[Insurance-Medical, Coexistence or Mutual Destruction] Urgent Revision Needed for Guidelines on Healthcare Collaboration

(Rising) Health Management Services... Symbiosis on the Test Bench
Global Competition Intensifies in US, China, Japan, etc.
Domestic Restrictions on Medical Data Utilization

[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 being involved in insurance fraud to deceive patients, are widespread. Even in the era of the Fourth Industrial Revolution, simplification of claims for actual medical expense insurance and the healthcare sector remain trapped behind barriers. As the insurance and medical industries fail to coexist, insurance premiums rise annually, and consumer harm spreads due to numerous cases of giving up on complicated insurance claim procedures. Experts warn that if 'medical moral hazard' is left unchecked, both the insurance and medical industries will inevitably self-destruct. Asia Economy examines the insurance and medical sectors at the crossroads of coexistence and mutual destruction in a three-part series.

[Asia Economy Reporter Oh Hyung-gil] Ping An Insurance, the largest insurer in China, created the healthcare platform 'Ping An Good Doctor' and established a cooperative system with about 2,000 medical institutions at the level of university hospitals. This was a strategic decision based on the necessity of securing excellent medical personnel to provide medical services to insured customers.

Ping An Good Doctor has grown into a large global healthcare company with 370 million members. It has also made efforts to expand overseas, providing medical services in Indonesia and online medical questionnaires and drug delivery services in Japan. Recently, it has been expanding additional services to ensure customer safety amid the COVID-19 situation.

Optum, a digital healthcare subsidiary established by UnitedHealth Group, a major U.S. insurer, has been providing telemedicine services such as virtual care, home care, mental health management, and integrated physical therapy services across all 50 U.S. states since this year. In particular, it is expanding services by sharing cost billing data with local hospitals to make medical services more accessible.

As healthcare services grow rapidly, the insurance industry is showing great interest in expanding its domain. In a survey conducted last year by the Korea Insurance Research Institute targeting insurance CEOs, more than half identified 'insurance linked with healthcare services' as the insurance product to focus on selling in the post-COVID era.

The healthcare sector, emerging as the next-generation growth engine, is a key area where both the insurance and medical industries must cooperate. Global insurers are already forming alliances with medical institutions to dominate the global healthcare market. It is pointed out that the domestic insurance and medical sectors must overcome conflicts and foster this area toward coexistence.

Japan Focuses on Elderly Healthcare... China Enables Medical Practices

Globally, the digital healthcare sector is breaking down the boundaries between healthcare providers, fintech companies, and insurers. While our insurers and medical sectors are mired in protracted conflicts over excessive and fraudulent treatments, there is a harsh assessment that we have already been outpaced by not only the U.S. and Japan but also China, a latecomer in healthcare services.

Domestic insurers are also eager to enter the healthcare service market. However, it is true that their level still lags behind other countries. Only this year, regulatory easing has made it possible to provide healthcare services to the general public, enabling the introduction of new services.

Nevertheless, these remain at an early stage, including exercise management services based on walking, analysis of health checkup information, and mental health-related services. While benefits such as insurance premium discounts are offered to encourage customer participation upon achieving certain goals, many citizens feel these efforts are insufficient.

In contrast, U.S. insurers have long provided healthcare services, focusing on the aspect that customers can reduce their insurance premium burden if their health improves through these services, and insurers can reduce medical (insurance) expenses.

Japan’s insurance industry, facing rapid aging, provides healthcare services centered on nursing care for the elderly. In China, where medical supply is insufficient compared to demand, insurers directly provide medical services. Based on monitoring, analysis, and evaluation of customer health, direct medical practices to control disease occurrence and maintain healthy conditions are also possible.

"Non-medical Guidelines Must Be Revised for Insurance-Medical Collaboration"

There are calls for Korea to develop and provide trustworthy healthcare services by linking insurers and specialized medical institutions.

In May 2019, the Ministry of Health and Welfare established the 'Non-medical Healthcare Service Guidelines,' clarifying the classification criteria for healthcare services that can be provided by non-medical institutions. Non-medical institutions are allowed to provide non-medical counseling and advice by guiding or utilizing guidelines, standards, and statistics presented by credible institutions.

However, advanced general hospitals and other medical institutions are excluded from the 'credible institutions' proposed in the guidelines, blocking collaboration between insurers and medical institutions.

One life insurance company attempted to jointly develop a cardiovascular disease risk assessment service with a general hospital, but the hospital was not recognized as a 'credible institution' under the guidelines, halting service development. Instead, the company had to incur additional costs to receive review from verified academic societies, forcing them to abandon the project.

Accordingly, the insurance industry plans to propose revising the guidelines to include advanced general hospitals as credible institutions. If hospitals are included as requested by the insurance industry, collaboration between hospitals and insurers will become possible, and various healthcare service models are expected to be discovered.

Kim Seok-young, Senior Research Fellow at the Korea Insurance Research Institute, said, "Health consultations and referrals to specialized hospitals that consumers actually need may violate the Medical Service Act, making it difficult to expand healthcare services. We need to support the development of necessary healthcare services for the public through expanded use of health-related data and flexible operation of the Medical Service Act."