Zika Could Make Puerto Rico’s $70 Billion Debt Crisis Look Like Chump Change

Zika Could Make Puerto Rico’s $70 Billion Debt Crisis Look Like Chump Change


President Obama has until Sept. 15 to choose the seven-member fiscal control board that will be empowered to effectively control the Puerto Rico’s finances and devise a solution to the island’s $70 billion-plus debt crisis. Six of the seven members will come from lists provided by House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. Obama gets to appoint the other, subject to confirmation by the Senate.

Given the events of the past few weeks in Puerto Rico, at least one if not all of the members of that board should specialize not in debt or finance, but public health, which at this point is a far bigger danger to the future viability of the commonwealth.

Related: Congress Doesn’t Seem to Care About Zika — and Neither Do Most Americans

The Zika crisis in Puerto Rico hit a critical mass last week as the the 10,000th case of infection on the island was reported. Nearly 2,000 of those infections occurred in just the previous seven days, and the new total that will likely be released today is expected to be just as grim. And that’s just the people we know about: Since the majority of Zika cases show no outward symptoms, many more Puerto Ricans may have contracted the disease, which has been sexually transmitted in some circumstances in addition to being borne by mosquitoes.

Over 1,000 of those infected are pregnant women, who are instantly susceptible to having their babies born with birth defects like microcephaly, where the child has an abnormally small head. And Puerto Rican hospitals have logged at least 30 cases in adults of Guillain–Barré syndrome, which causes temporary paralysis.

The U.S. government declared a state of emergency, which frees up special funds to combat the disease. But it’s not expected to be enough: Surgeon General Vivek Murthy said last week he expected fully one-quarter of the island’s 3.5 million citizens to contract Zika by the end of the year.

Related: Zika's Origin and Global Spread

This was predictable and predicted. The public health infrastructure in Puerto Rico has teetered on collapse for months, amid the debt crisis and rampant austerity. Around $200 million in direct cuts to health services went through last year. Medicaid reimbursements are sharply lower on the island than on the mainland, making it difficult for health professionals to survive. And most people with money and skills are leaving, creating a massive talent drain. By one account, a doctor a day has left the island over the past year. And the public, skeptical of a government that ran up debt and created the conditions for austerity, isn’t heeding many of the warnings to cover up and wear insect repellent.

This makes Puerto Rico the last place on earth equipped to handle an outbreak of this kind, and it’s why Congress’ failure to authorize funds to fight the Zika epidemic is so unconscionable. First, Congress shortchanged the Obama administration’s $1.9 billion request, and then House Republicans tried to add ideological riders to their Zika funding bill, including cuts to federal support for Planned Parenthood and even a measure to allow the Confederate flag to fly in national cemeteries.

Related: US Government Shifts $81 Million to Zika Vaccine Research

The White House has shuffled scarce funds to put toward Zika efforts, but that money is not nearly commensurate with their initial request. And because of that, Zika is now far more expensive in places like Puerto Rico, simply because more people will contract the disease, raising the likelihood of widespread birth defects.

Consider this: If you add up the cost of pregnancy and care for a child with microcephaly or other defects like incomplete brain development, the lifetime costs, direct and indirect, could equal $4.1 million. That means that 20,000 babies born to Zika-infected pregnant mothers — and with widespread infections, this is a strong possibility — would cost more than the current amount of money Puerto Rico owes to creditors. Medicaid picks up a lot of that, but the lower Medicaid reimbursement rates in Puerto Rico then come into play.

Related: Here’s Why Obama’s Medicaid Expansion Is Costing So Much More

The Zika emergency will give Puerto Rico a short-term boost of needed cash. But that will simply not stretch far enough, and if it passes through directly to creditors, it will be useless.

This brings us back to the fiscal control board. These seven officials will have tremendous power to allocate resources on the island and work toward a sustainable fiscal solution. But the word “sustainable” doesn’t mean in August what it meant in February. “Sustainable” now refers to ensuring the island’s habitability. It doesn’t matter if the debt gets reduced to a certain level of the commonwealth’s GDP if nobody can live on Puerto Rico without being infected by mosquitoes.

To my knowledge, Paul Ryan and Mitch McConnell have not revealed their lists for the fiscal control board, which President Obama must choose from for the bulk of the panel. And the president has not revealed his selection to the board. But fiscal experts won’t understand the most efficient and cost-effective way to fight the epidemic; only doctors and public health officials have the necessary expertise. They would have the contacts to appeal to non-governmental organizations or public health charities to work on the problem. They would be in the position to explain to the rest of the board the urgency of the situation — how money earmarked for creditors should instead be put to help halt Zika.

Related: Health Care Costs Will Push the Debt Into High Risk Territory

Without that level of knowledge on the board, it is very likely to operate in ignorance of the crisis, and cut deals with financiers that will neglect the terrible consequences of Zika. Money that could be directed to building up the health infrastructure will be slashed in furtherance of balancing the island’s budget. Does it matter that Puerto Rico gets on a path to fiscal stability if that also creates a path of Puerto Ricans fleeing in droves?

Any other country or commonwealth facing an epidemic at the scale of the Zika crisis in Puerto Rico would mobilize as if preparing for war. If the control board only prepares to “make hard choices” by cutting government services to the bone and giving bondholders a deal they can smile about, they may be destroying the island in order to save it.

This article was updated to correct the description of microcephaly.