San José, Costa Rica, since 1956

Social Security System panel urges job cuts

A panel of independent advisers appointed by officials at Costa Rica’s Social Security System (Caja) this week made public a report with 81 recommendations to help the troubled institution overcome financial and administrative setbacks that have nearly bankrupted it in recent years. 

Economists Fernando Naranjo and Pablo Sauma, businessman Rafael Carrillo and sociologist Juliana Martínez focused on three areas in the report: revenue, costs and management. They presented their findings on Monday to members of the Caja’s board of directors during a five-hour meeting.

“We cannot expect that all of our proposals will immediately be taken into consideration,” Sauma said. “Some of them, however, are necessary now.” 

Among the report’s criticisms are poor management, over-staffing, and bureaucratic decision making that failed to produce results. According to Martínez, a priority for directors should be to replace employees in key management positions with more results-oriented staff. 

“During the [Oscar] Arias administration, 1,200 new jobs were created in the Caja, and more than half of those were administrative jobs. A large percentage of those workers are doctors who should be treating patients, not filling out paperwork,” Martínez said.

The panel also recommended that Caja officials “revise the model used by the Caja’s general management to estimate social security deductions,” which are the primary source of the Caja’s revenue. That would help managers have a clearer picture of the institution’s income, as well as allow them to have a more accurate budget.

 Experts did not recommend raising Caja fees paid by employers and workers. Instead, they said that greater efforts should be made to ensure that residents are enrolled in the Caja and pay their fees. Panel members recommended that Caja inspectors spend at least 70 percent of working hours conducting workplace inspections. 

The panel also said more managers and department heads should be replaced. In September, Caja directors asked six general managers to resign (TT, Sept. 16). Three of the six have submitted their resignations: Infrastructure and Technology Manager Gabriela Murillo, Administrative Manager José Alberto Acuña and Logistics Manager Ubaldo Carrillo.

Another unsettled issue is the debt the Costa Rican government owes to the Caja. Some  of  that  money  has  already been paid, but panel members hope to see a meeting between Caja managers and Finance Ministry officials by the end of October, in order to set up a payment calendar. In late September, the Finance Ministry finished paying off a $167 million debt to the Caja. 

One recommendation, supported by Sauma, Carrillo and Naranjo, but not Martínez, said the Caja should study ways to reduce the amount of coverage the public health care system provides, although no examples were mentioned. 

According to Naranjo, a national debate needs to take place on universal health care to determine if the country can continue to pay for it under the current system. 

“We need to see if Costa Rica can afford and support a model of universal social security,” he said. Only Martínez said it is feasible for the Caja to continue offering universal health care coverage.

Caja Executive President Ileana Balmaceda said that the Caja’s board of directors would study the recommendations and decide on a schedule for implementing them. Caja officials are not under any obligation to adopt the recommendations since the report is not legally binding. However, Balmaceda said she and other officials have a responsibility to take the report seriously. 

 “We have been implementing a series of measures even before this report was finished,” Balmaceda said. “Our next step is to study a number of ideas that will help us reduce the amount we spend on paying employees overtime.” 

On Tuesday, the Ombudsman’s Office issued a press release urging Health Ministry officials to become more involved in the response to the Caja crisis, and suggested they help oversee the implementation of the panel’s recommendations. 

“The Caja needs to follow a path where the [experts’] recommendations become actions, and during this process, we believe that active participation by the Health Ministry is necessary,” said Ombudswoman Ofelia Taitelbaum. 

Taitelbaum’s statement is similar to those made by former Health Minister María Luisa Avila, who publicly disagreed with President Laura Chinchilla on the same issue. Ávila also has said the Health Ministry should be more involved in solving the Caja’s problems. Ávila declined to comment on the panel’s report.

In a Tuesday session with her Cabinet, President Laura Chinchilla met with panel members and discussed their recommendations. 

Chinchilla backed the recommendation that top Caja managers resign. She also created a working group consisting of officials from health, planning, finance and labor ministries to study and implement other recommendations. 

“By October 12, I expect a report from the working group that should include the specific steps to take, a calendar for when those actions will be implemented, and the names of the people who will execute the plan,” Chinchilla said. 

In a press conference held by the Citizen Action Party (PAC) on Tuesday, Legislative Assembly President Juan Carlos Mendoza urged members of the Caja’s board of directors to set a timeline for implementation of the panel’s recommendations. 

“With this report, we can confirm that most of the Caja’s issues need to be solved within the institution. In the Legislative Assembly, we are open to facilitate the processes when legal reforms are needed,” Mendoza said.  

Lawmakers also created a special legislative commission to address the Caja crisis. On Wednesday, commission members met with Balmaceda to begin the process of analyzing and the panel’s recommendations. For more than two hours, Balmaceda outlined the steps Caja officials are taking to address the financial crisis. 

Legislative commission members Viviana Martín, of the National Liberation Party, and Carmen Granados, of PAC, pressed Balmaceda on when the Caja’s managers would be asked to resign. 

“We need to be able to focus on the causes that led to this crisis and not only the problems themselves. Therefore, we need to know when those directors are going to submit their resignations,” Martín said. 

According to Balmaceda, Caja board members have already established a hiring profile for management positions. 

Luis Guillermo Solís, a political analyst and possible PAC presidential candidate in 2012, said the experts’ report is a positive step toward solving the Caja’s crisis. “It is a quality report with specific short- and long-term steps. Its biggest advantage is that it requires no legal changes, which makes it easier to implement,” he said. 

However, Solís disagreed with the suggestion that Costa Rica should consider backing away from a public health care system based on universal coverage. “This is one of the pillars of our democracy, and our country will lack direction without it,” he said. 

Solís said that the Caja has been a victim of an ongoing lack of political will for change, and a lot of corruption. 

“The Caja is crucial in Costa Rican politics. It represents an important percentage of our country’s GDP and is the basis of our welfare state,” he said. “It affects a lot of people, and its downfall would have very important consequences for every single politician.”

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