President Moon Jae-in has said that the government will start this year to build a country where, by 2022, every single Korean is free from the worry of medical bills and can be treated for any disease.
The Ministry of Health and Welfare said that national health insurance will cover all medical expenses except those for cosmetic purposes. The expanded coverage is expected to apply to MRIs starting next year and, later, medical ultrasounds. In 2015, national health insurance covered 63.4% of medical bills. The government hopes to raise this to 70% by 2022, reported JoongAng Daily.
In addition, the cost of bills not covered by the government is expected to fall by 64%. According to Kim Do-ha, an SK Securities analyst, if the government covers the cost of excessive hospital visits, this will allow private insurers to lower premiums because “it will help normalise the loss ratio”.
Last year, for example, life insurers, including Samsung Life Insurance and Mirae Asset Life Insurance, raised their premiums more than 20%. This year, nonlife insurers raised premiums more than 20%. Samsung Fire & Marine increased its premiums by 24.8% while premiums went up by 26.9% at Hyundai Fire & Marine Insurance and 24.8% for Dongbu Insurance.
These companies claimed the hikes were necessary because of an increase in their loss ratios. According to the Financial Supervisory Service (FSS), the loss ratio of insurance firms grew from 112.5% in 2012 to 122.1% in 2015.
The insurance sector is hoping to retain a sustainable client base despite the government’s expansion of the national health insurance scheme. There are about 32.7 million private medical policies, which works out to about 65% of South Koreans.
“Raising the national insurance coverage from 60% to 70% will not put private medical insurance companies out of business,” said Lee Byung-gun, an analyst at Dongbu Securities. “Since last year, private insurance companies have been cutting back on government-covered policies.”