[Viewpoint]Robbing Peter to pay PaulThe health insurance premium will be increased 6.4 percent next year, which is more than double the rate of inflation. That is a sort of tax. Unlike the pension premium, it never returns to the payer’s pocket. As such, raising it every year is the same thing as increasing taxes every year.
Korea’s national health insurance has a lot of problems.
First, it suffers from a chronic ailment of a financial deficit. Since the expenditures for health insurance have climbed more than 30 percent due to a functional division between physicians and pharmacists that began in 2002, the situation has gotten worse.
The net financial deficit ― insurance premium revenues minus total expenditures ― exceeded 4.2 trillion won ($4.5 billion) last year. The financial deficit is barely filled by taxes and contributions from tobacco sales revenue.
Second, due to the unreasonable regulations on the price of insurance, the distribution of national resources has been distorted. Instead of offering inexpensive, indispensable medical care, hospitals try to provide medical services with less-regulated prices. Excellent medical practitioners rush toward much more profitable plastic surgery or dermatology, leaving essential medical care. The provision of medical care and medical supplies overlap with each other, and the provision of medical equipment, including CT (computed tomography) and MRI (magnetic resonance imaging) is excessive.
Third, the rigid health insurance policy infringes on the customer’s right to choose. The government regulates even the medical care of patients who want to get treated at full expense. On the other hand, patients have to visit one hospital after another because there is no national health management system. So the unique needs of each person are not reflected properly.
Fourth, the benefits of health insurance are decided without principle. Ignoring opposition from experts, health authorities took the liberty to spend health funds on patients’ food expenses, only to see tens of billions of won in deficits.
A few days ago, they announced unilaterally that the food expenses benefits will be reduced. In other words, the benefits of health insurance are chosen to curry favor or to cater to populism.
Fifth, the loose operation of the National Health Insurance Corporation is also a problem. Because of the integration of health insurance, all the people were forced to join a single health insurance corporation. The National Health Insurance Corporation, a large monopolistic organization, became a bureaucratic interest group. This corporation spends about 1 trillion won for operating expenses alone every year, but the premiums uncollected until last month amounts to 1.7 trillion won. Due to the corporation’s negligence of institutional improvement, a strange phenomenon is taking place in which employed workers earning low incomes have to support with their premiums regional insurance subscribers who live in expensive houses and don’t work.
Advanced countries have already come to the conclusion that national health insurance is impossible with public health insurance alone.
Under the objectives of stability of insurance funds, promotion of efficiency and assurance of customers’ right to choose, they have facilitated efficiency through competition in public health insurance and entrusted part or all of health insurance to the private sector since the 1990s.
In Germany, individuals choose one of a range of health insurance organizations for the provision of medical care they need. Currently, more than 400 health insurance organizations either grow or come to ruin, depending on customers’ choice. Therefore, the insurance organizations make desperate efforts to reduce premiums and provide the benefits customers want. In the Netherlands, the health care of most people is entrusted to privately owned insurance companies and competition among insurance companies is induced through the process of customer choice. In Singapore, each individual is required to have a medical savings account. In the case of employed workers, the workers and the company deposit a certain amount of their income in a bank account every month, and then workers use this money for their personal medical expenses. Because the remaining money saved from the medical expenses belongs to individual workers, they make efforts to promote their health and use only highly reliable medical institutions.
The Korean government deserves compliments in that it has so far prepared the foundation for a great leap in the economic sector through the promotion of competition and the policy of efficiency. However, the health insurance area is left without any effort to enhance competition and efficiency. Seen from a cost-benefit analysis, it is understandable that Korea’s medical care system ranked 58th in the world in an assessment by the World Health Organization.
It has been 30 years this year since our country introduced public health insurance. For the coming 30 years, health insurance, which extorts money from the less privileged people, should now be changed.
*The writer is a professor of health economics at Yonsei University. Translation by the JoongAng Daily staff.
by Jung Woo-jin