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close this bookThe Nutrition and Health Transition of Democratic Costa Rica (INFDC, 1995, 228 p.)
close this folder2. Development of the social security institute
View the document(introduction...)
View the documentBackground
View the documentSocial security in Costa Rica
View the documentThe extension of direct insurance
View the documentExtension of insurance to the family
View the documentThe financial crisis
View the documentThe constitutional amendment
View the documentToward universalization
View the documentDevelopment of human resources
View the documentThe integration
View the documentThe new health care models
View the documentFinal comments

Social security in Costa Rica

The only noticeable action that took place toward the end of the last century was carried out by the Church when Monsignor Thiel, Archbishop of San Jospublished a pastoral letter called the Fair Wage. There is no doubt that this letter was directly influenced by the encyclical Rerum Novarum. However, it was an isolated event without significant impact on the small and isolated Costa Rican society of those days, when the Government relied completely on the export of coffee and bananas.

In 1906, Representative Enrique Pinto presented a project to the National Congress to protect the population against occupational accidents and profession-related illnesses. This law was not even discussed, and when it was reintroduced three years later it was rejected without substantive discussion. Artisans worked in the production of crafts, and the only industries that began to develop were the banana plantations whose production and marketing were in the hands of the transnational United Fruit Company.

Several popular political parties were founded after World War I, the most important of which was the Reformist Party. This party introduced a political program that underscored the health conditions of the workers and their families, including the need to create an organization that strengthened the fight against parasites, poverty, malaria, undernutrition, and tuberculosis. This was in response to the perception that poverty and underdevelopment were the background against which the subsequent pathologies developed. The Reformist Party, headed by Jorge Volio, faced two opposition parties during the presidential political campaign of 1923.

Since none of the three candidates obtained the majority needed to become President, Jorge Volio accepted a deal in which Ricardo Jimz would become President in exchange for the creation of an institution that would protect workers against occupational accidents and illnesses. President Jimz supported the establishment of an insurance bank that would take care of the administration of all commercial insurance available in the market. Insurance involving occupational accidents and illnesses was included, but with the characteristic that coverage was individual and each worker could expand his coverage based on his ability to pay for it and his level of education to identify the advantages of different insurance schemes.

The surprising aspect of this decision was that the Insurance Bank was created as a monopoly that favored commercial insurance policies despite a liberal philosophy of government of which President Jimz was one of the strongest exponents and that was unopposed. This situation remained unchanged until 1980, when the bank became the National Insurance Institute, which promoted the responsibility of the employer to cover the health care of his workers. Neither the bank nor this institute created their own hospital medical services. They always obtained them from the hospitals and afterwards from the Costa Rican Social Security Institute. The National Insurance Institute has always kept its distance from its homologous institution and has preserved a profitable duplication of efforts by avoiding transferring its programs to the Social Security Institute.

During the political campaign of 1928, health of the population was again among the central themes. President - elect lawyer Cleto Gonzs Vez requested a German - born engineer named Max Koberg to develop a health care project. The outcome was the introduction to Congress of the project for the creation of an Emergency System that would take care of treatment for common illnesses affecting the worker and his family. Meanwhile, protection against occupational hazards was still provided by the Insurance Bank. Congress approved the project, but the whole world became immersed in the economic crisis of 1929. Our poor country saw the prices for its exports drop to critical levels that paralyzed the economy and the possibility of financing this new project.

Other authors, such as Carlos MarJimz, mentioned the possibility of creating a Social Security Institute, but lack of experience with social security resulted in lack of support. Nevertheless, in the neighboring valley of Turrialba, 75 km from San Joswhich was considered a very long distance in those years, the owners of the coffee and sugarcane plantations established a cooperative for the provision of health services to the workers and their families. This effort was funded by the plantation owners and workers and the county, and represented an organizational scheme that was unique in the country.

In 1913, the encyclical Quadraggesimo Anno was published, complementing Rerum Novarum. It put forward the concept of organization schemes involving employers and workers that would prevent capital-labor struggles. This contrasted with the radical proposals of the Marxist organizations that were gaining ground in most countries.

After all, the concern of the Church for the workers was a political position well defined by Rome. The encyclical promoted the formation of blue-collar Catholic worker groups that could develop benefit actions in conjunction with their employers. In Europe, the German Catholic unions had established very clear guidelines that produced good results. Our Costa Rican ecclesiastical authorities sent the young and promising Father Victor Manuel Sanabria to Rome to obtain his doctorate in canon law. Upon his return he became the Archbishop of San Josnd head of the Church, which promoted the formation of Catholic unions in the country. He supported the training of Father Benjamin Nuin the social arena to promote and develop this idea and to establish health care services and a retirement and indemnification program for the disabled and for widows.

In 1928, the first group under the leadership of Manuel Mora Valverde was established in the School of Law. Within a short time, this gave birth to the Communist Party of Costa Rica and the presence of Manuel Mora as Communist representative in the National Congress. Point two in the Minimal Program of Political Action proposed to the nation the need to establish Social Security Institutions to cover the workers and their families. In 1934 this political group organized the first large strike of workers and selected for this purpose the banana plantations in order to obtain better wages and working conditions.

In 1932, Dr. Rafael Angel Calderuardia, a young physician who graduated from the Catholic University of Lovain, where he had been a student of Father Mercier, arrived in San Joss an emissary from Rome. As a result of his knowledge of the social and labor sectors he eventually became a cardinal. In the political campaign of 1936 he was elected a representative and eventually became the President of the Congress. Four years later he was almost the only presidential candidate, and officially became President in May 1940. At the same time Manuel Mora was elected a new representative to Congress and Monsignor Sanabria became head of the Church.

A few months before, in September 1939, World War II began, closing once again the markets for Costa Rican coffee and sending the country into a profound economic crisis. In addition, the policy derived from the radicalization of the groups that had close ties with the European countries involved in the conflict soon created an unstable environment. The lawyer Guillermo Padilla Castro, who was a friend and counselor of President Calderwas responsible for drafting the law that created the Social Security Institute. The idea was to establish a new institution responsible for its administration and that would meet not only the needs of the workers but also improve the political climate, and reduce the tensions that had developed. When the lawyer Padilla had the project ready, there was no one to discuss it, since the country had no previous experience with this type of institution. Therefore he requested permission from President Calderto go to Santiago to consult his friend, the lawyer Arturo Etchebarne, who was the director of Workers Insurance Program of Chile. Upon his return, the project was sent to the national Congress, which immediately began to discuss it.

Two groups opposed it from the beginning, the business sector and physicians. The business sector argued that due to the poor economic situation it was not appropriate to consider adding new costs to products, since this would limit their access to international markets. The physicians warned that this law would hurt their profession, since it would decrease their income by absorbing part of their current private patients. A large number of labor groups also opposed this law, although to a lesser extent than the other two groups. Their argument was that the fees that would be required from them were equivalent to a salary reduction in exchange for a service that was completely unknown to them.

The law that created the Costa Rican Social Security Institute was approved in November 1941, with important changes that transformed the original project. A board of directors was named the following January, electing the lawyer Padilla as assistant director. During 1942 the administration of the Institute moved with great care and organized its administration without a great deal of attention to the provision of services related to the section on Illness and Maternity, the only section that had been authorized initially.

The board of directors was worried about four issues that were not solved by the original law:

· The institution was not autonomous, since it was established as an organism linked to the executive power.

· The institution lacked its own infrastructure to provide health services. Therefore to meet the demand for hospital care, it was obliged to refer all patients to the San Juan de Dios Hospital through an agreement reached with the Council for the Social Protection of San JosProfessional services, however, were charged by the physicians as if they were part of their private practice.

· The institution's reserve funds were administered by a board formed by the manager of the Insurance Bank, the manager of the National Bank, and a representative of the President of the Republic. This undercut completely the financial and administrative autonomy of the institution.

· The maximum salary allowed for beneficiaries of 400 colones, meant that the poorer workers who needed more services were going to be the customers of the institution. This was precisely the reason why the Chilean Social Security had just closed its clinics.

To solve these problems, it was essential to modify the law, a task that was achieved the following year. The new 1943 law established institutional autonomy, and the board of directors acquired the authority to develop its own rules. With the inclusion in the 1949 constitution of the article that gave the institution the right to administer the Social Security system, the rulings and decisions of the board of directors acquired the strength of law. The Institution also assumed responsibility for the administration of its own reserve funds.

In its first year 12,000 workers were covered by the Costa Rican Social Security Institute. Almost all of them were government employees, since the executive branch provided the first contingent and a seed capital of 100,000 colones for basic operations before the Institute began to collect fees. Since the Institute was organized within the classic social security framework, it only covered wage earners. The women who were provided with services were not family members of wage earners but mainly teachers and office workers.

The Institute lacked infrastructure and therefore had to adapt a room in the San Juan de Dios Hospital to receive the first insured under the care of Dr. Esteban L, who was hired for this endeavor. Surgical services were provided by the hospital surgeons, who sent their bills to the Institute. From the beginning, the administration understood that it required its own beds and pharmacy, since the bills for medicines were of the same nature as those for professional services. For this reason, the construction of a Social Security Hospital was accelerated as much as possible, but it was not until March 5, 194 5 that the first 29 beds were available in the hospital that would later be known as Central Hospital. The Institute began to offer its outpatient services in a small building located in the city's downtown. As soon as it was possible, the a Polyclinic was opened to offer services in family medicine, specialized medicine that was highly in demand, and minor surgery.

Nevertheless, its institutional growth was slow and difficult: slow because the upper wage limit acted as a financial constraint, and difficult because the Institute did not have the empathy of the employers, target workers, physicians, or professional workers. In addition, the country experienced very difficult political times during the 1940s. Because of the upper wage limit, only the poorest workers were created, and this population with low incomes and higher health care needs represented a disproportionate financial burden for the Institute.

The difficult economic situation caused by the war in Europe decreased the ability of the employers to pay. The workers were unaware of the benefits, and the negative comments had more weight than the positive ones. In addition, the Government had lost popular support very rapidly, and the Communist Party was almost the only defender of this type of project, which also created resistance. The support provided by Monsignor Sanabria was not enough to counteract these negatives.

The physicians openly opposed the establishment of the Institute, and in 1944 they founded their first union under the leadership of Dr. Antonio Pehavarr who was the director of the San Juan de Dios Hospital. Soon, working for the Social Security Institute was not considered a professional achievement. In 1946, the board of directors approved the administration's proposal to increase the wage limit for eligibility to 1,000 colones. This led to the first medical strike and collective resignation of the physicians. The conflict was solved only when the board of directors rescinded the order. The physicians claimed that their economic interests would be inure because they would lose part of their private clientele. They also added that the wage limit could not be increased until all the workers earning less than 400 colones were covered by the Institute.

When the national assembly, in 1949, discussed the proposal to introduce legislation that would have been a ewe social advance, it rejected the proposal.