Health insurance reserves will dry up

Unless there are substantial efficiency improvements, the country’s accumulated health insurance reserves will dry up by the end of the year and in the long run, the country’s state-run health insurance company will no longer be sustainable.

The National Health Insurance Corporation said yesterday that it posted around 1.3 trillion won ($1.14 billion) in fiscal deficits last year, marking a 406-fold increase from 3.2 billion won in 2008, due to a widening gap between income and expenditures driven by rising medical costs and an aging population.

Spending has been increasing by 13 to 14 percent, while income has been constantly used to make up for the increased insurance costs and for the new policy of covering expensive drugs for cancer and osteoporosis.

The Ministry of Health and Welfare said that it will minimize the fiscal deficit to 513 billion won by urging better insurance fee collection but the goal seems not at all easy to achieve.

There were two main reforms concerning the medical industry in 2000; separation of dispensing and prescribing drugs followed by health insurance integration - which was the starting point of deficit accumulation. Due to inadequate planning of the separation of dispensing and prescribing drugs, the annual expenditure has increased by hundreds of billions of won as patients now have to receive a prescription from a doctor to purchase drugs from a pharmacy. And the integration of health insurance made the autonomous management system weaken, for which income and expenses initially were managed by 200 different medical insurance unions.

Adding to the burden is a rapid increase in the country’s aging population; medical costs for the elderly have significantly surpassed the total increase. Up to 18,000 medical facilities have been established within the past decade, while general hospitals have increased the number of beds and expensive medical equipment.

Costs for medical tests have also increased, accounting for 13.5 percent of the total expenditure in 2009, from 11.4 percent in 2005.

An official of the National Health Insurance Corporation said that “a fiscal deficit of around 500 billion won is expected this year and to minimize this as well, the company is switching from an emergency management system to a crisis management system, pushing ahead with intensive measures for financial stability.

The new measures include controlling the increasing price of drugs.

By Shin Sung-sik [enational@joongang.co.kr]