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Opinion

[Editorial] Looming crisis

An experts’ report on the future of the nation’s health insurance system offered an extremely grim outlook ― a 16 trillion won ($14 billion) annual deficit by 2020 even if salaried workers steadily increase their insurance premium payments.

The long-term estimate by the Health Insurance Policy Institute under the National Health Insurance Corp. sounded like an answer to the opposition Democratic Party’s nascent “free medical care” policy. Whatever the suspected political motivation may be, the looming huge red figures compel the authorities and parties to work on drastic reforms immediately.

The Republic of Korea’s universal health insurance system, which started from larger workplaces in 1977, has been internationally touted as the model of public healthcare. Still, the system struggles under weak finance as well as increasing demand for medical care from the growing number of old people. And then there are the bad habits; too many people go to clinics for common cold and doctors provide excessive treatment prescribing, too much medicine.

The health insurance account showed a deficit of 3.2 billion won in 2009 and then the gap increased 400-fold to 1,299 billion won ($1.1 billion) last year chiefly because of expanded coverage of illnesses and their treatment methods, according to the NHIC. The insurance corporation’s research arm estimates that the deficits will grow geometrically as the increase of revenue cannot catch up with fast rising payments to medical service providers.

Expenditures will increase 3.3 times from 41 trillion won in 2012 to 137 trillion won in 2030 while insurance premium incomes will rise 2.1-fold during the same period. Insurance payments for the treatment of old people aged 65 or above will increase from 13.4 trillion won next year to 32 trillion won in 2020 and to 70.3 trillion won ― more than a half of total expenditure.

These estimates suppose no change to the current ratio of insurance coverage of diseases and no increase in insurance premiums or payments to medical institutions. If payments to hospitals and clinics rise by 2.5 percent annually to cover overall price rises, the total expenditures will reach 180 trillion won in 2030. Then, even with the current 20 percent subsidy from the government, insurance premiums from employees will have to rise to 11.69 percent of their salary by 2030.

In order to stave off further deterioration of insurance finance, the research body recommended a set of remedies, which mostly have previously been proposed but not implemented vigorously. First of all, people who have income but are hidden as dependents of insurance subscribers should be made to pay their own insurance premiums. More taxes should be collected from the sales of tobacco and liquor, and investigation methods should be further improved to prevent cheating by dishonest medical service personnel.

The Ministry and Health and Welfare needs to expedite developing better payment system for medical institutions not to allow the squandering of insurance income through excessive or unnecessary treatments. Broader and more efficient use of the DRG (diagnosis-related group) system can help rationalize the medical insurance business by ensuring that patients with similar illness use the same level of hospital resources, thus discouraging exceptionally high expenses.

It is calculated that Korean people on average received 106.7 won worth of medical care for every 100 won they spent on medical insurance in 2008 while life insurance subscribers had only 64.6 won worth of benefits. The medical insurance finance can become healthier when people visit hospitals only when they are really sick and when doctors offer just the adequate level of treatment for the sickness.
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