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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

The financial crisis

The rapid rate of increase in the covered population precipitated a financial deficit, since the upper wage limit of 400 colones was still in place. In May 1958, Mario Echandi became President of Costa Rica and named Franklin Solno Salas, who was a lawyer and President Ex-officio of the board of directors of the Institute, as Labor Minister. In his inauguration address, President Echandi surprised many when he expressed his desire to expand social security services on a large scale. Since new financial resources would be needed, the Treasury Minister, lawyer Alfredo Hernez Volio, proposed the elimination of the upper wage limit, and a redistribution of the government contribution. The latter was opposed by the board of directors in order to maintain the symbol of the government as benefactor. In August 1958, the Echandi administration proposed a massive extension of the Illness and Maternity law. For this purpose, it would be necessary to remove wage limits, redistribute the government's contribution, and transfer the Professional Risk system and the Insurance Bank to the Social Security Institute, which would receive their contributions. In addition, the government would recognize and pay the accumulated debt, dependent coverage would be universal, and rural areas would benefit from the Disabled, Elderly, and Death initiative.

This proposal was the broadest that the Institute had ever considered, and it reacted with caution because it lacked physical infrastructure and personnel to assume these new responsibilities. On the other hand, the redistribution of the government contribution provoked reactions from private sector employers who considered the financial charge to them excessive, since in principle it meant the removal of the upper wage limit of 400 colones. Minister Solno personally took charge of processing the law that was drafted for this purpose. On its pare, the board of directors of the Institute, sent a different law to Congress that would allow autonomous institutions to pay their contributions directly to the Institute, and independently of the government, which would be relieved of this burden.

Under this proposal, the Institute would have been allowed to increase the upper wage limit from 400 to 1000 colones immediately and would have been given the authority to increase it even more in the future if it deemed it necessary. In reality, however, an excellent financial opportunity was lost by the Institute. Of all the proposals, the only one that was approved, mainly because of direct intervention of the Labor Ministry, was the increase in the upper wage limit to 1,000 colones, which was immediately applied and followed by an expanded coverage. At the time, the National Physician's Union did not oppose this measure, since unemployment among its members was running high and the strengthening of finances of the Illness and Maternity initiative could help create new jobs. The number of eligible workers and dependents doubled in four years as a result (Tables 1 and 2).

TABLE 1. Health and Maternity Insurance, 1942-1962

Year

Workers Insured

Families Insured

Total Insured

Total Population

Total Employed

% Employed Covered

% Population Covered

1942

12,000

0

12,000

N.A.

N.A.

N.A.

-

1943

14,000

0

14,000

N.A.

N.A.

N.A.

-

1944

25,710

0

25,710

685,305

233,003

10

4

1945

43,472

0

43,472

704,434

239,507

18

6

1946

47,192

5,000

52,192

725,222

246,575

19

7

1947

50,333

N.A.

N.A.

745,924

253,614

20

7

1948

52,750

N.A.

N.A.

766,064

261,096

20

7

1949

57,398

N.A.

N.A.

788,852

268,798

21

7

1950

63,317

N.A.

N.A.

812,056

272,774

23

8

1951

65,900

N.A.

N.A.

838,084

282,434

23

8

1952

70,189

N.A.

N.A.

868,741

290,159

24

8

1953

71,876

N.A.

N.A.

971,312

297,347

24

7

1954

73,072

N.A.

N.A.

1,008,766

306,035

24

7

1955

79,290

42,813

122,103

1,048,512

315,133

25

12

1956

81,348

51,935

133,283

1,089,570

326,563

25

12

1957

84,390

58,351

142,741

1,131,762

335,739

25

13

1958

86,019

72,308

158,327

1,176,480

347,588

25

13

1959

92,215

56,265

148,480

1,226,895

359,802

26

15

1960

94,304

94,802

189,106

1,276,001

371,726

25

15

1961

105,562

119,983

225,545

1,320,662

384,179

27

17

1962

111,279

157,018

268,297

1,367,067

396,060

28

20