Health insurance deficit to reach W16 trillion in 2020

By Kim Tae-jong

The National Health Insurance Corp. expects a 16 trillion won ($14.36 billion) deficit in 2020 if it fails to come up with effective measures to counter snowballing shortfalls, its policy research institute said Monday.

The Health Insurance Policy Research Institute warned that the situation will put a heavy burden not only on insurance policyholders but also on the nation’s overall health insurance system.

It suffered a 1.3 trillion won deficit last year due to a stalled increase in income against soaring insurance payments.

“The health insurance deficit, if not addressed immediately by some drastic countermeasures, will reach about 1.5 trillion won every year,” said Park Il-su, researcher at the institute. “Without effective measures to correct the current imbalance in expenditure and revenue, the whole insurance system won’t be sustainable.”

Park said the most practical thing to make up for the shortfall is further rises in the premiums.

Under the current system that guarantees wide health insurance coverage with low premium income, the insurance agency cannot correct the imbalance on its own no matter how stringent the measures implemented are, the agency said.

The government’s subsidies, which account for around 15 to 20 percent of the total revenue every year, are also insufficient to fill in the gap.

Its record deficit of 1.3 trillion won last year represents a sharp gain from 3.2 billion won in 2009, with its cumulative surplus shrinking to 959 billion won. The institute expects its deficit to shrink to 28 billion won next year before jumping to 1.5 trillion won in 2013.

Worsening the outlook for the state-run health insurance agency is the fast aging population, which means a heavier burden in coverage for the agency against dwindling revenue sources.

It expects the budget to cover those aged over 65 to reach 13 trillion won in 2012, 32 trillion won in 2020 and 70 trillion won in 2030.

The institute said an appropriate rise in insurance premiums should be supplemented by various other steps to cut or eliminate shortfalls. Some of the measures it suggested include greater government contributions, higher premiums, new cigarette or alcohol taxes and stricter monitoring of medical fraud.

Responding to the report, the Ministry of Health and Welfare said the institute’s deficit projection was not reflected in this year’s rise in insurance premiums and other countermeasures announced by the government.

It said a 3 to 5 percent increase in insurance premiums is required every year along with other measures to tackle the problem.