MCS CEO: To fix Puerto Rico economy, plans needed for most industry sectors
SAN JUAN – To propel economic growth and offset elements that hamper Puerto Rico’s economy, the island Rico needs to define its “endgame,” Medical Card System Inc. (MCS) CEO Jim O’Drobinak said Wednesday.
As the opening keynote speaker at the Second Promesa Conference, O’Drobinak also presented the need to focus on infrastructure and deregulation. In addition, and as for the attitude public and private entities should adopt, he said they need to think of the “greater good,” as well as use common sense and make courageous decisions.
O’Drobinak, who is at the helm of a leading health plan, life insurance and Medicare Advantage coverage provider in Puerto Rico, described the situation after the devastation from Hurricane Maria, on an already economically battered island, as a black swan, referencing the term popularized by the statistician Nassim Nicholas. This term refers to a society that can withstand events that are hard to predict.
Ultimately, O’Drobinak argued that besides particular economic or social factors, Puerto Rico’s main problem is that it needs to grow its economy, and to put it in context, the CEO compared economic elements between Puerto Rico and the U.S. mainland. Among the factors he highlighted, is the local debt per capita, which is much lower when compared with the States, compounding the island’s lack of potential to meet obligations.
“The debt situation per person in the United States versus Puerto Rico, [the latter] which has a much more modest debt limit–the United States is almost 2.8 times as much, but the problem is the size of the economy, because we all know this level of debt [of the central government] cannot be serviced,” the CEO stated.
Another issue he underlined is the island’s population decline, whose rate has accelerated faster than originally projected.
“What everybody worries about is when the smoke clears. Where is Puerto Rico going to be from a population perspective, i.e., when the diaspora leaves. Where is it going to end up?” O’Drobinak questioned.
As for solutions, the CEO argued that while the administration of Gov. Ricardo Rosselló is on the right track, there needs to be deregulation. This means the process to get certifications and permits to do business in Puerto Rico needs to be streamlined. O’Drobinak included as part of the steps he endorses the privatization of Puerto Rico’s Electric Power (Prepa) and Aqueduct & Sewer (Prasa) authorities.
To promote business growth, O’Drobinak assured this component would need to go hand in hand with sufficient infrastructure development. “Good-quality public education,” policing and proper healthcare are also required. “Puerto Rico has 93% of people covered by group healthcare plans, second to the United States, and second in a good way, behind Massachusetts,” he said about the latter.
On the other hand, the CEO was concerned that he has yet to see a more defined goal of “what the endgame” is regarding what economic development will look like, and suggested a focus on developing concrete plans for tourism, manufacturing, the service industry and healthcare.