Pay 200 Won More for Cigarettes Due to 150 Won of Health Insurance Taxation

The Health and Welfare Committee of the National Assembly passed the bill for the Health Insurance Finance Special Law to increase the health insurance tax to 150 won from current 2 won to secure the Health Insurance finance yesterday. The National Assembly will approve the bill at the general meeting today. Consequently, cigarette prices will hike up 200 won per pack from February after the process of cigarette price report to the Ministry of Finance and Economy by the tobacco manufacturer is complete.

The drastic increase imposed on the Health Insurance tax is expected to raise about 660 billion won per a year, which will be used for medical expenditures for senior citizens over 65, rapidly increasing recently, of the local Health Insurance (44.8 percent) and corporate Health Insurance (55.2 percent).

An official of the Health and Welfare Ministry disclosed that "Even though the government request for 180 won was not accepted, the increased tobacco tax will remarkably help to resolve the financial deficit and the Health Insurance Finance is likely to reach a balance by 2006."

The components for price increase per pack include 150 won of Health Promotion Share, 15 won of the value added tax, 16.5 won of the retailers benefit, and 10 won of the Production Security Funds for the Farmers.

However, the Health Promotion Share will not be imposed on `Sol` which is limitedly produced for the low-income citizens in the urban area.

The revised bill establishes Health Insurance Policy Deliberation Commission composed of 8 persons each from insurance customers, pharmacy and medical sectors, and public experts and enforces their cooperation in the deliberation process over income and expenditure. The Vice Minister of Health and Welfare will take charge of the new Commission, which unified the separated organizations of Heath Insurance Deliberation and Coordination Committee and Finance Management Committee which independently decided the insurance premium and the insurance cost evaluation.

The revised National Health Insurance Law that describes the 1.5 year postponement of the Health Insurance Finance merger will be deliberated upon and passed at the general meeting of the National Assembly on the 8th as well.

Jeong-Hun Kim jnghn@donga.com