[VIEWPOINT]Health insurance agency needs bailout

The National Health Insurance agency is said to be again turning a deficit. Just five years ago, the National Health Insurance agency got out of deficit by taking several measures, such as raising the price of cigarettes and getting additional support from the national treasury.
It happened because the health insurance agency increased its expenditures without considering how much income it receives.
If this trend continues, there will be bigger problems in the future. People might think that there is no concern, because even though there is a 200 billion won ($208 million) deficit this year, there still remains an accumulated balance of 1 trillion won.
However, 1 trillion won is not enough. Considering the agency’s monthly expenditures are more than 2 trillion won, it will not last long.
Since the government has expanded the range of its health insurance coverage for the past few years, expenditures will sharply increase after next year. Yet it will not be easy to increase the insurance premiums drastically, so a huge deficit is bound to occur. It is not a problem that can be solved simply by increasing incomes a little bit and decreasing expenditures.
How did the health agency fail to reach equilibrium between its incoming and outgoing expenses? First of all, there is a problem in the structure of the decision-making process regarding policies.
The Health Insurance Policy Deliberation Committee (HIPDC) makes decisions about the scale of insurance coverage expansion and the increase of insurance rates. The HIPDC is made up of representatives of medical providers, such as hospitals and pharmacies, and holder organizations, such as labor unions and public interest groups. The government used to make decisions on insurance policies. The present system was introduced in 2000.
During the past few years, the HIPDC was overwhelmed by strong voices from the provider organizations.
The holder organizations put pressure on the HIPDC to expand its insurance coverage, and the providers only wanted to raise insurance fees. Therefore, public interest groups had a hard time mediating between the two. Moreover, the HIPDC lost leverage over the holder organizations’ demand to increase insurance coverage when the health insurance agency turned a profit in 2003. The government should have put them in their place, but it failed to do so.
We desperately need a system that can mediate conflicts like this one and solve them rationally. Germany, which has a system very similar to ours, has a mediating facility. Korea also needs an objective mediating facility made up of specialists, such as economists and social figures, who have the people’s confidence.
We need to make clear the differences in the roles between the national health insurance and private insurance. Health insurance alone does not fully cover medical bills. If the agency did cover everything, the insurance premiums would have to be raised much higher.
Therefore, there is a need for a co-existent relationship between the national health insurance and private insurance, in which the private companies pay more of the medical bills.
Germany, the original state of social insurance, and the United Kingdom, which has a national medical insurance system, both expanded their health insurance coverage by getting private insurance companies to share the burden.
In the case of the Netherlands, the government makes decisions on the premiums and the extent of medical insurance coverage, but the public health insurance associations are all private insurance companies competing against each other.
Korea is also planning to introduce private medical insurance, which would cover the full amount of every medical bill. However, the government will restrict their coverage. They can only cover what is not handled by national health insurance and cannot cover personal co-payment. With such restrictions, it will be difficult for private medical companies to enter the market.
A legal personal co-payment is the part of the medical bill that is supposed to be paid by the patient. For example, you pay 3,000 won ($3.12) at a local hospital for a visit. This is a legal personal co-payment.
The government claims that if private medical insurance covers even the legal personal co-payment, insurance holders would go to hospitals too frequently, causing medical expenses to increase sharply.
However, there is no academic evidence to support such a claim. France is often quoted as an example, but as its system is different from ours, it is hard to directly compare the two.
It would actually be more realistic to let private insurance cover the legal personal co-payment and certain portions of medical bills which are not covered by health insurance.
It is not easy to solve financial crises in health insurance by raising insurance premiums or the price of cigarettes. It is difficult to ask people to take the burden of paying more than the inflation rate, considering the present commercial depression.
In this regard, clinging to the goal of increasing the coverage rate of health insurance to 70 percent by 2008 can lead to a complete collapse of the balance between income and expenditures. Now is the time to look for a new social agreement and a system that can prevent possible waste in medical expenditures.

* The writer is a researcher at the Medical Policy Laboratory of the School of Medicine, Seoul National University. Translation by the JoongAng Daily staff.

by Kwon Yong-jin