Estimation Result of Health Insurance Coverage Reinforcement Measures
Chapter I of this report provides an introduction to the Korean health insurance program, chapter II analyzes the financial status of health insurance, and chapters III and IV provide the contents of the Reinforcement Measures for Health Insurance Coverage as well as the fiscal estimation results. Chapter V reviews foreign examples of health insurance coverage.
Health insurance revenue in 2016 was 55.7 trillion Korean won, expenditure was 52.6 trillion won, resulting in a 3.1 trillion won surplus over this period. Maintaining a steady surplus since 2011, the aggregate reserve volume in 2016 reached 20 trillion 65.6 billion won. As of 2016, the amount of payments related to senior citizens who represent 13.2% of the total population is 39.2% of total payments, whereas the amount of payments related to children who represent 14.5% of the total population is 8.7% of total payments.
On August 9th, 2017, the government released the Reinforcement Measures for Health Insurance Coverage, according to which health insurance coverage will increase from 63.4% in 2015 to 70% by 2022. These new sets of measures include plans to include out-of-pocket expenses under insurance coverage, relieve the medical expense burden faced by low-income and vulnerable groups such as seniors, women and children as well as institutionalizing medical expense support for disasters and expanding eligibility criteria. The government estimated an additional expense of 30.6 trillion won for health insurance, citing that the costs will be covered by increasing premium rates and around 11 trillion won will be drawn from the aggregate health insurance reserve.
This report analyzes the fiscal balance of health insurance according to the target coverage rate and provides the fiscal estimates of each measure. Supposing that health insurance coverage reaches 70% by 2022 and this rate will be retained by 2027, the health insurance balance during this term is estimated to enter a deficit from 2019, and the accumulated reserve will be depleted in 2026.
Meanwhile, should coverage reinforcement and fiscal contractionary measures be pursued simultaneously, the health insurance balance for this period is projected to turn to a deficit from 2019 with 4.7 trillion won available from the accumulated reserve balance.
This report not only provides the balance forecast for health insurance following the reinforcement of insurance coverage but also reveals the estimation results of concrete policies such as the reduction of the co-payment rate for dentures and implants for seniors, the improvement in fixed out-patient fees for seniors, the reduction of the co-payment rate of hospital stays for children 15 years and younger to 5%, the capping of the co-payment rate proportionate to income level as well as expanding the criteria for those eligible for receiving support for medical expenses incurred as a result of disasters.
In the meantime, health insurance expenditure could significantly exceed expectations as a side effect of the coverage reinforcement, as a result of a herd effect to large hospitals or through the abuse of high-cost medical services. Therefore, expenditures will need to be more strictly managed.