Treasury Secretary Jack Lew Visits Puerto Rico Amid Debt Crisis
ROBERT SIEGEL, HOST:
Treasury Secretary Jack Lew is in Puerto Rico today to get a firsthand look at the impact of the island's financial crisis. Last week, the U.S. territory missed a $400 million debt payment. An even larger payment, nearly $2 billion, comes due July 1 and, needless to say, Puerto Rico won't be able to pay that either. This week, Congress is expected to take up the latest draft of a bill dealing with the crisis.
NPR's Greg Allen is traveling with the Treasury secretary, and he joins us now from San Juan. And Greg, as the negotiations around the bill are going on in Washington, what does Secretary Lew want out of this trip to Puerto Rico?
GREG ALLEN, BYLINE: Well, Robert, you know, Secretary Lew has been here before to meet with the governor and other top officials on the island. And they're all pretty much on the same page, that Puerto Rico needs Congress to give the island tools to restructure its more than $70 billion in debt.
But on this trip, Lew is not just meeting with Puerto Rican officials. He's here to visit places like schools and hospitals. His main purpose is to show what's at stake if Congress doesn't act. One concern is how well Puerto Rico is prepared to deal with things like the Zika virus. Here's what Secretary Lew has to say about it.
JACK LEW: If you're an island where there's widespread exposure to Zika and hospitals are losing personnel and unable to get enough of the drugs they need to treat patients and the areas where mosquitoes breed, there's no money to deal with mosquito eradication - those are very important realities. It's not a future problem. It is something happening now.
SIEGEL: Well, talk about what he's alluding to there, Greg. How is the financial crisis affecting the health care system in Puerto Rico?
ALLEN: Well, while he's here, Secretary Lew is visiting Puerto Rico's largest hospital, Centro Medico in San Juan. He's there to see, you know, the problems that hospitals are dealing with day in and day out here. A majority of people in Puerto Rico receive Medicare, Medicaid or both, so you've got, like, 60 percent plus on the island on some kind of public health insurance.
But the problem is the island - which is, by the way, a U.S. territory - has never received reimbursements comparable to what the states receive. For years, the government has accumulated operating deficits in health care and then it's covered them by selling debt Wall Street. Payments to insurance companies now and to doctors and hospitals are very low, and with the crisis - the financial crisis - the island's health insurance agency is behind in making its payments.
So we've got hospitals doing layoffs, wards being closed, doctors are leaving the islands for jobs on the mainland. It's estimated at least one doctor a day leaves Puerto Rico for jobs elsewhere. And officials are hoping that they'll get some relief from Congress also on this issue of Medicaid and Medicare funding.
SIEGEL: Well, what's holding up the legislation in Congress, Greg?
ALLEN: Well, there's a lot of sensitive things around this bill. Fiscal conservatives backed by some of Puerto Rico's creditors on Wall Street have been calling it a bailout. And that's a word that Treasury Secretary Lew and other proponents say is wrong, unfair and just not true, that it's not a bailout. Here's what Lew has to say about it.
LEW: Looking at Puerto Rico, they need to have their debt restructured because they're insolvent. It's been made clear that there's no interest on the part of Congress right now in spending a penny of taxpayer dollars. And there is nothing about the legislation that's moving through Congress that is a bailout. This is a plan for an orderly restructuring with an oversight authority to get Puerto Rico in a place where it can have a stable foundation to start thinking about a sound, economic future.
ALLEN: Well, Robert, the bill under discussion doesn't use any federal money to cover Puerto Rico's debts. What it would do is create a financial control board that would help the island restructure its $70 billion debt, even if that means imposing terms, ultimately, on creditors. And that's something that hedge funds and other creditors on Wall Street don't like. They want to set their own terms. Washington doesn't have a lot of time to get this done. It needs to have something in place by the time the next big debt payment is due on July 1.
SIEGEL: Thank you, Greg.
ALLEN: You're welcome.
SIEGEL: That's NPR's Greg Allen in San Juan, Puerto Rico. Transcript provided by NPR, Copyright NPR.