Passed the final hurdle... Simplification of Real-Name Claims Hampered by Parliamentary Deadlock

April 25 National Assembly Plenary Session Virtually Canceled
'Lee Jae-myung Blackhole' Clouds Future Schedule
14-Year-Long Insurance Business Act Amendment Postponed
Selection of Intermediary Institutions Remains a Knot to Untie

[Image source=Yonhap News]

The bill to simplify the claims process for indemnity medical insurance, which has passed the National Assembly threshold for the first time in 14 years, was stalled at the final stage. This was because the plenary session was canceled and the National Assembly schedule was paralyzed after the motion to agree to the arrest of Lee Jae-myung, leader of the Democratic Party of Korea, was passed.

According to the industry on the 25th, the plenary session of the National Assembly, which the ruling and opposition parties had tentatively agreed to hold that day, was effectively canceled. This was because the motion to agree to the arrest of Lee was passed and the Democratic Party’s floor leadership resigned, causing all National Assembly schedules to be temporarily suspended. The schedule for the resolution of the amendment to the Insurance Business Act, which includes the simplification of indemnity insurance claims, also fell into uncertainty. After the plenary session was adjourned and automatically dissolved on the 21st, the ruling and opposition parties only processed 8 out of the originally planned 98 agenda items, including the amendment to the Insurance Business Act. Although the bill passed the National Assembly’s Political Affairs Committee and quickly passed the Legislation and Judiciary Committee after the Anti-Corruption and Civil Rights Commission recommended improving the indemnity insurance claims procedure in 2009, it was effectively tied up at the final hurdle.

If this bill is implemented, indemnity insurance subscribers will no longer need to obtain various paper documents; they can simply request the hospital after treatment, and the insurance claim will be automatically processed. It is expected that the number of cases where people give up on insurance claims due to inconveniences such as revisiting hospitals or issuing documents, despite having paid premiums, will significantly decrease. Yoon Chang-hyun, a member of the People Power Party, estimated that unclaimed indemnity insurance payments amounted to 255.9 billion KRW in 2021, 251.2 billion KRW in 2022, and 321.1 billion KRW in 2023. Hospitals will also experience reduced administrative burdens related to this process, and insurance companies are expected not only to save over 400 million sheets of paper annually used for claim reviews but also to have more capacity to utilize their workforce more efficiently.

The industry emphasizes the urgent need for the bill’s passage, but the National Assembly schedule remains unpredictable. The next scheduled plenary session is on November 9, but the newly elected Democratic Party floor leadership on September 26 may negotiate the legislative schedule with the People Power Party for early next month after the Chuseok holiday. However, the outcome of the warrant hearing for Lee Jae-myung on September 26 is a variable. There remains a possibility that the National Assembly schedule could be paralyzed again.

Meanwhile, once the bill is promulgated, it will be enforced one year later (two years later for medical institutions with fewer than 30 beds). It could be implemented as early as the end of next year or delayed until the following year. Even after the bill passes, there are unresolved issues to address, notably the 'intermediary agency' problem. The medical community strongly opposed the bill’s passage, arguing that medical information of indemnity insurance subscribers could be leaked through specialized intermediary agencies entrusted with the indemnity insurance claims process.

In particular, the Health Insurance Review and Assessment Service (HIRA) refused to become the intermediary agency, fearing that non-reimbursable treatment details from hospitals and clinics would be transferred to HIRA. In this case, the government and insurance companies would be able to clearly identify and control non-reimbursable information. Various alternatives have been proposed, ranging from the Korea Insurance Development Institute to recent private fintech companies, so significant disputes are expected until the final implementation.

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