Despite Further Reductions in Health Insurance Premiums Due to COVID-19... Government Ignores Budget Allocation

Only Increasing Subscriber Burden... Possibility of Insurance Premium Hike Cannot Be Ruled Out

[Sejong=Asia Economy Reporter Kim Hyunjung] It has been revealed that the government did not properly allocate the budget for health insurance premium reductions to respond to COVID-19 last year, resulting in an increased financial burden on health insurance. The possibility of this leading to premium hikes cannot be ruled out.

According to the "2020 Fiscal Year Total Revenue Settlement Analysis" published by the National Assembly Budget Office on the 11th, the government supported only 29.1% (265.6 billion KRW) of the 911.5 billion KRW in health insurance premium reductions related to COVID-19 response from March to May last year with the national budget. This was because the government expanded the scope of the reductions beyond the original plan but did not allocate additional budget.

Last year, the government set the first reduction target as the bottom 20% of premium payers (bottom 50% in special disaster areas), requiring them to pay only 50% of their premiums. It predicted a total premium reduction amount of 531.1 billion KRW, including 76.1 billion KRW for 710,000 people in special disaster areas and 454.9 billion KRW for 10.89 million people in general areas. Half of this amount, 265.5 billion KRW, was included in the first supplementary budget.

However, before implementation, the target was expanded to include all areas nationwide except special disaster areas, covering those between the bottom 20% and 40%. As a result, the actual reduction amount surged by 71.6% compared to the estimate, reaching 911.5 billion KRW. Excluding government support from the premium reduction support amount, there was a shortfall of 645.9 billion KRW, but the government did not allocate a related budget this year either.

The Budget Office expressed concerns about the worsening health insurance premium revenue and the potential increase in premium burdens on subscribers in the future. Last year, health insurance revenue increased by 7.9% compared to the previous year, which is lower than the 9.6% increase in 2019. The Budget Office stated, "Health insurance premiums in 2020 were levied based on income from 2018-2019, so the impact of COVID-19 was less significant, but from 2021, when the damage becomes more pronounced, the scale of revenue decline is expected to expand compared to the previous year," adding, "There is concern that this could act as a factor leading to increased premiums for health insurance subscribers, who bear the actual burden." Furthermore, it advised, "Additional expenditures incurred due to government support measures responding to COVID-19 need to be properly budgeted and supported by the government," and recommended, "For policy-driven premium reduction programs, the types, purposes, and durations of reductions, as well as the responsible parties, support ratios, and supporting data should be transparently disclosed, and principles for national budget financial support should be established."

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