Private health insurance companies plan to cancel policies and raise rates
Ecuador’s private health insurance companies say that a new law will force them to cancel thousands of policies and drastically increase rates on others.
Provisions of proposed legislation expected to pass the National Assembly within days, require that private insurers reimburse Ecuador’s Social Security Institute (IESS) if their clients opt to use the public system. According to the government, a majority of those insured by private health plans are also covered through the IESS health plan.
The new law would also require insurance companies to provide coverage without age restrictions and to those with catastrophic illnesses. Under current law, private insurers can refuse coverage on these grounds.
The country’s largest health insurer, Salud, S.A., announced Friday that it will terminate policies for 170,000 clients in November in expectation that the proposed law are enacted.
“The law will be catastrophic for private insurance companies,” says Roberto Aspiazu, director of the Ecuador Business Committee. “It takes away many of the prerogatives that companies need to be remain viable and ultimately, to continue in the insurance business at all.”
Aspiazu suggested that the law is the result of the government’s need to cover loses to IESS. “The system is running a deficit and wants to make up loses off the backs of industry,” he said.
To cover the new costs, Aspiazu says that private policies will increase from 50% to 80%.
Ecuador’s private insurance industry provides coverage to about 500,000 of the country’s 15 million population.