Health insurance vulnerable to cheating

A 35-year-old ethnic Korean from China, identified only by her surname Cho, entered Korea in 2011. Not qualified for the country’s health insurance yet, Cho used her aunt’s social security number to get medical services at a discount. A year later, she was caught by the public insurance agency.

Cho’s misguided attempt is just one of a growing number of cases of Korea’s high-quality public health insurance system being exploited.

According to the National Health Insurance Service, there were a total of 280,323 cases of irregularities ― patients receiving insurance benefits without due qualifications or regular payments over the previous five years, highlighting the cracks in the monitoring system.

One of the most common types of fraud was misuse of others’ insurance cards or confidential personal data to get insurance benefits. The NHIS uncovered 4,139 illicit uses of insurance cards in the last five years, including 823 cases in 2013.

While the specific figures fluctuate year by year, insurance officials say that the numbers do not necessarily reflect the total number of cases of fraud that actually took place each year.

“These are only the numbers that were uncovered. Depending on how much time and work we invest in uncovering illegal cases, the figures can change,” an NHIS official said. “We estimate that far more cases occurred (than the official data shows).”

Some patients received affordable health care services from the state by taking advantage of the lax insurance system. Last year, some 48,000 people, most of whom emigrated to other countries or gave up their Korean nationality, were caught receiving insurance benefits without due qualifications. The trick was simply going in to see a doctor, as hospitals rarely check patients’ ID cards and insurance status.

The broader system itself is fairly straightforward. All citizens living in the country must join Korea’s National Health Insurance system, governed by the National Health Insurance Act, and pay a premium. For most treatments, 80 percent of the costs are covered by the system, which is funded by taxes and national insurance payments.

But the procedure for handling health insurance fees is so complex that agencies often fail to filter out free riders or cheaters.

Instead of charging medical fees directly to the insurance agency after providing medical services, clinics and hospitals file their insurance-covered fee applications to the Health Insurance Review and Assessment Service, a state-run organ in charge of supervising health care costs.

The HIRA monitors whether the fee claims can be justified or whether the applications are bogus. Once this review process is completed, the NHIS moves to fully reimburse doctors and hospitals. The two agencies can only do so much to detect every single fraud.

After all, doctors face no penalty for neglecting to check patients’ identities and insurance status, generating a big hole in the health insurance system.

“Hospitals should check the ID cards of patients strictly so that they can prevent a large number of abuses of insurance benefits. Hospitals are too lazy to do so because no penalties are imposed on those who fail to check the identity of patients,” said Kim Jin-soo, professor of welfare at Yonsei University in Seoul.

Last year, Rep. Choi Dong-ic of the Democratic Party proposed a bill that aims to punish hospitals which do not properly check the identities of patients.

The bill, however, faced strong opposition from medical service providers, who argued that making doctors accountable for checking insurance cards was unfair. The proposal is still pending.

“Some kind of legal push is needed. Unless the government makes the ID checks compulsory, insurance abuses will continue,” said Shin Hyun-woong, a research fellow at Korea Institute for Health and Social Affairs.

Along with the lax ID checks, a low threshold for subscribing to the insurance is cited as a weakness of the country’s medical services that cheaters seek to exploit.

Under Korea’s insurance system, half of the premiums are automatically deducted from the monthly paycheck of those who have jobs, regardless of nationality. The other half is paid by the employer. The amount of the premium is proportional to income.

People who are self-employed or jobless, however, belong to a different category called “local insurance” and pay a different amount of premiums depending on their income and region.

For the local insurance, benefit-seekers should prove that they are actually living in the region, not just visiting.

Once foreigners pay the average monthly amount of local insurance for three months, they become eligible for state health benefits. The average amount is largely determined by the region they live in but is usually around 80,000 won.

D- or F-visa holders ― which include students, foreign spouses and ethnic Koreans ― are exempted from paying the three-month fee.

Until 2008, the requirement was one month, but it was lengthened following criticism of foreign citizens visiting Korea for affordable medical services after only paying the one-month premium for the local insurance scheme.

While the number of foreign recipients of Korea’s health insurance services has climbed, the number of Koreans with foreign nationalities receiveing health benefits temporarily decreased in 2009, when the minimum period was extended to three months.

According to the NHIS, a total of 22,317 of Koreans with foreign citizenship registered in 2009 for the country’s health insurance benefits, down 1,000 from 2008. The number rebounded in 2010.

Some observers say the more stringent the qualifications only had a temporary impact.

“I believe the effect was limited. But the new requirement at least gave a message that Korea’s health care service is not something that insurance seekers can enjoy whenever they want,” Yonsei University professor Kim Jin-soo said.

While some still say the three-month threshold is not enough, the government appears unwilling to strengthen the rules further.

“There is no right answer for a reasonable period for gaining eligibility,” said a high-ranking official at the Ministry of Health and Welfare. “For local insurance, the government is reviewing whether it can charge foreigners more depending on the amount of assets and income they have in their (home) countries,” the official added.

By Lee Hyun-jeong (rene@heraldcorp.com)