NHIC to face financial crunch in May

Medical insurance fees for office workers and others are likely to rise by 20 percent from May, a move that is expected to draw outrage from subscribers. Insurance fees on office workers already climbed 21.4 percent in January and subscribers in regional areas saw their fees rise 15 percent last December.

Currently, insured office workers pay an average of 50,863 won per month (half of the amount is borne by their employers), and participants in regional associations pay an average of 35,498 won a month. The increases will boost these figures to about 60,000 won and 45,000 won, respectively. In order to bail out the medical insurance corporation, the government plans to offer a one trillion won subsidy from the national coffers, in addition to 1.9 trillion won in financial support that was already earmarked for the ailing corporation.

According to an announcement Tuesday by the National Health Insurance Corporation (NHIC), operated by the Health and Welfare Ministry, hospitals. clinics and pharmacies last month received a 1.07 trillion won medical insurance subsidy. Since November last year, they received more than one trillion won in subsidies. Before last November, monthly insurance payment was about 660billion won.

Total revenues derived from fees and government subsidies stand at a monthly average of about 830 billion won, meaning that the medical sector incurred a monthly deficit of some 400 billion. If the trend continues, the total deficit is estimated to hit as much as 3.5 trillion won by the end of this year. After May, NHIC expects government subsidies and accumulated insurance fee will be used up.

The deficit was higher than anticipated due to a sharp hike of about 30 percent in doctors` fees in the aftermath of a dispute with pharmacists.

The government and the health insurance corporation worked out the following measures to cope with the situation: the additional provision of one trillion won by increasing medical insurance fees by 20 to 30 percent for all subscribers; additional provision of one trillion won in financial support; savings of some one trillion won to 1.5 trillion won with the abolition of doctors` prescription fees for injections; and collection of insurance fees in arrears among other initiatives. In this manner, the government plans to erase the expected deficit of 3 to 4 trillion won within the year by saving one to 1.5 trillion won.

NHIC president Park Tae-Young said at a meeting of local branch presidents on Monday that this year`s estimated total deficit was 3 to 3.5 trillion won and that he would ask for hikes of insurance fees and more government aid to resolve the problem of chronic deficits.

Song Sang-Keun songmoon@donga.com