KCCI: "Next Year's Health Insurance Premium Rate at Least 'Frozen'... Must Respond with Rational Expense Management"

"Concerns Over Long-Term Stagnation of the Korean Economy and Labor Market"

Including Comprehensive Adjustment of Expansion Plans for Coverage
Response Should Focus on Rational Management of Expenditures

KCCI CI (Photo by KCCI)

[Asia Economy Reporter Kim Ji-hee] The business community has reiterated its stance that next year's health insurance premium rate should be at least 'frozen.' While the government initially planned an increase in the mid-to-high 3% range, it is reportedly considering a rate in the mid-to-high 2% range in light of the public burden caused by the novel coronavirus disease (COVID-19). This reconfirms the previous argument for 'freezing or lowering' the rate. It also added that rather than further increasing the premium rate, rational expenditure management should be implemented to strengthen pandemic response capabilities.

On the 17th, the Korea Employers Federation (KEF) stated in a position paper, "Considering the worst economic and employment crisis caused by the COVID-19 pandemic, the deterioration of companies' payment capacity, and the uncertain recovery outlook of the global economy, next year's health insurance premium rate needs to be at least frozen."

The KEF pointed out, "As of 2018, companies pay about 38% of the annual health insurance premium revenue, and this corporate burden naturally increases every year due to workers' wage increases in addition to premium rate hikes." Over the past three years since 2018, the health insurance premium rate has cumulatively increased by 8.74%, while the actual premiums paid by workplace subscribers have increased by 16.71% due to wage increases, and correspondingly, the corporate share, which bears half of the premiums, has also increased by that amount.

The recent global COVID-19 crisis was also cited as one of the reasons to freeze the premium rate. The KEF explained, "South Korea recorded negative growth in the first half of this year, and there are forecasts that the global economy will find it difficult to fully recover to the pre-COVID-19 state for a considerable period, raising concerns about a long-term recession in our economy and labor market." It added, "In response, the government is also deferring health insurance premium collection enforcement to alleviate fixed cost burdens excluding labor costs for companies." It emphasized, "We must consider that countless companies are facing the issue of how to endure and survive amid a national emergency economic and management crisis."

The KEF also cited a 'Public Perception Survey on Health Insurance Burden' it conducted in May, which showed that more than half, 53.3%, demanded 'freezing or lowering' next year's health insurance premium rate. In contrast, only 8% and 2.6% supported the government's considered increase in the '2%' or '3%' range, respectively. Regarding the government's premium rate increase policy to expand health insurance benefits (strengthening coverage), 76.5% of respondents disagreed. The KEF analyzed, "Since the implementation of the current health insurance coverage enhancement measures, the public's insurance premium burden has intensified, leading to a largely negative evaluation of further premium rate increases."

(Data=Kyunghyong)

Regarding recent concerns about the mid- to long-term deterioration of health insurance finances, the KEF's position is that "the government should place more emphasis on rational expenditure management, including a comprehensive adjustment of the coverage expansion plan, rather than on increasing premium rates."

According to the KEF, despite the rapid increase in health insurance premium rates, the total health insurance medical expenses (sum of insurance benefits and statutory copayments) increased by an average of 11.7% annually over two years from 2018 to 2019 after the current coverage enhancement measures were implemented. This is a significant increase compared to the 7.7% average annual increase over five years from 2013 before the measures were implemented.

Therefore, the KEF stated, "Systematic policy responses from the government are required regarding factors that deepen the burden on subscribers, such as rapid aging combined with the world's highest medical utilization rates, substantial government coverage expansion, fraudulent claims, and overall increases in management and operational costs." It added, "Future coverage enhancement tasks under review should be selectively pursued according to priorities considering the financial soundness of health insurance, and as much as possible, should be covered by expanded government subsidies."

This content was produced with the assistance of AI translation services.