[EDITORIALS]Insurance Merger Needs ReviewingLawmakers of the Grand National Party abruptly submitted a revision of the Health Insurance Act to the floor of the National Assembly. It was done to divide the finances of health insurance and to put the brakes on a financial merger of regional and employee health insurance plans that is expected to occur in January. The Millennium Democratic Party is opposed to the revision. But it is highly likely that the revision will pass through the National Assembly, for the GNP is one seat shy of outright majority in the National Assembly and the United Liberal Democrats have already expressed their intention to cooperate with the GNP, case by case.
When the government and the ruling party pursued the merger of the health insurance plans, they argued for reducing the disparity among the people and minimizing the national subsidy to the plans by redistributing income among policy- holders of the two plans through applying one standard of premium to both of them. Those who favored the merger said we have to consider that up to 8 million policyholders a year will move back and forth between the two insurance plans due to changing jobs or losing jobs.
However, we had to acknowledge two different standards of premiums to policyholders even before the merger because it was too difficult to figure out how much money the policyholders of the regional health plan, including self-employed people, are making.
The ratio of the governmental subsidy to the regional health insurance plan has increased from 28 percent to 50 percent.
According to a projection by the Ministry of Health and Welfare, regional health insurance will turn to the black starting next year, while the employee health insurance will suffer from an accumulated deficit of 2.1 trillion won ($1.6 billion) by the year 2005. If projections are correct, there is a positive aspect to the merger of the two insurance plans because regional health insurance could financially help the employee health insurance.
Furthermore, if the merger plan is canceled, the premium for the policyholders of employee health insurance will have to increase more than 8 to 9 percent per year, which is what had been expected. In addition, the offices of the two insurance plans were already integrated last July. It will not be an easy task to dis-integrate them.
That said, we still think the finances of the two health insurance plans should be kept divided. It is questionable how much the merger will help to normalize the finances of insurance plans in the long term, although it can be helpful in the short term. If we don't count the national subsidy to them, both the regional and employee health insurance plans are muddling through the red.
It is a stop-gap measure for the government to manage separately the finances of the two health insurance plans for five years even after the merger in January. In addition, there is a fairness problem. The income of policyholders of the employee health insurance plan is 100 percent transparent, while the income for regional health insurance is only 28 percent to 55 percent transparent. If we go ahead with the merger plan under such circumstances, the constitutionality of the merger can be questioned.
Officials from the government and the insurance plans should come up with measures to minimize the side effects in the process of canceling the planned merger of the two insurances plans' finances, reviewing more thoroughly the problems of separation of the two offices again and increasing the premium of employee health insurance.
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