[VIEWPOINT] Medical Reform Goes Against PrinciplesThe system will sink deeper in the hole if Seoul continues to use stopgap measures to fix it.
The national medical insurance, introduced in July 1977, was in financial balance until 1996, with separate medical insurance cooperatives for corporate workers and for regional non-wage earners managing their finances independently. The system began to degenerate rapidly, however, after the government merged the regional systems into a centralized system in October 1998.
Despite a 20 percent hike in premiums in the first year of integration, the regional insurance plan incurred 157.2 billion won ($125 million) in deficits in 1998 for the first time since its creation, and the losses kept ballooning every year since. Even the workplace system began to run up deficits after the merger. Beginning with deficits of 387. 4 billion won in 1998, it goes deeper into the red each year.
The regional system exhausted its reserve funds this year, and is making up for the shortfall by borrowing from the national government. The workplace system is also facing bankruptcy, having depleted virtually all of its reserves. So the national health care system is facing total ruin, in just three years after the government introduced changes to the system.
The disaster stems from enforcing a medical insurance system that runs counter to the basic spirit and principles of a social insurance system. Under a social medical insurance program, the beneficiary pays a premium, and the premium assessment and collection are carried out based on the consent of the subscribers ?the key difference from a medicare guarantee system that collects the premiums through taxation.
The integration of medical insurance into a central system leaves no room for the subscribers' participation in management, the basic principle of a social insurance program. It also leads to uniform management that eliminates the efficiency and creativity of independent management. It is difficult to impose transparent and fair premiums, and the key frontline organizations in charge of insurance finances have a weaker sense of responsibility, prompting lower premium collection rates and negligent management of subscribers.
Especially in case of regional medical insurance, the premiums are levied through a standardized assessment of the subscribers' income based on their sex and age, regardless of their actual income. Naturally, the subscribers feel they are being unfairly charged, making them reluctant to pay the fees on time. Managing medical insurance as a single unit across the nation also escalates any rise in medical costs into a national issue, making it difficult to raise the insurance fees as needed. This is one of the reasons that insurance finances are suffering from chronic deficits.
When matters came to such a state, the government enforced medical reforms to separate medical practice from pharmaceutical dispensing, with the goal of easing the medical insurance's financial woes by doing away with the payments to clinics and hospitals for dispensing drugs. Faced with stiff opposition from the doctors, however, the government tried to pacify them by repeatedly raising their medical service charges.
The medical reform only ended up accelerating the bankruptcy of insurance finances. Since the medical reform went into effect, the use of medications rose about 16 percent and the costs of mixing medicines increased about 55 percent. The current medical insurance system can be described as a two-story house, dubbed the new health care system, built on top of a building with a crumbling foundation, crossbeams and pillars.
The current system is already past the stage of being bailed out with partial remedies. We should not abandon the idea of reform, but the reformed system must be reviewed and changed where necessary. If the government continues to dispense emergency prescriptions as stopgap measures, the system will go deeper in the hole.
Under the current integrated system, there is no need to impose an extra burden on the people by managing a national medical insurance cooperative that employs more than 10,000 employees. The government can collect the fees through taxation, and it should maintain an organization that only reviews the claims from medical facilities.
Why do we have to maintain the current medicare system when it encourages greater use of medicines such as antibiotics and raises costs － and is inconvenient to boot?
If we have to offer medicare guarantees to all the people in the form of a social insurance system, then we should redesign it to be faithful to its basic principles, and also reach a social agreement on the breath of coverage. In other words, the system has to be redrawn to allow the insurance subscribers' participation in its management, such as premium assessment and collection and wage management.
Based on my experience, I believe regional medical insurance should be reformed to be more compatible with regional autonomous bodies, and the workplace medical insurance amended to promote more of a sense of community between labor and management.
The writer is a former official of the Ministry of Health and Welfare.
by Kim Jong-dae