[OUTLOOK]Integrate insurance programs

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[OUTLOOK]Integrate insurance programs

The government is pushing ahead with its plan to make a corporation under the National Tax Service collect insurance fees for all four social insurance programs ― health insurance, the national pension, unemployment insurance and worker’s accident compensation insurance. This has been seen as the right move, considering the criticism about the current system. It is inefficient that four different insurance corporations should collect insurance fees from one beneficiary. This has increased the burden on employers who have an obligation to pay part of the fees for their employees.
In 1998, a special committee was formed to debate ways to integrate the four insurance programs, but that effort failed due to resistance from people with different interests. Thus, for this unification to be successful, the government should make an effort to win people’s understanding and support.
If we look more into the social insurance system, we can see why the programs should be integrated. Disability is categorized as a disorder under worker’s accident compensation insurance, while it is categorized as a disability under the national pension. Standards for the ratings for the degree of disability are different in different insurance programs.
If a worker becomes sick, the worker’s accident compensation insurance corporation says the worker was suffering the illness before he or she started working, while the health insurance corporation argues that the illness was caused during work and that the other insurance corporation should cover it.
When two people have similar problems, one may benefit from both worker’s accident compensation insurance and the national pension, while the other benefits from neither. Because each insurance program is run separately, benefits sometimes overlap or contradictoryrulings are made.
The four insurance programs say they share data on beneficiaries, but that does not seem to work properly. One person reported a high income to the national pension scheme but hid his income from the health insurance company so he was able to avoid paying any fees.
In our country, there are a large number of irregular workers and low-income self-employed people. As our society is rapidly aging, the demand for social welfare is surging. The separate insurance entities of today can no longer meet the demands of the public. Thus, the government should examine ways to change the framework of the social insurance programs. The government wants to unify the collection departments of all four insurance programs. But if the payment departments are made into one and the system for payments is changed for the convenience of beneficiaries, people will be more satisfied.
In 1998, it was too early to talk about unifying the four insurance programs because the national pension and unemployment insurance had only started. However, conditions surrounding the social insurance programs now require this move.
If only the departments that collect insurance fees are to be made into one, the government should consider relating the task with the National Tax Service’s job of collecting income tax. In many advanced countries, national tax agencies collect social insurance fees. Because social insurance fees are not much different from taxes in terms of payment or collection methods, there is no need for different agencies to collect them.
It may be difficult now for the National Tax Service to start to collect social insurance fees. Therefore, departments that collect fees at the current social insurance corporations and the tax agency need to be merged into one and run together.
Lastly, unification of social insurance programs should not be done as a way of reducing the workforce or restructuring. To introduce an insurance program to take care of senior citizens and earned income tax credits, companies or shops with fewer than five workers and irregular workers should be closely supervised. More workers will be needed to do this job. The integration of social insurance programs will result in a surplus workforce. If these people’s jobs change to improve the quality of service, additional costs will be minimized and people working in social insurance corporations will feel secure about their jobs.
In this regard, the labor unions at the insurance corporations should cooperate for the reform of the system, instead of opposing the integration. If the insurance corporations continue to be run separately, there will always be a fear of restructuring because there is a surplus of workers. Making social insurance programs more competitive is the only way to secure their jobs.
The major shareholder in the social insurance programs is neither the government nor the corporations, but the public. It then becomes clear which direction social insurance programs should take to advance. The debate on integration these days is only a start to set up a social insurance system that integrates everyone. I hope the social insurance programs will become a system that is trusted and loved by people.

* The writer is a professor of finance and insurances at Soon Chun Hyang University.


by Kim Yong-ha
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