich outsiders to the island, while local Puerto Ricans are losing their homes and neighborhoods.

Under Act 22, wealthy individuals, including crypto investors and other wealthy outsiders, can avoid most US and Puerto Rico taxes by moving to the island, buying a home, and living for part of the year there. This has led to an influx of Americans seeking to take advantage of the tax breaks, pricing out long-time residents and driving up housing costs. Puerto Ricans are losing their homes, and their neighborhoods are being transformed into enclaves for the rich.

This is not a new issue. “Stop Letting the Rich Move to Puerto Rico as a Tax Haven,” a 2015 New York Times headline read, in an op-ed written by tax lawyer Edward Kleinbard, who also served as the chief of staff of Congress’ Joint Committee on Taxation. “With no U.S. or Puerto Rican tax on much investment income of new residents, U.S. citizens now can pay zero tax on capital gains,” he said, decrying the influx of tech billionaires who exploit the island.

Depriving the territory of this potentially taxable income inhibits investments in public goods. There is less money to invest in things like infrastructure, meaning inadequately built roads and bridges are easily decimated by storms, cutting locals off from rescue efforts. Puerto Rico’s financial crisis is precisely what made it so vulnerable to the partial privatization of its electric grid, which started failing long before Fiona hit the island and has intensified the storm’s damage (around half of the island, or 1.47 million people, still had no power as of Saturday). Crucially, inequality makes recovery efforts harder. Natural disasters make inequality worse, too, according to numerous studies.

The residents of Puerto Rico not only make substantial contributions to the federal treasury, but in fact have consistently made them in higher amounts than taxpayers in at least six states, as well as the territory of the Northern Mariana Islands.[12] From 1998 up until 2006, when Puerto Rico was hit by its present economic recession,[13] Puerto Rico consistently contributed more than $4 billion annually in federal taxes and impositions into the national fisc. See Internal Revenue Service, SOI Tax Stats — Gross Collections, by Type of Tax and State — IRS Data Book Table 5, available at https://www.irs.gov/statistics/soi-tax-stats-gross-collections-by-type-of-tax-and-state-irs-data-book-table-5 (last visited April 9, 2020). This is more than taxpayers in several of the states contributed, including Vermont, Wyoming, South Dakota, North Dakota, Montana, and Alaska, as well as the Northern Mariana Islands. Id. Even since 2006 to the present, and notwithstanding monumental economic problems[14] aggravated by catastrophic Hurricane María[15] and serious ongoing earthquakes,[16] Puerto Ricans continue to pay substantial sums into the federal treasury through the IRS: $3,443,334,000 in 2018; $3,393,432,000 in 2017; $3,479,709,000 in 2016; ... 25*25 $4,036,334,000 in 1998. Id. Puerto Rico's contributions include the payment of federal income taxes by residents of Puerto Rico on income from sources outside Puerto Rico for which they are liable under the Internal Revenue Code, the regular payment of federal income taxes by all federal employees[17] in Puerto Rico, 26 U.S.C. § 933, as well as the full Social Security, Medicare, and Unemployment Compensation taxes that are paid in the rest of the United States, see 26 U.S.C. §§ 3101, 3111, 3121(e), 3301, 3306(j).[18] That in 2018 the IRS collected approximately $3,443,334,000 from Puerto Rico taxpayers clearly undermines the contention that Puerto Rico residents do not contribute to the federal treasury. There should be little doubt that, to the extent that there may have been a basis for it when Califano and Harris were decided, the argument that Puerto Rico's residents do not contribute to the federal treasury is no longer available.

Estimated Change in Federal SSI Program Cost for Potential Extension of SSI Eligibility to Residents of Certain U.S. Territories—INFORMATION

The Office of the Chief Actuary has prepared estimates of the change in SSI program cost for extending SSI eligibility to the residents of Puerto Rico, American Samoa, Guam, and the U.S. Virgin Islands.1 [**INSERT FOOTNOTE**] Residents of the Northern Mariana Islands have been eligible for participation in the SSI program since 1978. The remaining U.S. Territories not specifically noted are essentially uninhabited. [**FOOTNOTE ENDS**] We estimate that if such extension were effective October 1, 2020, Federal SSI payments would increase by a total of approximately $23.4 billion over the short-range projection period of fiscal years 2021 through 2030 – approximately $22.7 billion for the extension of SSI eligibility to residents of Puerto Rico, and about $0.7 billion on a combined basis for a corresponding extension to residents of the other territories. In the longer term, we estimate this extension to all four territories would increase Federal SSI program cost by about 3.4% annually in calendar year 2030, and decrease slightly on a gradual basis thereafter to 2.6% in calendar year 2044.

Rationale #1: Federal Income Tax. The federal government has argued in both cases that the fact that Puerto Rican residents only pay federal income tax on certain sources of income provides a rational basis from excluding them from SSI, SNAP, and the Medicare subsidies.244 That’s true: residents of Puerto Rico do not pay federal income tax on most types of income.245 Unlike other Social Security benefits which are paid for through payroll taxes (taxes that Puerto Ricans pay), SSI is paid for by general tax revenue, includ ing income tax receipts.246 Yet, while the Supreme Court in Rosario states that Puerto Ricans “do not contribute to the federal treasury,” recent tax re- ceipts suggest otherwise.247 Puerto Rico contributes roughly $4 billion in an- nual tax revenue to the federal government, exceeding the contribution of several states.248

While the average monthly Puerto Rico Social Security Disability benefit of $921.20 can definitely help offset some of the financial stress caused by a disability, it takes some Puerto Rico Social Security Disability applicants more than two years to before receiving their first payment from the SSA.

The first stage of the Social Security Disability application process takes a Puerto Rico Social Security Disability applicant approximately three to four months to complete. More than half of these applications are denied at this stage, resulting in the need for a disability appeal. The first stage of appeals in Puerto Rico is called a Request for Reconsideration, which takes a Puerto Rico Social Security Disability applicant another three to four months to complete. Again, the majority of these requests are denied by the SSA. An applicant must then pursue the second stage of disability appeals, which is a hearing before an administrative law judge. Depending on the area of Puerto Rico that you live in, it can take anywhere from 289 to 550 days to be scheduled for this disability hearing.

Supplemental Security Income (SSI) is a cash benefit received by over eight million Americans who are elderly, blind, or have a disability as defined by federal law. The maximum monthly SSI benefit for an individual recipient is set at $ 794 and is not based on a recipient's prior earnings. Furthermore, the income threshold is set nationwide and the asset test is much lower than other means-tested programs. Notably, SSI recipients who live alone, or where all household members receive SSI, are eligible for SNAP and typically eligible for Medicaid. Lastly, as a part of the larger Social Security apparatus, SSI recipients have the same recourse to administrative procedure as recipients of benefits through the Social Security Disability Insurance (SSDI) program. The SSI program operates in the fifty states, the District of Columbia, and the CNMI. Guam, Puerto Rico, and the U.S. Virgin Islands have no SSI program. SSI benefits are not available to these territorial residents. Instead, these Americans are eligible to receive federally funded benefits through the Aid to the Aged, Blind, and Disabled (AABD) programs that SSI replaced. And neither AABD nor SSI operates in American Samoa. History provides needed context as to how this came to pass. Prior to 1950, no federal Social Security payments were made to residents of Puerto Rico or the U.S. Virgin Islands. Congress debated whether to extend public benefits to both territories. Ultimately, the enacted bill, H.R. 6000, meant that employment in Puerto Rico and the U.S. Virgin Islands would be covered through Social Security's contributory programs, and Puerto Rico and the U.S. Virgin Islands were treated like states. The Social Security Amendments also meant that Puerto Rico and the U.S. Virgin Islands were able to administer the AABD programs similar to states. In 1958, Congress extended AABD to Guam. The fifty states and the District of Columbia also operated AABD into the 1970s. In 1972, Congress replaced, and President Nixon signed into law, the various state-administered AABD programs with a national means-tested disability program called Supplemental Security Income (SSI). Congress excluded Guam, the U.S. Virgin Islands, and Puerto Rico from SSI, but extended eligibility to residents of the Northern Mariana Islands a few years [*1674] later. There are some exceptions for children who live in one of the excluded territories but whose parents are serving in the U.S. military. The federal government still provides funding to the territories to help pay for costs of providing cash assistance to the needy, aged, blind, or disabled, but this funding is significantly less than comparable expenditures for SSI. Federal matching grants help fund these disability assistance programs so long as the territories meet certain statutory criteria. To qualify for federal matching grants, a territory must submit a plan to the U.S. Department of Health and Human Services assuring the federal government that the program will be administered in conformity with federal law. Territories can set the income thresholds and the benefit levels for the programs. The federal government will provide 75% of benefit payments, with the territories paying 25%. But as with food assistance and healthcare, federal law caps AABD assistance for the territories. This ceiling of support is set by statute and does not reflect inflation.

Residents of Puerto Rico and other U.S. territories do not have a constitutional right to receive certain federal benefits that the government provides to people who live in the 50 states, the Supreme Court ruled on Thursday in an 8-1 decision. The case, United States v. Vaello Madero, involved Supplemental Security Income, a safety-net program that provides cash assistance to older, disabled, or blind Americans who have very low incomes. Congress excluded residents of Puerto Rico and three other territories from the program. Jose Luis Vaello-Madero, a U.S. citizen who lives in Puerto Rico, argued that the exclusion violates the Constitution’s guarantee of equal treatment for all. In an opinion by Justice Brett Kavanaugh, the court rejected that argument. “The Constitution affords Congress substantial discretion over how to structure federal tax and benefits programs for residents of the Territories,” Kavanaugh wrote. Many federal laws, Kavanaugh noted, treat the territories differently from the states — and not always to the detriment of the territories’ residents. For instance, Puerto Rico residents are exempt from federal income tax, though they do pay other federal taxes such as Social Security, Medicare, and unemployment taxes. “In devising tax and benefits programs, it is reasonable for Congress to take account of the general balance of benefits to and burdens on the residents of Puerto Rico,” Kavanaugh wrote. Justice Sonia Sotomayor was the lone dissenter. “In my view,” she wrote, “there is no rational basis for Congress to treat needy citizens living anywhere in the United States so differently from others. To hold otherwise, as the Court does, is irrational and antithetical to the very nature of the SSI program and the equal protection of citizens guaranteed by the Constitution.” Justices Clarence Thomas and Neil Gorsuch each wrote separate concurrences. Thomas questioned the court’s longstanding precedent that the Fifth Amendment’s due process clause (which applies to the federal government and was the basis for Vaello-Madero’s constitutional challenge) contains an equal-protection guarantee that is identical to the equal protection clause of the 14th Amendment (which applies to the states). Thomas said the 14th Amendment’s citizenship clause may offer a more solid constitutional basis for prohibiting racial discrimination by the federal government. Gorsuch called on the court to formally overturn a series of notorious early-20th-century decisions, known as the Insular Cases, in which the court invoked racist stereotypes and held that some constitutional rights do not extend to people living in Puerto Rico and other so-called “unincorporated” territories. As Gorsuch acknowledged, however, neither the federal government nor Vaello-Madero had asked the court to overturn the Insular Cases. Instead, the case was litigated under the assumption that the Constitution’s guarantee of equal protection applies in Puerto Rico. Kavanaugh’s majority opinion held that Congress’ exclusion of SSI benefits does not violate that guarantee, a holding that Gorsuch joined. President Joe Biden has urged Congress to end the exclusion and extend the SSI program to Puerto Rico. But even if Congress did so, that would be far from the end of differential treatment of the territories in federal policymaking. Other safety-net programs also withhold benefits from the territories, even though the territories tend to have higher unemployment and lower average incomes than the states. Kavanaugh’s opinion suggests that Congress has wide latitude to continue or even increase this differential treatment so long as the government can point to a rational basis — the lowest level of constitutional scrutiny — for doing so.

The U.S. Supreme Court on Thursday upheld a federal law that denies disability benefits to residents of Puerto Rico. The court ruled 8-1 that Congress can deny Supplemental Income Security, or SSI, benefits to Puerto Rico residents because they don’t pay all federal taxes. Justice Sonia Sotomayor, one of the court’s three liberals, whose family stems from Puerto Rico, dissented. SSI benefits are meant to offer regular financial assistance for disabled and elderly people in need. The program is available to people living in the 50 U.S. states, but not to those living in some U.S. territories. The question before the high court centered on whether the due process clause of the Fifth Amendment to the U.S. Constitution required Congress to extend SSI benefits to Puerto Rico. A lower appeals court had ruled that excluding SSI benefits to residents there was unconstitutional. The Department of Justice argued before the Supreme Court last year that that the appellate ruling should be reversed. Puerto Rico has been a U.S. territory since the Spanish-American War in 1898, and its residents are U.S. citizens, but they have no vote for president or representation in Congress. They also do not pay federal income tax. Justice Brett Kavanaugh wrote in the majority opinion that “Congress has long maintained federal tax and benefits programs for residents of Puerto Rico and the other Territories that differ in some respects from the federal tax and benefits programs for residents of the 50 States.” Kavanaugh noted that Puerto Rico residents are mostly exempt from federal income, estate and excise taxes, among others. They do pay other federal taxes, such as Social Security, Medicare and unemployment taxes, and they are eligible for the benefits programs that those taxes fund. “But just as not every federal tax extends to residents of Puerto Rico, so too not every federal benefits program extends to residents of Puerto Rico,” Kavanaugh wrote. The case stems from 2013, when New York resident Jose Luis Vaello Madero, who was receiving SSI benefits, moved to Puerto Rico where he continued to receive those benefits payments, which totaled more than $28,000, for several years. The government sued Vaello Madero, but a federal district court and a federal appeals court sided with him. The Supreme Court, however, ruled that the existing legal precedent indicated that Congress had satisfied its requirements in distinguishing Puerto Rico from the 50 states when it comes to SSI benefits. Siding with Vaello Madero could invite a host of “far reaching consequences,” Kavanaugh added, including possibly inflicting “significant new financial burdens on residents of Puerto Rico.” Sotomayor dissented. “In my view, there is no rational basis for Congress to treat needy citizens living anywhere in the United States so differently from others,” she wrote. “To hold otherwise, as the Court does, is irrational and antithetical to the very nature of the SSI program and the equal protection of citizens guaranteed by the Constitution,” Sotomayor wrote.

DISCRIMINATION IN FEDERAL FUNDS FEDERAL PROGRAMS THAT WE DO NOT RECEIVE Our organization, composed of Puerto Ricans aware of the negative effects of economic inequality on society, and understanding that the disadvantages of the majority affect the quality of life of society as a whole, we demand parity for Puerto Rico in federal programs and aid, in order to reduce the economic inequality gaps that have been imposed on us. We do not see federal aid as a gift, as a panacea, or as a substitute for the inescapable work of building our economy; rather, we see parity as a way to begin to repair the poverty that more than a century of disadvantageous relations with the United States has created. We fight to extend to the island the federal services and programs that would mitigate the inequality we suffer. Because reducing poverty gaps benefits us all. Parity is synonymous with social stability, economic growth and justice. More information about our cause here: https://porparidad.org/somos/#mision SSI SNAP MEDICAID MEDICARE PART D LIS MEDICARE PART D LOW INCOME SUBSIDY (LIS) What is the program? Part D of the Medicare program authorizes private insurers to offer federally subsidized drug plans to Medicare beneficiaries. The Low Income Subsidy (LIS) in particular extends this benefit to low-income families in addition to those who normally qualify for Medicare coverage. Who qualifies? Those age 65 and older who are eligible to enroll in Medicare Parts A and B. You have received Social Security disability payments for at least 2 years. You receive a diagnosis of end-stage renal disease (ESRD) or kidney failure and must undergo dialysis or a kidney transplant. Children under age 20 with ESRD may qualify if they have at least one parent eligible for Social Security benefits. How much do we receive? $0 Is there a disparity? Yes. U.S. citizens living in Puerto Rico are expressly excluded through a statute (42 U.S.C. § 1395w-114(a)(3)(F). How to apply? At this time it is not possible to apply for Puerto Rico residents. FEDERAL PROGRAMS RECEIVED Although Puerto Rico receives the following programs, in many of them the federal contributions are lower than those received by the other states TANF TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) The Temporary Assistance for Needy Families (TANF) Program provides financial assistance to individuals and families who lack the financial resources to meet their basic needs and who meet the eligibility requirements established for each category of participation.[1] The six (6) categories of participation in the Program are broken down as follows: Financial assistance for persons 65 years of age or older Financial assistance for persons with a degree of vision of 20/200 or less, certified by a medical specialist. Financial assistance for a maximum of 60 months (consecutive or interrupted) for family members with children from zero (0) months to eighteen (18) years of age where there is a factor of abandonment of one or both parents; or family with both parents, where one of them has total and permanent disability. Financial assistance to persons over 18 years of age, with total and permanent disability. Financial assistance to persons over 18 years of age, whose disability is transitory and total. It also provides assistance to children under 18 years of age with permanent and total disability. Assistance to children from birth to 18 years of age. Minors must reside with and be in the custody of a guardian of legal age, who may not be a family member specified by law. AMOUNT RECEIVED IN PUERTO RICO: Puerto Rico may receive federal funds not to exceed $107.3 million to operate TANF; Aid to the Aged, Blind, and Disabled (AABD); foster care and adoption programs. As for TANF, Puerto Rico claimed about $71.6 million. This represents the maximum amount established by law for this program.[2] AMOUNT SPENT BY THE UNITED STATES: TANF is a joint federal and state program to support low-income families. States run the program under federal guidelines and targets. The federal portion of the program spent $16.6 billion in FY2020 and $15.4 billion in FY2021.[3] Conclusion: Due to the statutory limit, Puerto Rico receives a total of $71.6 million for the TANF Program.

While U.S. citizens and non-citizens who legally live in all 50 states, Washington D.C. and the Northern Mariana Islands can access the Supplemental Security Income (SSI) program, people in Puerto Rico cannot. They are only eligible for a federal assistance program called Aid for the Aged, Blind and Disabled (AABD), which provides substantially less help. The categories covered by the AABD are administered on the island by the Temporary Aid Program for Needy Families (TANF), which in turn is managed by the Puerto Rico Family Department. “The main difference lies in the benefits that the participant receives. Right now, participants who receive TANF in one of those three categories receive minimal benefits, compared to a citizen who receives regular SSI benefits,” said Alberto Fradera, administrator of the Family Socioeconomic Development Administration (ADSEF, in Spanish), in an interview with El Nuevo Día newspaper. In TANF, under Category A, poor adults over the age of 65 receive $80 per month. Under Category B, poor blind people with a 20/200 vision or less receive $128 per month. Meanwhile, in Category D, people over 18 with a total and permanent disability receive $80 per month. “In most cases, these participants are concerned about their medication,” Fradera said. “The amount received by older adults, who mostly live on their own, does not give them enough to cover monthly expenses.” Contrary to the limited help in the AABD program, the maximum SSI payment in the United States is $841 per month, with an eligible couple receiving up to $1,261, according to the most recent review by the Social Security Administration (SSA), which manages this program. The maximum amount of SSI payments increases alongside the cost of living increase that is applied to Social Security benefits. The last increase of this type was 5.9% and was implemented in January. Between the aforementioned categories, until last month, there were 30,207 beneficiaries in Puerto Rico. However, according to a five-year estimate from the Puerto Rico Community Survey that the Census Bureau carried out in 2020, some 455,200 people on the island could be eligible to receive SSI under the three available categories. That estimate, which represents an update to the number of eligible individuals in Puerto Rico, was reviewed for El Nuevo Día by Judith Rodríguez, a demographer and retired professor at the University of Puerto Rico (UPR), and Rafael Irizarry, a biostatistician and professor at Harvard University, with the collaboration of demographer Wilmari de Jesús and Mónica Robles, a statistician at the Puerto Rico Department of Health. Prior to the new estimate, the Center for a New Economy (CNE), a San Juan-based think-tank, had calculated that there were 435,886 potential beneficiaries, based on data from the 2018 Puerto Rico Community Survey. Through the AABD, the federal government grants some $26 million annually to Puerto Rico, to which $6.2 million in state funds are added. The benefits of this assistance could be expanded, but only with the Puerto Rico government’s own resources. Fradera explained that, under TANF, there are three other categories. In all, the government has received approximately $71 million per year since it began operating in 1998, he added. The federal government doesn’t cover the administrative costs, so the state government must supply more than $20 million in matching funds to run the program. Categories A, B and D have been administered by the state government since at least 1981, Fradera specified. In 2020, the SSA estimated that extending the SSI to the island would cost $2.27 billion per year. When Congress created the SSI in 1972, it did so to standardize federal assistance to several of the most vulnerable groups in the United States and to combat poverty. However, Puerto Rico, the U.S. Virgin Islands and Guam were expressly excluded. Under SSI, there are three categories of eligibility: adults age 65 and older, and blind or disabled people with low income and resources. One of the main differences is that the AABD does not grant benefits to children, whereas a person of any age can become eligible for SSI. Another difference is that a person who receives some type of income, including Social Security benefits, may still be eligible for SSI. In Puerto Rico, beneficiaries of categories A, B and D cannot have any income. “It is a matter of civil rights, of human rights,” Fradera stressed. “In the times we are living as a population in an island, where everything increases (in cost), it’s time for us to be heard and for Puerto Rico to receive the equal treatment it deserves.” In April, the United States Supreme Court upheld the exclusion of residents of Puerto Rico from SSI in the case of José Luis Vaello Madero. Most of the Supreme Court justices held that the Territorial Clause of the Constitution gives Congress the power to extend a welfare program without any obligation to do so. It also determined that the exclusion of island residents from the SSI program is not a constitutional violation of the Due Process Clause in the Fifth Amendment. A class-action lawsuit, which was paused by the Vaello Madero case and is now seeking an opportunity before the federal district court, states that the exclusion of SSI to Puerto Rico residents violates the Citizenship Clause of the Fourteenth Amendment. The group of plaintiffs is made up of seven women and five men ranging in age from 26 to 75 years, all U.S. citizens. Three of the plaintiffs are adults 65 or older who, despite meeting the age established by one of the eligibility categories, cannot receive SSI in Puerto Rico. The rest are individuals suffering from various disabling health conditions, including severe intellectual disability, cerebral palsy, spastic quadriparesis, lupus, schizophrenia, spina bifida and hydrocephalus, total vision loss and kidney conditions, among others. The most vulnerable, excluded from SSI Kidney disease, like many other chronic conditions, leads patients to a life of fragility and disability, making their daily activities difficult, said Zaisca Pacheco, a social worker at the Pediatric Renal Center. Data from the Puerto Rico Renal Council shows that, out of 6,200 people under dialysis on the island, 11 of them are children. “It seems a small number, but the fact that there is a single boy or girl who is on dialysis is a lot,” she said. According to the Renal Council, by 2017, 17.8% of the population (473,959 people) had diabetes and 45.1% (1,228,492) suffered from hypertension, while 68.3% (1,778,464) are obese or overweight. Those conditions are the main risk factors of kidney disease. “(Apart from the disease), economic stressors are the most complex issue families face because the costs involved are so great. For example, vitamins and specific nutritional supplements are not covered by the plans, and a case of 24 eight-ounce bottles can cost $60,” Pacheco estimated. Transportation is another economic challenge families must deal with. The Pediatric Hospital is the only place that offers dialysis to this population and receives patients from all over the island. For adults, there are Medicare Advantage plans that limit the number of trips per month, despite the fact that many patients must undergo dialysis three or four times a week, Pacheco denounced. “The high costs of treating a chronic disease, without a cure or (with prolonged treatment), can displace anyone into poverty and affect the quality of life (of these patients and their families),” stressed the social worker. She added that 60% of kidney patients have diabetes, which in turn can cause blindness. “Any chronic disease not treated in time can become a disability. We see that in dialysis patients. It is very difficult for them to be able to remain active in the labor force, so their income goes down, and kidney failure becomes a disability. At the pediatric level, it is also difficult for them to go to classes, although there are reasonable accommodations,” she said. “Gender, age and poverty status are linked to more deaths and disability in patients with chronic conditions. It is a population hit by multiple economic stressors and many limitations. Being able to count on other assistance helps with those stressors,” Pacheco said. Moving to the United States is not easy for kidney patients, she added. Acceptance into other state programs depends on the patient’s medical coverage, and many programs have new patients on long waiting lists. But dialysis patients qualify “almost immediately” for SSI in the United States, Pacheco said. In Puerto Rico, however, that access is blocked. Gabriel Corchado, who heads the Ombudsman for People with Disabilities office, said most of the calls his office receives are related to basic and economic needs. “Out of 20 calls a day, half may be for some type of financial aid or some expense due to their condition. These types of calls are channeled through referrals to municipalities, nonprofit institutions or government agencies that could help that person,” the official said. Low income versus great needs The ombudsman for the Elderly, Carmen Delia Sánchez, urged access to SSI for the more than 256,000 adults 65 or older who live below poverty levels in Puerto Rico. “Many receive minimum income from Social Security. Few make more than $1,000 in Social Security (per month). That is why SSI is created… Social Security is not enough to survive,” she noted. The need to achieve higher incomes that would contribute to a better quality of life in this sector is urgent, she added. Although the need for long-term care prevails, in Puerto Rico there is no federal aid for this type of service, Sánchez explained. This means elderly care homes are usually paid for by their relatives, out of the patient’s own savings if there are any or by the Puerto Rico Family Department, if the person qualifies. The official indicated that barely 8% of the population 60 or older remains on the active labor force, which places further pressures for additional income, particularly to buy medicines, cover medical expenses, transportation, nutrition and housing. The spokesman for the Puerto Rico National Association of the Blind, Frank Pérez, also made an urgent call to the federal government so that this population has access to SSI in Puerto Rico. “With the cost of living and medicine so high and the few employment opportunities for this population, many live in poverty,” Pérez said.

Those of us who fought against the approval of the PROMESA Act in 2016 were right then on obvious moral and ethical grounds. Simply put, its enactment was an abuse of the anachronistic and undemocratic Territorial Clause of the federal Constitution and a blemish to the United States’ reputation as an adherent to the principle of government by the consent of the governed. The imposition of fiscal and political control, extreme austerity measures on an impoverished 3 million people and the negation of our inherent right to defend ourselves in bankruptcy court and to negotiate directly with our debt holders are but the constant and crude realities of the actions of the seven non-elected persons that compose the Fiscal Oversight Board, or as we have come to know it in Puerto Rico, “la Junta de Control.” {mosads}Time has now proven we were also right as to the detrimental effects that the Board’s severe and unreasonable austerity measures are causing the common folk of Puerto Rico. Puerto Ricans are being unjustly taxed on our essential services and minimal quality of living. Our police stations are grossly understaffed as the violent crime wave is on the rise. Even our families wait for weeks, or even months at a time, for their deceased loved ones to be returned to them from our forensic science institute. Public schools are being arbitrarily closed without a structured plan or analysis produced. Our public University of Puerto Rico is on the verge of losing its accreditation by the Middle States Association, because of an unnecessarily severe fiscal plan imposed by la Junta. All these drastic measures, along with pension cuts, the elimination of important workers protections on the private and public sectors, have been done to comply with a draconian fiscal plan imposed by la Junta and spinelessly accepted by our current local government. In short, la Junta and PROMESA -are just as bad as the Trump administration’s response to Hurricane Maria- and they are killing us. Recently, the First Circuit Court of Appeals declared that the current Board membership is unconstitutional because the appointments clause of the federal Constitution was violated in their designation process. The current Board members have filed a certiorari petition to the Supreme Court and President Trump just this week reappointed them for Senate confirmation so that they may serve the remainder of their term that expires in August. If there is no Senatorial confirmation or another judicial order, come May 16 the current Board will vacated and budgetary and bankruptcy process, as well negotiations with debt holders would enter into a state of limbo. As this happens, the House Committee on Natural Resources and its chairman, Rep. Raúl Grijalva (D-Ariz.), are holding hearings on the results of PROMESA and the actions of the board. What needs to be done? First, amend PROMESA to abolish, or at least considerably curtail, the powers of the Board. The bankruptcy and debt restructuring process set up by Title III of PROMESA gives enough protections to all parts, including creditors. Therefore, Congress should let Puerto Rico defend itself in court and negotiate on its own behalf with creditors. That is essential to the principle of government through the consent of the governed. Congress must not continue to use its authority under the Territory Clause to maintain seven unelected masters that can impose their will, favor hedge funds, and deny Puerto Ricans essential services and minimal quality of life. Finally, the issue of U.S. colonialism and Puerto Rico’s self-determination must be addressed. Congress should enact a process that permits representatives of all three non-territorial status options: independence, statehood and sovereign free association to negotiate formal terms. This could be done through a special constitutional status assembly elected by Puerto Ricans to negotiate with the federal government and then bring the results of those negotiations to the people of Puerto Rico for a binding, self-executing vote. Puerto Rico is suffering an untenable situation. The United States is not meeting its obligations to fashion a reasonable way forward for all parties concerned. Congress must face the results of its failed promise to Puerto Rico and tackle head on the serious defects of the PROMESA Act.

2021 marks the five-year anniversary of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which created a legal framework for restructuring Puerto Rico’s $74 billion debt and established the Financial Oversight and Management Board (the Board). Although Congress passed PROMESA to provide much-needed relief to Puerto Rico in the midst of a crushing debt crisis, the Board has used its power to impose devastating austerity measures and negotiate unsustainable debt restructuring plans that enrich Wall Street and hurt Puerto Ricans. These two approaches both stunt economic development and growth, and make it very likely that Puerto Rico’s debt will soon become unsustainable again. The unelected and unaccountable Board has failed to deliver on PROMESA’s key mandates of representing the interests of Puerto Rico in the debt restructuring proceedings, and helping Puerto Rico achieve balanced budgets and regain access to capital markets. Since 2006, Puerto Rico’s residents have suffered a protracted economic recession. In recent years, the island has been battered by a series of natural disasters as well as the COVID-19 pandemic. Throughout this devastating series of natural and public health crises, the Board has continued to push fiscal plans that: 1) impose harmful austerity cuts, 2) ensure hefty payments to bondholders and Wall Street firms, and 3) take advantage of federal disaster relief funds to secure larger payouts for Wall Street bondholders. Under the Board’s watch, Puerto Rican communities are contending with decimated public services, limited resources to rebuild their homes and businesses, and a struggling economy that cannot support them. During its tenure, the Board has privatized the publicly-owned power grid and pushed rate hikes on utility customers; weakened labor protections for workers; imposed massive cuts in education funding and over 250 school closures; proposed cutting pensions for public sector workers by 8.5%; imposed significant cuts to healthcare and the state-run Medicaid program; and narrowed eligibility for vital food assistance programs. These austerity measures are being imposed on communities that already face an enormous degree of economic precarity. Over 43% of the island lives in poverty, one-third of the island’s residents are food insecure, and the unemployment rate is consistently nearly double that in the United States. While the Board forces sweeping service cuts on residents of Puerto Rico, it is leading a debt restructuring process projected to cost a total of $1.6 billion through 2026, the entirety of which is funded by Puerto Rican taxpayers. To make matters worse, several Board members appear to have significant conflicts of interest, raising questions about whether members of the Board are truly acting in the best interests of Puerto Rico. Indeed, the overwhelming sentiment amongst those on the island and the diaspora is that the Board represents an extreme and undeniable manifestation of the colonial relationship between the United States and Puerto Rico. In the years before PROMESA became law, Wall Street predation was a driving factor in Puerto Rico’s debt spiral. The banks that underwrote Puerto Rico’s bonds did not merely enable its borrowing spree; in many cases they targeted the island with unsustainable levels of debt that they knew it would not be able to pay back, all in order to pad their profits. Puerto Rico was subject to a host of predatory Wall Street financial instruments, including capital appreciation bonds (CABs) and toxic swaps. This allowed banks like Santander, Wells Fargo, Goldman Sachs, and JPMorgan Chase to close more deals and collect more fees, while making Puerto Rico’s debt portfolio significantly riskier and more costly. In fact, a large portion of Puerto Rico’s debt isn’t debt at all; it is unpaid interest on CABs—the municipal version of a payday loan. Additionally, a staggering $6 billion of Puerto Rico’s general obligation (GO) debt was allegedly issued illegally, as it violated Puerto Rico’s constitutional debt limit. Rather than rein in Wall Street speculation, the unelected Board has overseen a slow and expensive debt restructuring process using a bevy of high-paid consultants and lobbyists. In some cases, their restructuring plans have proposed awarding hedge fund creditors close to the full amount of their investment even though they bought bonds at steep discounts, while at the same time seeking to cut 80% of the payments owed to local small businesses, public sector workers, and individuals who won civil rights claims against the government. These deals are a boon to Wall Street speculators but fail to provide fiscal and economic stability for the island. The Board’s debt restructuring plans are unsustainable and, even based on the Board’s own estimates, would result in deficits as early as 2036.