[ANALYSIS] How healthcare reform has become President Yoon's policy priority

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By Lee Hyo-jin

Korea is one of the leading countries in healthcare services. Medical services are widely accessible to the public, thanks to the solid health insurance program, which protects patients from catastrophic medical bills.

In the last few years, however, critics have been sounding the alarm over the financial stability of the National Health Insurance Service (NHIS), as healthcare spending has been on the rise.

The annual healthcare expenditures for 2022 are expected to hit a record high of over 100 trillion won, double that of 51 trillion won in 2011, according to data from the Ministry of Health and Welfare.

The NHIS is currently holding 21.2 trillion won in reserves, but the funds are expected to decrease rapidly next year, to a possible deficit of 6.4 trillion won by 2028. In other words, at this pace, the national health insurance program may run out of money in less than six years.

Against this backdrop, the health ministry has recently announced reform plans aimed at improving the spending efficiency of the NHIS. It will apply stricter standards on insurance benefits to things like magnetic resonance imaging (MRI) examinations and ultrasound scans, the opposite of what the previous Moon Jae-in government had sought.

In 2017, the Moon administration introduced policies dubbed "Mooncare" with an aim to strengthen the nation's healthcare coverage, similar to Obamacare in the United States. Under the plans, public health coverage was expanded to a wider range of treatments, including costly ultrasounds and MRI scans.

While supporters of Moon's policies touted the success of the measures, which helped the underprivileged receive the medical attention they needed, the incumbent administration is focusing more on the side effects caused by them such as some patients' alleged abuse of treatments.

During the last three years, Korea saw a ten-fold increase in MRI diagnosis expenses, while over 2,500 people were found to have visited hospitals more than 365 times each in 2021.

The government, therefore, is seeking to "normalize" the healthcare scheme by overhauling many of the health insurance policies introduced by the previous administration.

Former President Moon Jae-in holds a girl, who was a beneficiary of the government's expanded health insurance program, during an event held to celebrate the achievements of "Mooncare" at Ilsan Hospital in Goyang, Gyeonggi Province, July 2, 2019. Korea Times file

Health policy experts, who agreed that healthcare reforms are inevitable, viewed that undoing Mooncare is not a panacea for solving all the problems.

Kim Yoon, a professor of health policy and management at Seoul National University College of Medicine, commented that the government is "missing the forest for the trees."

"It is true that expanded health insurance has led to some amount of exploitation of medical services. But losses from that are only a small portion of the total medical expenditure," Kim told The Korea Times, citing a report from the Board of Audit and Inspection (BAI).

In a July report, the state audit agency found that about 200 billion won was wasted due to Mooncare, which is a mere 0.2 percent of the total medical expenses which stand at over 100 trillion won as of this year.

Kim said the government should expand its scope and rectify other factors contributing to the waste of insurance expenditures such as the fee-for-service care model, oversupply of hospital beds and moral hazard by medical service providers.

Under the current fee-for-service scheme, doctors are reimbursed by the NHIS based on the number of services they provide as the payment model rewards physicians for the volume and quantity of services they perform. Without proper monitoring, some doctors perform unnecessary procedures to gain more benefits, according to Kim.

He also urged that the government should conduct a comprehensive study to figure out the exact amount of waste in NHIS funds in order to come up with a detailed reform plan that does not focus on taking away the benefits of insurance subscribers.

"Depriving people of insurance coverage just because a few abuse the system isn't a good approach. Hospitals and medical service providers that abuse the system should also be held accountable, as well as the authorities that have failed to monitor unethical cases," he said.

A patient receives an MRI scan at a hospital in Seoul. Korea Times file

Shin Young-seok, a senior researcher at Korea Institute for Health and Social Affairs, noted that about 30 percent of insurance funds are presumed to be wasted every year.

"The government is going in the right direction in normalizing the flawed system," said the researcher at the state-run think tank, who supported the government's move to apply stricter standards to MRI and ultrasound scans.

However, there should be more follow-up measures, he said.

"As of last year, Korea's health expenditures as a share of GDP stood at 9 percent, close to that of the OECD average of 9.6 percent. And the share is expected to increase rapidly under the current system."

He pointed out that due to expanded insurance coverage, people with mild health issues that can be treated in local clinics opt to visit general hospitals in the capital area.

"Not only does this lead to waste of healthcare expenditures, it also worsens the imbalance of medical services between urban and rural regions," he said. "The authorities should actively cooperate with private hospitals and doctors to rectify this phenomenon."