After fears of insolvency, NHIC sees huge surplus

After fears that its reserves would be depleted by the year’s end, the National Health Insurance Corporation is expected to record a surplus of 927.5 billion won ($818 million) for the year, according to its September figures, and see its reserves total 1.2 trillion won.

The corporation’s total income from January to September of this year amounted to 28.6 trillion won, according to its financial report, while expenditures came in at 27.7 trillion won, its first time in the black in three years. Last year, the National Health Insurance Corporation recorded a deficit of 1.3 trillion won.

The state-run health insurance program had expressed concerns in January that its program may no longer be sustainable because of snowballing deficits caused by rising medical costs and an aging population.

But income for the first nine months of this year increased 12.5 percent compared to the same period last year, thanks to an increase in health insurance premiums of 5.9 percent as well as efforts by the corporation to stabilize its finances, the National Health Insurance Corporation said.

Meanwhile, the corporation’s expenditures on insurance coverage for hospitals, clinics and nursing homes only increased by 6.8 percent in the first nine months of this year compared to the same period last year.

After the corporation’s total expenditures increased by 8.5 percent in 2008, expenditures spiked in the next two years, increasing by double digit figures: 13.2 percent in 2009 and 12.6 percent last year. This year, it came down to 7.1 percent.

The Ministry of Health and Welfare said that one of the main contributors to decreased expenditures was fewer people visiting doctors at hospitals and clinics this year.

“Of course, the reduction in medical insurance fees for tests such as MRIs contributed to the decrease, but it’s mostly due to just a 1 percent increase in medical fees for doctor consultations,” said Choi Hee-joo, a health insurance policy official from the ministry, explaining that “less people visited doctors this year, possibly from the economic downturn.”

Choi added, “Next year, the increase in health insurance premiums is expected to be lower than this year’s, which was 5.9 percent, and the company should still be able to survive.”

The ministry expects to see only about a 2.8 percent increase in health insurance premiums because of this year’s surplus.

A 1 percent increase in health insurance premiums contributes about 300 billion won in additional revenue, according to the National Health Insurance Corporation.

By Yim Seung-hye [sharon@joongang.co.kr]