"Health Insurance Fund Faces Depletion Crisis"... 21 Trillion Won in Unpaid Government Support

Although the Legal State Subsidy Rate Is 20%, Actual Payment Remains in the 14% Range
Health Insurance Fund Turns to Deficit This Year... Accumulated Reserves Expected to Be Depleted by 2028

Even last year, when the government was embroiled in conflict with the medical community, the amount of statutory government funding not provided to the National Health Insurance Service exceeded 1.6 trillion won. While the government pledged to inject a large-scale health insurance budget to resolve the conflict and medical service gaps triggered by the expansion of medical school quotas, it failed to fulfill its obligation to provide the statutory government subsidy. As the health insurance fund faces a looming crisis due to an aging population and a rise in chronic diseases, government support has been decreasing each year, prompting opposition from healthcare labor unions.

According to data submitted by the Ministry of Health and Welfare to the National Assembly's Health and Welfare Committee on September 16, last year’s revenue from national health insurance premiums was 83.952 trillion won. Of this, the statutory government subsidy that should have been paid to the National Health Insurance Service, as stipulated by law, was 13.8051 trillion won. However, the actual amount provided by the government was only 12.1658 trillion won, leaving about 1.6393 trillion won unpaid. The ratio of government support to expected insurance premium revenue was 14.5%.

Under the National Health Insurance Act and the Health Promotion Act, the government has been required since 2007 to provide an amount equivalent to 20% of the expected annual health insurance premium revenue to ensure the stable operation of the health insurance fund. Of this, 14% comes from the general account (the national treasury) and 6% from the Health Promotion Fund, which is financed by tobacco taxes (tobacco surcharges). However, the amount that can be provided from the Health Promotion Fund is capped at 65% of tobacco surcharge revenue.

Nevertheless, the government has not adhered to the statutory 20% government support rate, instead calculating the expected insurance premium revenue based solely on the premium increase rate, excluding other variables such as economic growth and inflation. As a result, from 2007 to last year, the government should have provided 149.7617 trillion won, equivalent to 20% of insurance premium revenue, but the actual amount provided was only 128.0332 trillion won. The cumulative unpaid statutory subsidy over 18 years exceeds 21.7 trillion won, with 18.4753 trillion won of that amount accumulating over the past 10 years (2015-2024).

This year as well, the government plans to provide 12.6093 trillion won from the national treasury, which is 14.4% of the expected insurance premium revenue of 87.7586 trillion won. Not only has the government support rate decreased compared to last year, but it is also uncertain whether the full amount will actually be executed. For next year, the Ministry of Health and Welfare’s budget proposal allocates 12.7171 trillion won as the government subsidy for health insurance, which is 14.2% of the expected insurance premium revenue. Meanwhile, the national health insurance premium rate that citizens must pay will increase by 1.48% next year.

The Korea Alliance for Health Care and the National Health Insurance Service labor union stated, "The government subsidy rate for health insurance will decrease from 14.4% this year to 14.2% next year," adding, "The government claims that the health insurance fund will face a crisis and raises insurance premiums, yet continues to reduce its own support, which is contradictory. The state must fulfill its responsibility for public health."

Previously, a social insurance report published by the National Assembly Budget Office in August indicated that, as the rate of revenue growth outpaces the rate of expenditure growth, the health insurance fund will turn to a deficit a year earlier than previously forecast, starting this year, and the accumulated reserve is now expected to be depleted by 2028, two years earlier than previously projected. The Budget Office explained, "This is the result of reflecting the medical reform plan, which involves a 20 trillion won investment in health insurance finances from 2024 to 2028, and the emergency medical system, which will require 200 billion won per month until 2025," and added, "Due to the recent acceleration of population aging and the expansion of health insurance coverage, health insurance expenditures will continue to increase."