[editorial] Caution on Medical Bailout

The national medical insurance program for employees went in the red to the tune of more than 500 billion won ($394 million) during the first two months of this year. If the trend continues, the program will go bankrupt in May. First the regional insurance program was on the verge of collapse, and now it is joined by the employees' program. At the end of last year, that program had accumulated reserves of 880 billion won, but in January and February the program paid out 1.2 trillion won, far exceeding its income of only 662.9 billion. Even with a 20-percent raise in premiums from January, the insurance program is expected to suffer losses of over 120 billion won a month. The regional program is far worse off; it ran out of reserve funds in January, and the 1.9 trillion won in assistance it will get from the national treasury this year is predicted to carry the program only through August.

Since the medical system reforms of last July, there has been a 60-percent increase in medical treatments and a 66-percent increase in expenditures for prescriptions. This more than anything has brought the insurance programs to the brink of bankruptcy. Some workplace insurance cooperatives have objected to the move to consolidate the two insurance programs, asking why they should bail out the regional program. Many of these cooperatives have been spending their reserves instead of building them up. The financial difficulties of the regional insurance program have been with us for quite some time, yet the actual income of only 26 percent of those insured is known. In 1998, for instance, there were 1,156 self-employed insured persons with annual incomes of more than 100 million won who paid nothing into the program. Anyone with a total yearly income of 5 million won or more is required by law to participate, yet a reported 700,000 persons are delinquent.

Some in the ruling camp are for a program whereby the insured would be required to maintain personal reserve accounts for medical expenses, but they seem to be hesitating out of fear of a public backlash. In any case, this problem cannot be solved by merely raising premiums or instituting a new system. The government needs to conduct a complete overhaul of the current system, and to prevent the employees' program from going broke as well, the timing of consolidating it with the already-bust regional program should be changed. Rushing to consolidate may simply lead to a total collapse of both systems.