Insurance Reserves In Free Fall

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Insurance Reserves In Free Fall


Expenditures for the national medical insurance system for employees drastically increased in January and February of this year, shrinking the system's reserves to 300 billion won ($240 million) from 840 billion won at the end of last year, the Ministry of Health and Welfare said Tuesday.

Experts say the reserves will be depleted by May if the trend continues.

To prevent further deterioration of the system, the ministry plans to strictly control illegal applications for reimbursement by doctors and to curtail treatment fees in cases where doctors prescribe expensive medications.

It also plans to increase insurance fees for both of Korea's health systems. Most people in Korea are insured through an employee plan funded jointly by employers and workers. A regional system insures the self-employed, professionals and others.

Further increases in insurance premiums will likely be met with strong resistance from the insured, however. The state corporation managing the insurance system already put through increases in January of 20 percent for employees and 15 percent for those insured by the regional system.

The direct reason for the depletion of the reserve fund is that reimbursement levels have been increased five times since November 1999. The result has been a skyrocketing 41.5 percent in overall reimbursement outlays.

Another factor in the growing costs has been the strict separation of the roles of doctors and pharmacists that was implemented last year.

In addition, reckless spending of the reserves began to take place after the numerous cooperative schemes that administered medical insurance were merged into one giant state-managed insurance corporation in July. Before the merger, officials say, cooperatives felt a sense of stewardship of the money in their own reserve funds.

Health policy experts have proposed various ways of overcoming the problem. One is to make patients pay for out-patient visits, while saving the insurance money for more serious illnesses.

Another is to create individual medical savings accounts. Depending on people's income, a set amount would be set aside for medical treatment.





by Park Tae-kyun

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