미분류

[EDITORIAL] Premium setting in health insurance needs reform

By 류근하
  • Published : Jul 5, 2016 - 08:31
  • Updated : Aug 19, 2016 - 14:01
[THE INVESTOR] The main opposition The Minjoo Party of Korea has unveiled a plan to overhaul the health insurance system amid widespread discontent about the way insurance premiums are determined.

The party’s plan proposes making aggregate income the single criterion for setting premiums for the two types of policyholders -- employees and the self-employed.

Currently, insurance contributions for employees are set based solely on their wage income and are shared equally between the employee and employer.

For the self-employed, premiums are computed based on both income and the value of their assets, including houses and vehicles, as it is difficult to accurately assess their income.

Both employees and the self-employed feel the current premium setting formula is inequitable as it is disadvantageous to them.

Employees feel that they shoulder an unfairly large share of the premium burden because of the inability of the National Health Insurance Service to accurately assess the assets of the self-employed.

Similarly, the self-employed feel they are treated disadvantageously as the insurance premiums of employees are charged only on their wage income, excluding income from other sources, such as rent, interest and dividends.

Discontent runs especially deep among people whose status has changed from employees to the self-employed after retirement or being laid off. Although they earn no or much lower income than before, their insurance premiums typically double if they own assets.

These people can avoid paying insurance premiums altogether if they register themselves as dependents of their employed children. But this system makes the national health insurance scheme further inequitable.

It allows people with considerable assets to get a free ride, while forcing those who barely earn a living to pay contributions.

Some affluent people put themselves on the payroll of a company without actually working for it, simply to avoid the high contribution rates imposed on their assets.

For these and other reasons, discontent is widespread among the public. If one wants to get a sense of the level of dissatisfaction, they need look no further than the 67 million complaints that were filed with the NHIS last year alone.

The Minjoo Party’s proposal is aimed at addressing these complaints. The party proposes to calculate insurance premiums of both employees and the self-employed based on their aggregate income, which includes not just wage income, but income from all sources.

The party says its proposal, if implemented as planned, would alleviate the burden of insurance premiums for more than 90 percent of all beneficiaries.

The minor opposition People’s Party also plans to come up with an income-based premium setting formula for the state-run health insurance scheme.

The two opposition parties’ moves are embarrassing to the government, as it has been unable to present a new reform plan after scrapping one in January 2015.

At the time, the government completed a reform scheme after two years of work, but it chose to drop it out of concern that affluent people might revolt against its move to charge them higher insurance premiums.

The government deserves severe criticism for its lack of the courage to face a backlash from high-income people. Now, it needs to cooperate with opposition parties to make the health insurance system more equitable.