The social security system in Ecuador is organized around three institutions: the Ecuadorian Social Security Institute (IESS), the Armed Forces Social Security Institute (ISSFA) and the National Police Social Security Institute (ISSPOL). The IESS administers the following programmes: the Farmers’ Social Insurance (healthcare and old-age benefits), Individual and Family Health Insurance, including cash benefits, work injury and general insurance for disability, old-age and death.
The principal challenge of the Ecuadorian social security system is its consistently low coverage rate. In 2005, only 15.3% of the population had access some form of health insurance. Of the economically active population, the proportion of premium payers hovers around 23%, so that out of 100 economically active persons, 77 do not pay social security premiums.
From a gender perspective, women are most strongly affected by exclusion from social security. Around 13.5% of women have social security coverage, compared to 17% of men. The most vulnerable population in terms of social health security are children, as they only have coverage under the health insurance programme for their first year of life.
In addition to the problem of poor social security coverage, there are other problems related to management, such as non-payment of premiums, problems with the enrolment process, premium collection and payment control, which all affect the IESS’ income.
Ecuador’s pension system is mixed and consists of an intergenerational solidarity scheme and an individual capitalization scheme, but in practice only the intergenerational solidarity scheme is operating. Due to the low contributory coverage of the workforce, only some 11% of over-65 year-olds acquire the right to a pension. The lack of social protection of 90% of elderly persons also limits their access to health insurance coverage and increases the poverty level.
The Job Risk Insurance is financed through a deduction of a fixed percentage from salaries. This has the great inconvenience of not providing an incentive for prevention, causing the costs of financing the insurance therefore go up.
Although the IESS is well established in Ecuador and is one of the pillars of the social security system, the above mentioned problems, which remain unresolved despite several attempts at reform, have led the current Government to introduce a complete reform of the system, aiming to streamline social security with a national health insurance and a basic universal pension for persons over 65. The Government has requested technical support from the ILO for the reform.