The simplification of medical insurance claims in South Korea, which will allow policyholders to file claims easily with just a few clicks, is in danger of stalling in the National Assembly due to political wrangling. A proposed amendment to the Insurance Business Act that includes this provision has been submitted to the National Assembly’s Legislation and Judiciary Committee for the first time in 14 years, but recent disruptions to the standing committee’s schedule due to political disputes have cast doubt on its passage this year. The current complicated claims process has resulted in 270 billion won ($203.52 million) worth of insurance benefits going unclaimed each year, leading to growing public dissatisfaction.
According to political and insurance industry sources on Tuesday, the amendment to simplify medical insurance claims is likely to be delayed again. “The bill would have been passed if the Legislation and Judiciary Committee had met on Sunday as scheduled, but it was postponed indefinitely due to the suspension of the standing committee (due to political disputes),” said an insurance company official. “I understand that Rep. Park Joo-min of the main opposition Democratic Party, who initially opposed the amendment, changed his mind after considering the explanations of the financial authorities and the purpose of the bill for the benefit of the public.”
The simplification of health insurance claims refers to a system in which medical certificates and medical records are sent directly from medical institutions to insurers for payment, instead of policyholders submitting paper documents. Currently, patients have to visit medical institutions, pay fees, obtain diagnosis certificates, and then either take pictures and upload them or send them directly (by fax or in person) to insurance companies to claim benefits. Insurance companies even employ part-time staff to manually enter the information from these documents into their computer systems, and the process results in the disposal of approximately 400 million sheets of paper (estimated based on 100 million claims at four sheets per claim).
As a result, many policyholders have given up making claims. According to a survey conducted by the National Council of the Green Consumers Network in Korea and other consumer organisations in 2021, one in two policyholders did not claim their medical expenses insurance benefits. The main reasons given were ‘the small amount of expenses’ (51.3%), ‘lack of time to visit the hospital’ (46.6%) and ‘the inconvenient process of sending documents’ (23.5%). As the survey allowed for multiple responses, the results suggest that simplified claims, if implemented, would encourage more policyholders to claim their benefits. While most unclaimed amounts were small, more than 10 percent of respondents reported amounts ranging from over 100,000 won to 300,000 won.
Insurance companies are also strongly in favour of simplified claims, as they believe that even if they pay out an additional 270 billion won in claims annually, it is still more cost-effective to computerise the process. “Currently, manual data entry results in different formats in each company, and although it is rare, mistakes such as incorrect payments to people with the same name can occur,” said an insurance company official. “It is better to return insurance benefits to customers than to waste time and money on simple and repetitive tasks.” Some hospitals have gone so far as to set up their own electronic submission systems with individual insurers and contractors to streamline the claims process.
Despite the overall benefits, the simplified claims system has been stalled for 14 years due to opposition from medical associations. Some associations have raised concerns about the potential leakage of sensitive personal medical information and the risk of insurance companies using electronically stored data for profit. More recently, some patient advocacy groups have also protested, claiming that insurance companies could use the information to selectively pay small claims and deny coverage for expensive treatments.
However, both arguments have been criticised as unrealistic. To prevent the leakage of personal information, medical records can simply be transferred to the Health Insurance Review and Assessment Service or the National Health Insurance Service, but medical associations strongly oppose this option as they do not want these organisations to review their non-insurance medical records, and rejected the proposal even when the Korea Insurance Development Institute offered to act as an intermediary organisation.
