[The Editors' Verdict] The Shortcut to Health Insurance Reform: "Special Judicial Police"

Kyung-ho Lee, Head of Bio Startups and Ventures Division

Last July, the Supreme Court ruled that non-medical personnel cannot be punished solely for opening a medical institution under the name of a medical corporation. Both the first and second trials had convicted non-medical personnel for establishing a medical corporation and opening a hospital as a corporate hospital, but this was overturned. The Supreme Court stated that evidence is required to prove that non-medical personnel abused the medical corporation through illegal means or improperly diverted the corporation’s assets, thereby deviating from the public nature and non-profit status of the medical corporation. As the entities establishing illegally opened medical institutions diversify to include medical cooperatives, incorporated associations, and foundations, concerns are emerging that investigations, punishments, and recovery of illicit gains may be weakened.

In an ultra-aged society with a senior population of ten million, the National Health Insurance must expand essential medical infrastructure while also securing financial soundness. One pillar of financial soundness is reforming health insurance premiums, and the other is reducing unnecessary and illegal expenditures to allocate resources where needed. The government and the National Health Insurance Service (NHIS) have focused on expanding detection, punishment, and recovery of illicit gains from illegally opened medical institutions known as office worker hospitals. The number of long-term care hospitals has grown from about 400 in the early 2000s to 1,398 as of 2022.

Illegal medical institutions such as office worker hospitals and license-lending pharmacies have siphoned off 3.4 trillion won from health insurance over the past decade. Meanwhile, the recovery rate is only 6.7%. Of the illicit gains (3.4 trillion won) detected by the NHIS over the past 10 years (2009?2022), half (52%, 1.74 trillion won) came from long-term care hospitals. Even after being criminally punished for illegal operations, the vicious cycle continues as these entities establish and operate illegal medical institutions again. Punishments are weak compared to the accumulation of wealth. Accounts should be blocked early through account tracking and investigations, but this is not happening. Investigations take an average of one to three years, during which the amount embezzled inevitably increases.

Former and current NHIS presidents Seong Sang-cheol, Kim Yong-ik, Kang Do-tae, and recently appointed Jeong Ki-seok have all pushed for the introduction of special judicial police (teuksagyeong). The special judicial police system grants NHIS employees investigative authority over office worker hospitals and license-lending pharmacies through amendments to the “Judicial Police Duties Act” (Article 7-4). Since 2020, four amendment bills have been proposed, but all are currently pending in the National Assembly’s Legislation and Judiciary Committee.

Currently, the Ministry of Health and Welfare has 12 special judicial police officers, but only three are assigned to office worker hospital cases. Since the Ministry faces limitations in increasing special judicial police personnel, the proposal is to create special judicial police within the NHIS, recommended by the Minister of Health and Welfare. The Ministry and NHIS are considering starting with about 40 personnel. Since 2014, the NHIS has had specialized personnel focused on investigating illegally opened institutions and a big data-based illegal institution detection system (BMS). They believe that focused investigations using these resources can efficiently crack down on illegal establishments.

Although there are disagreements in the National Assembly and opposition from medical associations and the police, the introduction of special judicial police is the easiest and fastest way to stabilize health insurance finances and protect public health rights. Legitimate medical practices will not be affected. Moreover, promptly recovering illicit gains could save 200 billion won annually. If the bill is not passed in the second half of the 21st National Assembly, it will be automatically discarded and reset in the 22nd National Assembly formed after next year’s general election. Time is running out.

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