The government has repeatedly frozen health insurance premiums to ease the burden on households, but critics warn the move is setting up a surge in premiums later. Three freezes in the past four years have raised the likelihood that the premium rate will have to rise by more than 2% every year from 2028 to keep the health insurance fund sustainable.
The premium rate was held at 7.09% for two straight years in 2024 and 2025 before rising 1.48% to 7.19% this year, according to the National Health Insurance Service (NHIS) and the Ministry of Health and Welfare on the 20th. But the ministry's Health Insurance Policy Deliberation Committee froze the 2027 rate at 7.19% again on Sept. 8, leaving the rate unchanged in three of the past four years.
The NHIS, by contrast, based its revenue projections in its medium- to long-term financial management plan for 2026 through 2030 on the assumption that the premium rate would rise 1.49% annually from 2027 to 2030. Freezing next year's rate effectively pushes that increase further down the road.
The decision to freeze the rate again next year reflects the reserves accumulated so far and the prospect of higher premium revenue as the economy recovers. Health insurance reserves stood at 30.2 trillion won at the end of last year, equivalent to about 3.5 months of benefit payments, according to the ministry. The government cited surpluses in the current balance over the past five years, an increase of about 1.1 trillion won in government subsidies next year, and an estimated 3.8 trillion won in additional premium revenue from the semiconductor industry boom.
Instead of raising premiums, the government is also restructuring spending. It is pursuing measures to save about 270 billion won a year through changes to the drug pricing system, about 2.6 trillion won by adjusting fees for laboratory tests and imaging, and about 800 billion won through tighter controls on improper claims. The NHIS plans its own cost-cutting efforts totaling 16.4565 trillion won over the five years through 2030.
The problem is that even with those measures, the longer an increase is delayed, the larger it will eventually have to be. Officials inside and outside the NHIS say the premium rate may have to rise by more than 2% annually from 2028 through 2030 to maintain the legally required emergency reserve of 1.5 months of benefit payments by 2030. That is higher than the 1.49% annual increase the NHIS originally assumed in its medium- to long-term financial plan.
There is also limited room for further increases. Under the current National Health Insurance Act, the premium rate for workplace subscribers is capped at 8%, only 0.81 percentage points above the current 7.19%. A simple calculation of 2% annual increases starting in 2028 would push the rate to 7.94% in 2032 and above 8% in 2033. Jeong Ki-seok, the former head of the NHIS, said at a fee negotiation meeting in May that with the rate at 7.19% and approaching the statutory ceiling of 8%, securing additional revenue sources would not be easy.
For now, however, the NHIS is ruling out raising the ceiling itself, saying it will address the revenue issue by overhauling the premium assessment system instead. Kang Cheong-hee, the head of the NHIS, said at the first news conference after taking office on Sept. 8 that the agency is not considering going beyond the premium rate ceiling at this stage. Kang said the agency would instead manage its finances by refining the premium assessment system and cutting unnecessary spending.