Inertial Health Insurance Subsidies at Sunset... "Support Should Be Provided as Needed"

14% of Health Insurance Budget Revenue Supported by Taxes... Deficit Despite Financial Input
Serious Financial Leakage Due to Illegal and Improper Claims... Need to Examine Whether Balance Is Maintained

[Asia Economy Reporters Seo So-jeong, Jang Se-hee]#. The National Health Insurance Service recently uncovered through internal reports that non-medical personnel, who are not authorized to open medical institutions, hired doctors to establish and operate office-managed hospitals, where medical practices were conducted and prescriptions issued, resulting in the improper receipt of 1.2 billion KRW in medical benefits. Cases were also found where patients visiting for non-reimbursable treatments were charged the full out-of-pocket medical fees, but medical records were falsified to indicate treatment for reimbursable conditions, leading to fraudulent claims. Additionally, there were instances where long-term care hospitals falsely reported doctors who did not actually work as full-time staff to claim improper reimbursements.

A National Health Insurance Service official stated, "Through amendments to the Judicial Police Duties Act (Special Judicial Police), we will eradicate illegal and fraudulent claims by office-managed hospitals and strengthen post-management of pharmaceuticals and insurance benefits." The health insurance finances are relatively sensitive compared to other funds. This is because it is delicate to address financial support issues under the principle that the state must take responsibility for public health. After eight consecutive years of surplus, the finances turned to deficit starting in 2018, making state support more important. However, considering projections of increasing financial burdens due to accelerated aging, calls for a fundamental review of health insurance financial support are gaining traction. It is argued that rather than providing a fixed 14% of annual revenue as support, necessary budgets should be allocated to prevent financial leakage caused by illegal and fraudulent claims.

◆Government Subsidies Provided Even During Health Insurance Surpluses= According to the Ministry of Health and Welfare and the Ministry of Economy and Finance on the 28th, government subsidies for health insurance premiums have been extended four times over the past 15 years. Each time the sunset clause approached since 2006, extensions were granted for 5 years (2006?2011), 5 years (2011?2016), 1 year (2016?2017), and 5 years (2017?2022), respectively.

The government provides tax support amounting to 14% of the projected revenue under the Health Insurance Act. This has continued even during periods of health insurance surpluses. In 2006, the health insurance financial balance (revenue minus expenses) recorded a surplus of 445.3 billion KRW. At the times of extension decisions, surpluses were 1.5023 trillion KRW (2011), 2.719 trillion KRW (2016), and 795.5 billion KRW (2017).

Last year, due to reduced hospital visits amid COVID-19, health insurance premium income increased by 5 trillion KRW to 62.4849 trillion KRW compared to 2019. Meanwhile, expenditures increased by only 3 trillion KRW. Within the government, cautious opinions have emerged suggesting that given the stable premium income and reduced expenditures, it might not be necessary to extend the sunset clause.

◆Strengthening Coverage and Preventing Illegal and Fraudulent Claims= Opinions have been raised inside and outside the government that there are too many reimbursable items. Under policies to reduce the public’s medical expenses by strengthening coverage, non-reimbursable items such as magnetic resonance imaging (MRI) and ultrasound are being gradually covered. Coverage has been continuously expanded since 2018, starting with cerebrovascular MRI and upper abdominal ultrasound, followed by head and neck and thoracoabdominal MRI, lower abdominal and male ultrasound in 2019, and female and ophthalmologic ultrasound last year. Consequently, concerns have been consistently raised that unnecessary treatments are being performed, especially among the elderly and some patients.

Although the health insurance deficit unexpectedly improved last year due to a sharp decline in hospital visits amid COVID-19, concerns remain that the deficit will widen again once the epidemic stabilizes after vaccination.

According to the National Health Insurance Service on the 28th, the deficit in health insurance last year, calculated as total revenue minus total expenditure, was 353.1 billion KRW, a reduction of 2.5 trillion KRW compared to the previous year. Health insurance, which recorded surpluses from 2011 to 2017 after the introduction of Moon Jae-in Care, turned to deficit in 2018, with the deficit sharply increasing to 2.8243 trillion KRW in 2019.

◆Will the Support Be Extended After the Sunset Clause at the End of 2022?= Even if the sunset clause arrives at the end of 2022, it is highly likely that state support will be extended. It is difficult to persuade medical providers, businesses, and subscribers during National Assembly discussions to cut or reduce insurance premium support rates.

A government official said, "We need to assess whether social insurance revenues alone can sustain independence and whether the health insurance premium balance is maintained." He added, "We will comprehensively consider the national fiscal situation and health insurance premium revenues to discuss extension and rate adjustments." He also explained, "However, last year, mask-wearing led to a significant reduction in hospital visits, resulting in lower-than-expected expenditures and a large surplus."

Academics agree that support should be provided as needed based on analyses of validity and effectiveness. Professor Sung Tae-yoon of Yonsei University’s Department of Economics said, "Support should be provided through subsidies only as much as necessary with a long-term plan." He added, "Given the worsening national fiscal conditions, unconditionally providing subsidies at previous levels lacks justification." He further stated, "For sustainability, support should be targeted only to low-income groups."

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