Ecuador’s Social Security Health Care Program is Short Of Cash: System In Trouble?

Ecuador’s Social Security health care program is short of cash; government shifts funds from pension reserve while critics say the system is in trouble

The Ecuadorian Social Security Institute (IESS) is moving money from its pension reserve to cover costs of the health care system. Government opponents claim that the move shows that IESS is in trouble due to lack of federal support.

Ricardo Espinosa, IESS director

Ricardo Espinosa, IESS director, Credit: El Comercio

According to IESS, annual costs of the health care system are $2.1 billion while contributions from members are $1.5 billion.

IESS Director Ridardo Espinosa blames the shortfall on poor administration and too many referrals from the system’s doctors to private specialists and clinics. He says, however, the problem is temporary and that the shift of money from pensions does no endanger monthly Social Security payments.

“All of members are protected,” say Espinosa. “Everyone will receive their pensions as well as quality health care.”

Government opponents say the shift of funds is prohibited by law and proves that the federal withdrawal of 40% support for the system earlier this year was a mistake. They also say that referrals to private health care providers are part of IESS’s stated commitment to provide good health care to its members.

Meanwhile, many private providers are complaining that the government is months behind in its reimbursements.

Espinosa says that neither the health care or pension systems are in trouble and that the law allows him to make administrative decisions, including those that require moving money from one account to another.

Critics claim that the government decision to add children of members to the health care system is the main source of financial strains. They also say that contributions from voluntary members, including housewives, are not enough to cover health care costs.

This article was published in Cuenca High Life on November 21, 2015


Ecuador is definitely in a recession right now. President Correa has already been saying for 6 months now that 2016 will be a tough year economically because of the drop in the price of oil and thus, the necessity for him to do what he can right now to cut government spending.

Ecuador’s government depends upon oil revenues for a large portion of its government spending, so it has to cut spending in order to live within its means. This causes people to lose their jobs, in construction and many other areas. Many thousands of government jobs have been cut in the last year, and many thousands of private sector jobs have been cut too.

Developments such as these cut backs within the Ecuadorian government can be a disaster if you are someone who lost a job or business because of it. However, for most of the rest of the people and sectors of the economy of Ecuador, (or anywhere else for that matter), a recession is a good thing because people can usually buy more for less money during this time. Ultimately, this kind of spending eventually brings back jobs as well.

There are no other global implications other than drop in the price of oil causing most of these cut backs in Ecuador.

Many people say President Correa is governing just as he should and as he was trained to do: as an economist. He is cutting back to keep within his budget, as spending money a government doesn’t have is just not smart accounting.
Other countries might take note of President Correa’s actions to keep his country solvent and in the black.
You thoughts?
If you came here looking for more information on the nuts and bolts of Ecuador, and not on my personal thoughts about current Ecuadorian politics, feel free to order my new book,

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