ED Indemnity medical insurance

Fundamental steps needed to rescue underwriters mired in chronic loss

Indemnity medical insurance provided by private companies has emerged as a serious issue for government and industry officials. Underwriters are calling for premiums to be raised by more than 20 percent to make up for losses they've sustained over the past few years. Financial policymakers are negative because higher premiums will reduce the effects of President Moon Jae-in's policy to expand health insurance coverage. Financial regulators and health insurance officials met Wednesday to discuss a solution. Finding one is unlikely to be easy, however.

Indemnity medical insurance has long become like another state health insurance for Koreans. Private medical insurance ― which covers up to 90 percent of the fees patients pay to hospitals and pharmacies ― is no longer an option but a must for all families. The problem is overtreatment by hospitals and the moral laxity of patients. When people visit medical institutions, hospital employees' first question is whether the patients have indemnity medical insurance. If the visitors say “yes,” hospitals recommend expensive treatment that is not covered by state insurance. Added to this are the moral hazards of patients who know insurance companies pay most of the costs.

When the incumbent administration implemented President Moon's healthcare policy, or “Mooncare,” which turned many non-reimbursable treatments into reimbursable ones, officials thought it would reduce of indemnity health insurance premiums. In reality, however, Mooncare has ended up increasing the payment burden for both the state and private underwriters. The loss rate at private insurers rose to 130 percent in the first half of this year.

A temporary rise in premiums cannot solve this problem. At its roots are hospitals' excessive treatment, patients' moral laxity and inappropriate medical fees. Without rectifying these problems, the taxpayers' financial burden is unlikely to go down. The government was right to decide to differentiate premium rates depending on the frequency of patients' hospital visits. It also needs to increase the co-payment ratio, which is set at 10 percent for reimbursable treatments and 20 percent for non-reimbursable ones. The time has long passed for the medical community and insurance industry to agree on a compromise instead of sticking to collectivism.