National Health Insurance Faces Challenge of Financing Expansion Plans
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National Health Insurance Faces Challenge of Financing Expansion Plans
In unprecedented move, govt. and subscriber bodies fail to reach agreement on a 3.4 percent raise in health insurance premiums, presenting major near-term challenges

29(Mon), Jul, 2019

President Kim Yong-ik of the National Health Insurance Service (NHIS) speaks at a session to report the outcomes of the 2nd anniversary of the President Moon Jae-in’s Care initiative at the Ilsan Hospital in Goyang on July 2. (Photo: NHIS)

A health insurance deliberation committee failed to agree on an increase in health insurance premiums for next year, an unprecedented move in the 30-year history of the health insurance industry.

The committee, also known “Geonjeongsim,” was in disarray as the government put forward a plan on a 3.4 percent raise in health insurance premiums, but labor, management and environment circles rejected it. The groups joined forces to oppose the proposed raise, demanding that the government normalize state subsidies to the health insurance finance.

Under related acts, the government is required to pick up the tab equivalent to 20 percent of projected revenues collected as health insurance premiums, but it has never lived up to the regulation. The government’s 2019 subsidies to health insurance finances stand at an awful 13.6 percent.

As it comes to securing the necessary finances for health insurance, the ball is in the court of the Ministry of Economy and Finance (MOEF). But the ministry made it clear that it cannot raise state subsidies to health insurance for next year, as subscriber side would not budge its position.

The President Moon government has come up with so-called “President Moon’s Care” program in which health insurance coverage of medical services will be expanded dramatically. Under the initiative, 42 trillion won needs to be secured between 2019 and 2023. If things continue to go without securing additional finances, the health insurance account is feared to be depleted, and the initiative might run aground.

Announcing the President Moon’s Care initiative in August 2017, the government disclosed a plan to raise health insurance premium rates to an annual average of 3.2 percent by 2022. But in reality, health insurance premiums have declined every year. Health insurance premiums rose 5.9 percent in 2011, 2.8 percent in 2013 and 1.6 percent in 2013, but they were frozen in 2017.

The government had demanded a 3.2 percent raise in health insurance premiums during Geonjeongsim meetings since 2017. Lee Ju-ho, a senior official with the Korean Confederation of Trade Unions, was quoted as saying that an agreement was never reached on the government’s plan on an annual increase rate of 3.2 percent in health insurance premiums.

To make things worse, budget authorities would not budge on their position on not raising its subsidies on the health insurance account. Now that welfare budgets are snowballing, MOEF official said the government has no room to raise state subsidies for health insurance.
The welfare budget soared to 72.514 trillion won, a 14.7 percent jump over last year, the largest-ever. As to a demand for the government abiding to a 20 percent share in state subsidies for health insurance, the MOEF dismissed it, saying that the regulation is non-binding.

The problem is that if all parties – the government and subscriber organizations – continue to ignore issues of securing necessary finances, the health insurance account is forecast to be depleted down the road.

Under the premise that health insurance premiums continue to rise to 3.2 percent in an annual average growth rate, health insurance reserves are forecast to amount to 11 trillion won by 2023. If the health insurance premium growth plant hits a snag, the health insurance account reserves are predicted to reduce by over 3 trillion every year more than planned. In that case, the health insurance account is feared to be depleted by 2023.

Experts shared the view that budget authorities and subscriber organizations together need to pick up a bigger share. The government also has to amend the President Moon’s Care initiative.

At an event at Ilsan Hospital marking the second anniversary of the initiative, President Moon said he would make good on a promise of raising health insurance coverage of medical services to 70 percent within his term.

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