Ecuador insurance companies say health care mandates could force them into bankruptcy

Executives of Ecuador’s private health insurance providers say they could go out of business if changes are not made to a 2016 law mandating new coverage. The Association of Prepaid Medicine Companies has requested an “urgent” meeting with President Lenin Moreno in a letter sent Tuesday.

Ecuador’s private insurance companies want an end to health care mandates.

The executives say there are two issues they want to discuss with the president. The first are mandates in the new law requiring insurance companies to cover pre-existing medical conditions and to insure clients no matter their age.

Of greater concern, they say, is the requirement that insurance companies reimburse the national social security health system (IESS) if its customers seek treatment through IESS.

“We appreciate the idea of covering everyone regardless of age or pre-existing conditions but this cannot be done without raising rates,” says Gustavo Zevallos, of Serviseguros. “The law says we have to do that but doesn’t allow us to recoup our costs.”

The reimbursement requirement for customers of private insurance who also use IESS services poses an immediate problem, says Eduardo Izurieta, president of the health insurers association.

“This obligation was invoiced by IESS last month and it came to $90 million for our members,” he said. “Since the total profit for the entire industry in 2016 was only $12 million, it will be impossible to pay.”

Juan Fernando Serrano, CEO of Latino Insurance, says the idea that insurance companies could afford to cover the IESS costs of customers who have dual coverage was based on bad accounting. “The Superintendencia of Companies during the (Rafael) Correa administration, told the National Assembly that insurance carries had a profit of $221 in 2014 when, in fact, it was actually $16 million,” he said. “So, a key provision in the law was based on an error and when we pointed it out during assembly debate, no one listened.”

Serrano also wants to talk to Moreno about the fairness of insurance companies being forced to repay IESS. “If our customers are members of IESS, it is their choice if they want to use those services,” he says. “They pay into the system like everyone else and it is grossly unfair that we should be penalized for their choice. In effect, it is a money grab by the government to cover the deficit at IESS.”