[Viewpoint] No simple math on free health care

Politicians are in a charitable mood on the welfare front, starting with free school meals to now considering free health care.

Under the liberal opposition’s idea, hospitalization insurance coverage would be upped to 90 percent from the current 60 percent, and the cap on individual spending on hospital care would be lowered to 1 million won ($897). They say the state would need 8.1 trillion won to make this possible.

But the math on health care is not that simple. Under the current national health insurance program, patients with cancer and other serious illnesses only have to pay for 5 percent of hospitalization costs and are also subsidized for costs exceeding 2 million won, according to the income-based individual cap system. Cancer patients nevertheless are only covered for less than 70 percent of their medical cost.

The cost of medical services and drugs supplied by medical institutions is divided between the national insurance program and individual patients. Despite the government’s endeavor to stretch the coverage ratio, the individual health burden failed to go down because of rises in medical costs from new drug development and technology.

For example, the simple treatment for thyroid cancer is the removal of worrisome nodules, which costs on average of 1.4 million won to 2.4 million won, of which patients in principle are required to pay for 5 percent.

But the bill usually comes out much higher. When using the latest surgery techniques, the operation cost can reach as much as 6 million won to 9 million won. The Korean Social Security Association recently issued a study saying that the health insurance coverage ratio stops at 55 percent.

Health costs take up 6.5 percent of the gross domestic product as of 2008, rising at one of the fastest growth rates among the Organization of Economic Cooperation and Development countries. When estimated with the 2010 GDP turnover of 1,100 trillion won, medical costs reach 71. 5 trillion won, of which 27 trillion won, or 38 percent, are paid by sick individuals.

To meet the OECD average coverage ratio of 80 percent, the government would need at least 13 trillion won a year to raise the figure.

But the sum goes up much more in reality. When applying the OECD average of a 9 percent to 10 percent rise in medical costs, we would need more than 40 trillion won a year to reinforce protection and cover rises in medical costs.

According to a poll by the National Evidence-based Healthcare Collaborating Agency on how much people could afford to extend their life for a year, the answers ranged widely, from 19 million won to 100 million won. Although individual perception on the value of health may vary, more people will likely seek the latest expensive medical care if they are fully subsidized.

In countries offering free health care, medical facilities charge more for subsidized patients than for those insured, suggesting there would be a hemorrhage in medical fees and funding if the system is introduced here.

In a recent report on inequality in treating cancer, the higher-income group receives more medical services and therefore benefits more from health coverage. The free health care policy may aim to help out the poor but in fact can end up widening the wealth gap in medical expenditures.

It is meaningless to debate the cost of blanket health coverage without any decision on the scope of illnesses and services it can cover. Whether the money comes from the National Insurance Corp. or state coffers, the funds would be limited because they must come from the pockets of taxpayers.

The National Insurance Corp. ran up a deficit of 1.3 trillion won last year. There are no countries that can cover all medical fees amid the flood of untested new drugs and equipment.

Even the British, despite their health benefits from state funding that take up 20 percent of the country’s total fiscal budget, go overseas for better health care.

Offering free health care for all is like the government paying for nearly 90 percent of higher education or even overseas education if the individuals want them.

As the state defines the scope of compulsory education from elementary to secondary, it must draw the line on medical services based on factual material if it is serious about examining the issue.

If the public cannot agree on the scope of coverage, all these talks will amount to nothing.

*The writer is the chief executive of the National Evidence-based Healthcare Collaborating Agency.

By Heo Dae-seog