Reform on simplifying health insurance claims stalemated for 14 years

South Korea's National Health Insurance automatically processes claims for medical treatment received at hospitals. For the personal medical insurance dubbed “second national health insurance,” with approximately 40 million individuals enrolled, one must go through the cumbersome process of submitting paper documents. They are required to visit hospitals in person, obtain receipts, diagnostic reports, and detailed treatment cost breakdowns, and then send them to the insurance company via fax or mail. Missing or incomplete paperwork often necessitates revisiting the hospital. Despite the digital era where smartphones handle virtually everything, this practice of paper-based insurance claims still prevails, amounting to an estimated one hundred million claims every year.

According to surveys conducted by consumer advocacy groups, including the Korea Finance Consumer Federation, nearly half of respondents have refrained from claiming insurance benefits due to the arduous process. It is estimated that from 2021 to this year, unclaimed personal medical insurance benefits amount to 828.2 billion won. Efforts have been made to address this inconvenience and waste through the "Personal Medical Insurance Claim Simplification Act (partial amendment to the Insurance Business Act)," but it has been stuck in parliament. Although it cleared the standing committee in June this year, it has encountered further delays in the legislation and judiciary committee. Concerns are mounting that the bill might have to wait another year to pass amidst the extreme political wrangling between political parties.

The call for simplifying personal medical insurance claims has been ongoing for years. The Anti-Corruption and Civil Rights Commission recommended improvements due to significant national waste, but even this dates back to 2009. During the recent presidential election campaign, candidates from all political parties made it a part of their pledges. In a national survey conducted by the presidential transition committee last year, the claims simplification was ranked as the top priority for the new government to address. In this context, the parliament's postponement of bill processing while being swayed by the medical community constitutes a serious dereliction of duty.

The medical community opposes this legislation, arguing that it conflicts with medical laws that strictly limit access to and provision of medical information. However, even with digitization, patient requests and consent are still required, and the Ministry of Health and Welfare and the Legislative Affairs Office have not raised any issues. The medical community also raises concerns about the potential leakage of sensitive personal information, but it is difficult to see how switching from paper documents to digital records would significantly increase this risk. The bill also includes provisions for an intermediary information processing agency and ensures that information cannot be stored for commercial purposes by private insurers.

As parliament has remained indecisive over the last 14 years, a whopping 3 trillion won has likely been lost from citizens' pockets. It is imperative to address such inconvenience and losses immediately. If issues come up, they can always be rectified through subsidiary regulations and the enforcement process.