MAYAGÜEZ, P.R. — The first visible sign that the health care system in Puerto Rico was seriously in trouble was when a steady stream of doctors — more than 3,000 in five years — began to leave the island for more lucrative, less stressful jobs on the mainland.
Now, as Puerto Rico faces another hefty cut to a popular Medicare program and grapples with an alarming shortage of Medicaid funds, its health care system is headed for an all-out crisis, which could further undermine the island’s gutted economy.
On an island where more than 60 percent of residents receive Medicare or Medicaid — an indicator of Puerto Rico’s poverty and rapidly aging population — the dwindling funds have set off outpourings of concern among patients and doctors, protest rallies and intense lobbying in Washington.
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And while the crisis is playing out most vividly today, its cause dates back decades and stems, in large part, from a vast disparity in federal funding for health care on the island compared with the 50 states. This disparity is partly responsible for $25 billion of Puerto Rico’s $73 billion debt, as its government was forced to borrow over time to keep the Medicaid program afloat, according to economists.
Dr. Johnny Rullán, right, a former secretary of the island’s Health Department, is lobbying for equal funding. Credit Dennis M. Rivera Pichardo for The New York Times
“These are a cascade of cuts that will have disastrous, gigantic implications,” said Dennis Rivera, the chairman of the Puerto Rico Healthcare Crisis Coalition, a group of doctors, hospitals, health care advocates, unions and insurance companies lobbying the Obama administration and Congress. “Health care in Puerto Rico is headed for a collapse.”
He added, “If we pay the same Medicare taxes and Social Security taxes, we should be treated equally.”
In January, the federal government is supposed to cut payments to Medicare Advantage plans in Puerto Rico by 11 percent. The plans, offered by private companies, are a popular alternative to Medicare, often providing extra benefits and accessibility.
Three-quarters of the Medicare population on the island is enrolled in Advantage, and patients, many of them poor and chronically ill, worry about the impact of the cuts on costs and benefits.
The cuts are expected to lead to higher co-pays for medication and hospitalization, among other things, said Dr. Richard Shinto, the president and chief executive of InnovaCare, an insurance company with three Advantage plans in Puerto Rico.
“There will also be certain services we might have provided in the past that we can’t now,” Dr. Shinto said. Free rides to doctor’s offices are an example.
In addition, several hundred doctors are already losing their contracts with major managed care companies. InnovaCare has terminated 200 contracts, Dr. Shinto said.
“That’s one way on the island we are trying to manage the significant revenue reductions we’re to have — narrow our network of physicians,” he added.
This is in part because of how doctors practice here; they tend to be in solo practices, making it difficult to meet all requirements. Lower funding levels also complicated efforts to meet standards.
The island’s Medicaid program — called Mi Salud, or My Health — serves nearly 1.6 million people, or 45 percent of the island’s population, the largest share in the United States, and it is also struggling, said Ricardo Rivera, the executive director of the Puerto Rico Health Insurance Administration, which carries out the Medicaid program.
Health care makes up 20 percent of the Puerto Rican economy, which has been in a slow decline as manufacturing jobs have disappeared and the government has borrowed more than it could pay back. Because of the island’s precarious finances, the Medicaid program lacks access to credit and is so short on cash that it owes providers $200 million, a figure it has whittled down from $350 million. It is also spending a one-time $6.4 billion federal grant at a much faster pace than expected, Mr. Rivera said.
The Medicaid program, which relies on both federal and commonwealth funds, could run out of the grant money as early as the end of 2016, three years earlier than anticipated, Mr. Rivera said. This could mean that 900,000 people will have to be dropped from the program.
Puerto Rico cannot use the federal health insurance exchange under the Affordable Care Act, and it chose not to create its own exchange because its citizens do not pay federal income taxes and thus are not eligible for the subsidies that make exchange plans more affordable.
A spokesman for the Centers for Medicare and Medicaid Services said the agency was aware of the growing concerns and was working weekly with a group of politicians, health care officials, advocates and insurance companies here to find solutions. So far, none have been offered.
The reduction in Medicare Advantage funding is meant to bring federal payments for that program more in line with traditional Medicare fee-for-service rates in Puerto Rico. Advantage plans on the mainland have received cuts in recent years for the same reason, although generally not as big.
But Puerto Rican officials and health care experts have long criticized the federal formula for calculating its fee-for-service rates as unfair, and point out that even the Virgin Islands, a much smaller commonwealth, gets considerably more money for Advantage.
Puerto Rican lawmakers and doctors warn that it will be more expensive for the United States to ignore the problem for one reason: Those who need medical care can quickly settle with relatives on the mainland, where it is pricier.
Sitting in the waiting room of his doctor’s office in this large, poor Puerto Rican city, Santos De Hoyos, one of the 275,000 patients who are on both Medicare Advantage and Medicaid, said he was bracing for higher co-pays for medication. At 63, he has a heart ailment, asthma and diabetes and takes numerous medications, including one that costs $150 per dose.
“If the medical plan stops covering it or I lose the plan, I die,” said Mr. De Hoyos, a former worker at a canned tuna factory. “I am praying that God puts his hands into this.”
Mr. De Hoyos typifies the health care challenges facing Puerto Rico, which has among the highest rates of diabetes and asthma in the United States. The same is true of Mayagüez, a city that once relied on manufacturing but now depends greatly on the health care industry.
“There are health conditions on the island that are just mind-blowing,” said Sara Rosenbaum, a professor of health law and policy at George Washington University. “You’ve got a tremendous burden of poor health, tremendous costs, a tremendously dependent population and a Medicaid program whose per-capita payment is a fraction of the U.S. per-capita rate.”
In San Juan, the Puerto Rican capital, beds in hospital emergency rooms line the hallways. There are so few nurses that people often hire their own private nurses during hospital stays.
Doctors, too, are preparing themselves.
“Medicare Advantage allows us to live and pay our bills,” said Dr. Carlos Román, a family doctor here. “And the companies are not going to cut into their profits; they will cut into our pay and limit treatments, services and medicine.”
Dr. Luis R. Vicenty, 55, a longtime Mayagüez internist, recently received termination letters from two Advantage companies.
Like many doctors from the island, a group that is well-trained, board-certified and bilingual, Dr. Vicenty received a job offer on the mainland, at a hospital in Washington State.
The crush of doctors who have left has created a serious shortage of specialists. Most medical school graduates do not even bother looking for jobs here; almost none are available, and those on the mainland typically pay double.
“Doctors can leave,” Dr. Vicenty said. “So this will get worse.”
Easy solutions to the health care crisis do not exist, mostly because it stems from the disparity in funding, something that only Congress can change. Mr. Pierluisi has introduced legislation to address some of the problems.
Puerto Rico’s health care woes began in 1968, when Congress placed a cap on Medicaid in the United States territories that sharply limited the federal government’s contribution.
For Medicaid, this means that Puerto Rico typically gets $373 million a year from the federal government and has to pick up the rest of the $2.5 billion tab, Mr. Rivera of the Puerto Rico Health Care Coalition said. Last year, Oklahoma, which is wealthier than Puerto Rico, received $3 billion from the federal government, according to data compiled by the coalition. Mississippi, also not as poor as the island, received $3.6 billion.
A similar discrepancy exists with Medicare and Medicare Advantage. Puerto Rico’s Medicare reimbursement rates for doctors are 40 percent lower than the mainland’s, and the Medicare Advantage program is paid 60 percent of the average rate in the states, according to coalition data.
Dr. Johnny Rullán, a health care expert who was once head of the island’s Health Department, said Puerto Rico was not asking for more. It was asking for equity.
“We just need equal funding,” he said. “That will take care of the problem.”
A version of this article appears in print on August 3, 2015, on page A1 of the New York edition with the headline: PUERTO RICANS BRACE FOR CRISIS IN HEALTH