Step-by-step change is better

The Ministry of Health and Welfare’s planners proposed to unite the national health insurance policy which is currently divided into mandatory employers’ subsidized program for salary-earners and voluntary subscribers for individuals through their regional insurance jurisdiction. The mandatory package levies insurance fees according to salary levels, while the regional jurisdiction program calculates rates according to income, real estate and the value of other wealth. But the ministry now wants to set the rates only based on income, which is desirable considering consumer complaints and administrative difficulties in the two-tier system.

The volunteer health insurance program was devised in 1988. Because eligibility based on income data was hard to perceive, health authorities included properties to set individual premiums. Insurance premiums differed according to the size of homes and cars. If there is not enough income data, rates are set based on the gender and number of family members. Even an infant in a family that has the plan is levied with a 3,510 won ($3.40) fee each month. The measurement seemed clever and useful at the time. But today 77 percent of volunteer subscribers can present income data - compared with just 10 percent in the 1980s. The current two-tier system also hampers mobility in the job market. Nearly half of workers experience extreme ups and downs in their insurance bills every three to four years because of a job change. About 60 percent of retirees have to pay more for medical insurance than when they had been on a payroll where employers subsidized half of the coverage. It is unfair to charge retirees more.

Changes in national insurance policy are necessary but they must not be made in haste. Under the new plan, 34 percent of employees would see their insurance rates rise. The extra charge is levied on their non-salary income from rents, financial investments and pensions. The scope should be lessened. The plan also proposes a tax rate of 5.7 percent for insurance fees on capital gains. Authorities should study if it is fair to tax temporary gains in capital transactions. The new insurance fee levy could hurt real estate subject to capital gain tax. Levies on retirement funds also require discretion. A sudden change to an income-based program is undesirable. The steps need to be incremental instead by first eliminating insurance based on cars and family members. Reviews of eligibility of non-family members should be toughened and guidelines on comprehensive income gradually eased. The changes should be carried out in a five-year plan.

JoongAng Ilbo, June 17, Page 30