This Nov. 9 photo shows the headquarters of Techniker Krankenkasse (TK), one of the biggest German statutory health insurance companies based in Hamburg. Korea Times photo by Lee Hyo-jin
Health insurance industry recovers from COVID-19 pandemic with adaptive strategies
By Lee Hyo-jin
BERLIN, Germany — As of 2022, 17 percent of Korea’s 51.6 million population were aged 65 and above. The figure is expected to rise to 20 percent in 2025, according to projections made by Statistics Korea, which would make the Asian nation a super-aged society.
The country’s fertility rate — the average number of children a woman gives birth to in her life — reached a new low of just 0.78 in 2022, much lower than the 2.1 threshold needed to maintain the population at its present level.
Among the many consequences of the nation’s rapidly aging population and low birthrate, increased public expenditure on health care is causing concern for the Korean government.
The government is struggling to come up with long-term solutions to tackle the impending fiscal burden of the nation’s universal health coverage system handled by the National Health Insurance Service (NHIS).
However, such a phenomenon is not limited to Korea alone.
Similar challenges are faced by European countries with robust health insurance systems, such as Germany and Belgium. These wealthy nations are also grappling with increased financial pressures on social security and public health services caused by a combination of increased life expectancy and a shrinking workforce.
A series of interviews with officials in the health insurance industry and a lawmaker based in Germany and Belgium, organized by Korea’s Ministry of Health and Welfare between Nov. 6 to Nov. 12, offered an insightful glimpse into how they are trying to find answers to this issue.
Thomas Schepp, right, head of strategies and controls, and Stephanie Bosch, head of the communications department at BKK Dachverband, speaks during an interview at the company’s office in Berlin, Nov. 7 (local time). BKK Dachverband is the umbrella organization of company-owned health insurance providers in Germany. Joint Press Corps
Germany’s health insurance based on solidarity, competition
Germany is widely known as the birthplace of social insurance. The world’s first health insurance scheme – built on a form of solidarity – was established with Bismarck’s Health Insurance Act in 1883.
Currently, all citizens and foreign residents are obliged to subscribe to the health insurance system under the Health Insurance Compulsory Law enacted in 2009.
Almost 90 percent of the nation’s 83 million population are covered by the public health insurance scheme locally known as Gesetzliche Krankenversicherung (GKV) while the other 10 percent, such as high-income employees and self-employed people, are covered by a private health insurance system, or the Private Krankenversicherung (PKV).
The basic premium rate for public health insurance stands at 14.6 percent, shared between employers and employees at 7.3 percent, respectively. Contributions are automatically deducted from the monthly salary of the insured. Each insurance provider may charge an additional contribution rate — a maximum of 1.6 percent — for supplementary benefits beyond the legally prescribed catalog.
A major aspect that differentiates Germany’s health insurance scheme from that of Korea is that, unlike Korea where the NHIS is the single insurer, the European nation has nearly 100 self-governing insurance corporations within the public health insurance scheme.
As such, people can “shop around” to find the best deals based on what types of coverage they need. This system, German officials say, is aimed at improving the overall quality of medical services through competition among the service providers.
“There are large companies like Siemens which has around 1 million subscribers, and then there are small ones with about 4,000 subscribers. But this doesn’t necessarily mean that the smaller ones are financially unstable,” said Thomas Schepp, who manages strategies and controls at BKK Dachverband, the umbrella organization of company-owned health insurances.
Thorsten Brackert, head of corporate development at Techniker Krankenkasse (TK), speaks during an interview at the company’s headquarters in Hamburg, Germany, Nov. 8 (local time). Joint Press Corps
Proactive immigration policies
In the long term, Germany has recognized the potential role of immigration to help deal with the financial burdens caused by public health expenditures due to the impending demographic cliff.
By accepting immigrants — especially those of working age — the country seeks to increase the number of contributors to both the social security and health insurance systems.
“Right now, I can’t give you the exact figures on how much the immigrants are contributing to the financial stability of the public health insurance scheme. But I can say that the migrant flow from Eastern Europe induced by the financial crisis of 2008 has brought positive effects (in the public health insurance scheme),” said Schepp at BKK Dachverband.
Officials at Techniker Krankenkasse (TK), one of the biggest health insurance provider based in Hamburg, also believes that active immigration policies are the best answer yet to be able to respond to the demographic challenge.
“We could consider raising the additional contribution rate … But for now, the immigration policies attracting young migrants are offsetting the speed of the aging population to some extent,” said Thorsten Brackert, head of corporate development at TK.
Korea, a predominantly homogeneous country, is looking for skilled migrant workers to reinvigorate its stuttering economy.
Yet, when it comes to foreign nationals in the public health insurance scheme, Korea’s NHIS has been grappling with a rise in foreign nationals who have exploited the system in recent years.
Under current laws, salaried workers of foreign nationality wishing to apply for Korea’s NHIS coverage are required to live in Korea for at least six months to sign up for the program through their employers and pay monthly premiums.
But their dependents — spouse, children or immediate family members — are not subject to such requirements and thus are eligible to sign up regardless of their duration of stay here, as long as they meet certain criteria such as income and assets. There have been many cases of foreign family members, including parents of the subscribers, visiting Korea to receive health insurance benefits such as treatment and surgery, despite not living here.
Regarding the potential for exploitation of the health German system, Brackert said, “I wouldn’t say that such a problem does not exist at all in Germany. But I think that isn’t a big issue here because foreign nationals have to live here for at least several years to become eligible for all the health insurance benefits offered.”
Impact of COVID-19
When asked about the COVID-19 pandemic’s impact on the nation’s health care expenditure for the last couple of years, Schepp replied that the pandemic has dealt a heavy blow on public spending concerning health care, but with ups and downs.
“While costs associated with pandemic response surged, there was a contrasting reduction in spending on non-essential health care services related to physical therapy and routine medical check-ups,” he explained.
Nezahat Baradari, a lawmaker of the Social Democratic Party and member of the Health Committee, speaks during an interview in Berlin, Nov.7 (local time). Joint Press Corps
Nezahat Baradari, a lawmaker of the Social Democratic Party and a member of the Health Committee, introduced some legislative efforts made by the German parliament to tackle the deficit of the statutory health insurance system, which had intensified due to the prolonged COVID-19 pandemic.
The GKV Financial Stabilization Act, which came into effect in November 2022, is aimed at reducing expenditure on pharmaceuticals and addressing the supply shortage of drugs.
“Due to the COVID-19 pandemic, there is significant pressure on the health insurance budget. But since it is difficult to raise insurance premiums, the law was enacted to being covered from the pharmacies and the pharmaceutical industry,” she said.
She went on to say that the cost-containment measures implemented under the newly introduced law have reduced the money allocated to pharmacies and drug manufacturers.
“There was strong opposition from pharmacy associations,” Baradari said, “But if we had not taken such measures, our health insurance system would have collapsed.”
Thierry Delestrait, an official at the financial department at the National Insitute for Sickness and Disability Insurance (NIHDI), explains the budget data of the institution during an interview at its headquarters in Brussels, Belgium, Nov. 9 (local time). Joint Press Corps
Health insurance is also compulsory in Belgium, a country with nearly 12 million people. The public insurance system is managed by the National Institute for Sickness and Disability Insurance (NIHDI). Unlike Korea’s NHIS, however, the NIHDI does not directly handle insurance benefits but is responsible for its overall management.
Every Belgian resident is mandated to choose and register with a specific health insurance fund, commonly referred to as a “mutuelle.” These non-profit organizations, six in total, operate independently based on political and religious backgrounds such as socialist, Christian and liberal.
People can opt for one of these associations to pay insurance premiums, which guarantees the reimbursement of most medical, pharmaceutical and hospital-related expenses.
Speaking to The Korea Times, Thierry Delestrait, an official at the financial department at NIHDI, explained that his institution, which oversees a budget of three billion euros, actively engages all relevant stakeholders in the budget decision-making process to ensure stability concerning financial management.
Regarding the effects of the prolonged COVID-19 pandemic, Delestrait said, “Around 30 different COVID-19 measures were introduced during the pandemic. One of our primary focuses was to increase the number of hospital beds to accommodate as many patients as possible, which obviously led to a surge in medical costs.”
He added that predicting the future financial performance of health insurance has become more challenging due to the pandemic.
“But on the bright side, we are planning to continue to utilize some of the positive sides of the pandemic response measures, such as non-face-to-face consultations and a remote health care system.”
