[Editorial] Unsustainable largesse

President Moon Jae-in attended an event in August to commemorate the fourth year since the introduction of a program meant to expand coverage under the state-run health insurance system.

The initiative -- called Moon Jae-in care, or Mooncare -- has been instrumental in lowering medical costs for people, he said, vowing to accelerate efforts to further broaden health insurance coverage.

He insisted that his administration has put the finances of the health insurance system under stable management despite the sharp expansion of its coverage.

But alarm bells are ringing over the long-term financial sustainability of the health care system as it is.

According to recent data compiled by the National Assembly Budget Office, health care insurance payments are projected to more than double from 79.5 trillion won ($67.4 billion) this year to 160.5 trillion won in 2030. The payments have increased by 24 trillion won over the four years since Moon took office in 2017.

The financial balance of the health insurance system, which recorded a surplus for seven straight years through 2017, went into the red in 2018, when the Mooncare program was introduced.

The deficit, which reached 177.8 billion won in 2018, soared to 2.8 trillion won in 2019 before falling to 353.1 billion won in 2020. The reduction in the deficit last year was attributable mostly to people refraining from going to the doctor or being hospitalized amid the coronavirus pandemic, which broke out here at the outset of the year.

During the event, held at Cheong Wa Dae in August, Moon stressed that the country’s robust health insurance system had played the role of a “last defender” in the fight against the pandemic. In reality, the pandemic served to slow down the deterioration of the financial soundness of the system.

The data from the parliamentary research arm forecast that the system’s reserve funds could be depleted by 2024. Those reserves dwindled from 20.7 trillion won in 2017 to 17.4 trillion won in 2020.

Intentionally or not, Moon appeared to be missing the point when he noted at the event that last year’s reserves far exceeded the 10 trillion won targeted by the end of 2022.

If Mooncare remains in place, either health insurance subscribers will have to pay more in premiums or support from state coffers will have to increase. But neither of those two options would be easy to sustain.

Employed people currently pay 6.86 percent of their monthly wages in health insurance premiums, up from 6.12 percent in 2017. The maximum rate is 8 percent. But an attempt to further raise it would prompt strong backlash from waged workers, who are also weighed on by increases in taxes and other social security insurance fees.

Support from state coffers to shore up health insurance financing continued to increase from 7.2 trillion won in 2017 to 7.5 trillion won in 2018, 8.2 trillion won in 2019 and 9.7 trillion won last year. The amount, which declined slightly to 9.5 trillion won this year, is set to climb again to 10.3 trillion won next year.

The problem is that the provision of taxpayers’ money for the health care system will come to an end in 2022 under a sunset clause included in a related law.

As many experts note, it is now necessary to review what is seen as the reckless expansion of health insurance coverage and enhance the efficiency of payments.

In principle, it is not wrong to expand the coverage of the health insurance system. But the pace of that expansion needs to be adjusted in consideration of its financial viability.

It may help make the system more viable and efficient to put its finances under oversight by the parliament.

In a more immediate measure, consideration may be given to setting a ceiling on annual medical costs covered by the health insurance plan, to prevent individual subscribers from undergoing excessive medical checks and treatments.

By Korea Herald (khnews@heraldcorp.com)