Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Health insurance premiums to surge
By Lee Hyo-sik
Koreans may have to pay about one 10th of their income for national health insurance premiums by 2020 due to the aging population and increasingly health-conscious social trends.
Heavier insurance premiums will likely weaken drive to work harder and lower the financial ability to spend on various goods and services or to save for rainy days, undermining Korea’s economic viability.
The Korea Institute for Health and Social Affairs (KIHASA) said Monday that the nation’s total medical and health-related expenditure will reach 110 trillion won in 2015 and 156 trillion won in 2020, up from 77 trillion won this year.
That’s because Koreans demand more advanced and expensive medical services in line with rising income levels.
A growing number of senior citizens, and new treatments and services are also expected to push up Korea’s medical bills.
The institute projected that Koreans aged over 65 will account for 15 percent of the population in 2020, adding the ratio of the nation’s medical expenses to gross domestic product (GDP) will reach 9.6 percent, up from 7.1 percent in 2010.
Aging population takes tolls
The institute said the National Health Insurance Corp. will pay 80.4 trillion won in 2020 to cover the soaring medical expenditures of its subscribers and their family members, up from 33.57 trillion won this year.
Considering the operational expenses of insurance companies, the figure is expected to reach as high as 83 trillion won in 10 years.
“Under our projection, every Korean worker will have to pay 10 percent of their income on national health insurance premiums in 2020, due to soaring medical expenditure as a result of the population aging rapidly and the well-being trend,” said Shin Young-seok, KIHASA’s director of social insurance and research department.
“I don’t think such a premium payment is sustainable. We should consider alternative ways to increase the national health premiums and maintain payments,” he added.
The National Health Insurance has been running at a deficit for years as it outspends its premium income, with the government injecting trillions of won each year to make up for its losses.
Shin said to prop up the financial health of national insurance, the government should introduce a ceiling on how much money can be paid to insurance subscribers and discourage patients with minor illnesses from seeking expensive medical attention.