[Insurance-Medical, Coexistence or Mutual Destruction] Over 1,000 Medical Professionals Commit 'Insurance Fraud' Annually

Deceptive Expertise Misleads Patients... The Disappearance of the Hippocratic Oath
Surge in Loss Ratios and Insurance Premiums... Consumer Harm Passed On

(Editor's Note) 'Medical Moral Hazard' is undermining the insurance industry. Despite the financial authorities' determination to eradicate it, fraudulent and excessive medical treatments leading to inflated insurance claims, or even medical professionals involved in insurance fraud deceiving patients, are widespread. Even in the era of the Fourth Industrial Revolution, simplification of claims for indemnity health insurance and the healthcare sector remain trapped behind barriers. As the insurance and medical industries fail to coexist, insurance premiums rise annually, and consumers suffer increasing harm due to the complexity of insurance claim procedures leading to many giving up. Experts warn that if 'medical moral hazard' is left unchecked, both the insurance and medical industries will inevitably self-destruct. Asia Economy explores the insurance and medical sectors at the crossroads of coexistence and mutual destruction in a three-part series.

[Asia Economy Reporter Oh Hyung-gil] The number of medical professionals caught committing insurance fraud has exceeded an average of 1,000 annually since 2012. The 'Medical Moral Hazard,' where medical professionals exploit patients to claim insurance money based on their expertise, remains uneliminated.

Falsely diagnosing or pretending a patient was hospitalized is more than simple fraud or financial crime. If the screening process tightens due to insurance fraud, the rights of patients who legitimately need treatment are also jeopardized.

According to the Financial Supervisory Service on the 10th, from 2012 to the end of last year, 9,643 medical professionals were caught committing insurance fraud, averaging 1,071 per year.

After surpassing 1,400 in 2017, marking a record high, there has been no clear decline despite intensified crackdowns by financial authorities. Although the number of medical professionals caught in insurance fraud decreased last year due to reduced use of medical institutions amid COVID-19, insurance companies estimate that the issue is resurging this year.

The damage from insurance fraud is directly passed on to consumers. Although indemnity health insurance, known as the 'second health insurance,' is set for its fourth revision this July, the skyrocketing loss ratio shows no signs of improvement.

This is the reason indemnity insurance premiums have increased annually. The root cause behind the crisis facing indemnity insurance is 'medical moral hazard,' such as fraudulent claims stemming from excessive medical treatment.

Most insurance fraud involving medical professionals is triggered by excessive medical practices. Patients and medical professionals share aligned interests in obtaining more insurance money and benefits.

Patients readily agree when told at hospitals, "If you claim through insurance, you can receive treatment without out-of-pocket expenses." Because they do not recognize it as insurance fraud, they unknowingly become involved in fraudulent activities.

Due to improper insurance payouts caused by some hospitals and clinics encouraging false or excessive hospitalization or treatment using indemnity insurance's non-reimbursable items, as well as illegal medical institutions such as office-based hospitals, loss ratios are rising not only in private insurance but also in the National Health Insurance.

The loss ratio for indemnity insurance rose from 122% in 2015 to 133% in 2019, an 11 percentage point increase, and health insurance premiums increased by 3.49% in 2019 and again by 2.89% this year.

As the profit-seeking behavior of some hospitals and clinics is passed on to the majority of honest insurance policyholders, calls are growing to strengthen whistleblowing to detect insurance fraud among professionals.

An insurance industry official pointed out, "Some hospitals exploit the lack of limits on non-reimbursable treatment fees by performing reimbursable treatments but falsifying medical records to claim them as non-reimbursable, inflating medical bills to commit insurance fraud," adding, "Strict supervision and management of excessive and improper treatments in non-reimbursable categories are necessary."