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 Solórzano 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 Hernández 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 Solórzano 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

The constitutional amendment

The extensive discussion of the Institute's finances that took place in Congress had important consequences. Two representatives, lawyers Alfonso Carro and Enrique Obregón, played important roles. Alfonso Carro was a member of the Institute's Board of Directors during the Figueres administration and President of the Board during the Orlich administration. Together with the lawyer Enrique Obregón, he was one of the main promoters of universalization of the principles of social security. When the topic was being discussed, they gave their support to those measures that promoted the expansion of social security. At one point, Obregón, suggested that 10% of the national budget should be assigned permanently to finance the expansion.

TABLE 2. Health and Maternity Insurance, 1962-1991

Year	Workers Insured	Families Insured	Total Insured	Total Population	Total Employed	% Employed Covered	% Population Covered
1962	11,279	157,018	268,297	1,367,067	396,060	28	20
1964	126,435	214,362	340,797	1,464,437	419,819	30	23
1966	138,450	397,284	535,734	1,567,230	446,676	31	34
1968	176,148	528,300	704,448	1,664,581	499,374	35	42
1970	202,291	606,373	809,164	1,762,462	528,739	38	46
1972	254,696	764,088	1,018,784	1,867,045	560,114	45	55
1974	308,124	924,372	1,232,496	1,987,895	638,432	52	62
1976	381,727	957,665	1,239,392	2,025,763	664,805	51	61
1978	519,020	1,075,243	1,594,260	2,151,225	719,637	64	74
1982	603,393	1,045,286	1,648,679	2,423,835	835,422	64	68
1986	691,033	1,179,284	2,156,139	2,720,136	957,283	66	81
1990	1,496,268	1,373,127	2,537,423	3,032,394	1,074,205	68	84
1991	1,526,523	1,400,838	2,592,563	3,108,342	1,104,066	67	84

After multiple discussions, at the end of May 1961 his insistence prevailed and the Constitution was amended with Article 177, which advocated the inclusion of all Costa Ricans in the Illness and Maternity Initiative. This amendment gave the Institute 10 years to implement this measure and guaranteed that any budgetary needs would be covered from the national budget. This political decision, which was received with great reservations by the Institute, meant the birth of the true principle of social security, where the benefit is for all the population, going beyond the limited, exclusive, and discriminatory concept that had been applied before, following Bismarck's model.

When Congress approved this decision, only Cuba and Canada had taken steps such as this. Canada followed policies inherited from Great Britain, and Cuba took these measures as part of a new political system that justified a centralized economy. Costa Rica was the country that, based on a democratic ideal, incorporated social security as part of the mechanism of equal access to health care. From then on, a series of gradual modifications took place. The most important one was the opening of the School of Medicine to train the physicians required. A few years later a school for the training of medical technologists was established.

Ever since the extension of coverage in 1960, the shortage of hospital space became gradually more serious, not only for the number of beds required but also because of the need to establish specialized services outside of the metropolitan area that would function in accord within the standards of institutional medicine. This need was met by the inauguration of the Mexico Hospital in 1969. The Institute began the construction of its hospital with the generous support of the Mexican Social Security Institute. This effort represented a strong affirmation of principles as well as a commitment to excellent health care services.

In March 1969, the outpatient services were opened, and in September of thee year the hospital had 600 beds ready to be used. This gave the Social Security Institute the technical basis required to begin the universalization of services. Since rural areas also required hospital beds, a series of agreements was formalized at the beginning of the 1960s in order to provide peripheral hospitals with the infrastructure needed for hospital care, medical visits, medicines, and support services. This contrasted with the very limited services provided to charity patients and created the ethical need to achieve universalization and to erase, as soon as possible, the discriminatory differentials that were difficult for the health personnel working in hospitals to apply and to accept.

In addition, given the increase in expenditures of the rural medical centers, the government had for several years created fixed subsidies for each of them. These subsidies were distributed through the Social Medicine Technical Council under the direction of the Ministry of Health. The proceeds of the Asilo Chapui lottery, administered by the Social Protection Council of San José, were also made available for distribution by the Council and became a very important complementary mechanism of new income for the rural hospitals. In addition there were several specific taxes designated for these, especially a sales tax thee was sent by the Ministry of Finance for the use of the Social Security Council. A study at thee time showed that the government subsidy represented 40% of the budget of the hospitals, the Institute contributed 30%, and the lottery and ocher minor sources made up the difference.

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